Lahore, September 29, 2022 (PPI-OT):NRSP Bank reflects a good presence across the country with about 150 branches in and around 10 regions. The geographical spread provides strength to the bank. NRSP Bank has been serving an increasing number of customers and has cemented its position in the industry amongst the top players of the microfinance sector with ~6.7% share in the total gross loan portfolio as of Mar’22. The Bank’s GLP witnessed a slight decline. Asset quality was impaired significantly, as the deferred book to total GLP was sizeable. Furthermore, considering the devastation of the massive flood, since Jul’22 the NPLs of the bank are expected to increase significantly, due to which the profitability of the Bank may come under pressure. Immediate financial support is required for which tangible steps are being taken.
Timing is crucial to help the Bank remain current on its financial obligation to the bondholders. As challenges in recovery and markup suspension would arise. The bottom line of the Bank increased, depicting a profit of PKR 138mln during 1QCY22 (Loss in CY21: PKR 1,232mln). Management’s commitment to recoup the asset health and consolidate the Bank’s position within the stipulated time is an acute necessity. However, sponsor support through equity injections is essential. The sponsors have extended support, both in technical and financial forms, to the Bank historically with an expression of explicit intention from NRSP to provide financial support in form of capital injection, as and when required.
The ratings are dependent upon the out-turn of management’s plans to steer the risk profile of the bank towards an improved trajectory. Timely sponsor support is imperative. The ratings would also monitor the impact of technological advancement on the operational and risk efficacy of the Bank and reflect the need to oversee the risk profile of the Bank against unavoidable challenges, going forward.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com