Karachi, September 01, 2021 (PPI-OT):VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of Security Investment Bank Limited (SIBL) at ‘A-/A-2’ (Single A Minus/A-Two). The long term rating of ‘A-’ signifies good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ signifies good certainty of timely payment; liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Outlook on the assigned ratings is ‘Stable’.
Set up in 1991, SIBL operates as a non-deposit taking Non-Banking Finance Company (NBFC) providing both funded and non-funded facilities and advisory services to clients. The assigned ratings derive strength from demonstrated track record of support of SIBL’s sponsors with majority shareholding held by individuals belonging to the ARY Group (ARY). ARY is a diversified group with interests in several sectors including media, apparel, retail and real estate.
Assigned ratings take into account reduced credit risk with the settlement of majority of financing portfolio in line with the NBFC’s regulations restricting financing to associate concerns, which formed the major part of the portfolio in the past. Overtime, with financing operations reduced, asset mix has witnessed a shift towards investments, increasing exposure to market risk. However, management has been actively reducing its equity exposures by diverting the same into Government securities which provides added comfort for rating purposes. Ratings also take into account improvement in liquidity and capitalization profile of SIBL overtime. Maintaining market risk emanating from investments at manageable levels will be important for ratings.
Going forward, in order to achieve envisaged business growth focused towards building a consumer portfolio, SIBL is exploring various funding options including seeking deposit taking status, given equity has surpassed investment company minimum required equity of Rs. 750m for deposit taking. Equity base of SIBL has increased on a timeline basis on account of profit retention and sponsor support. Leverage indicators stand on the lower side, however, with projected growth in liabilities to achieve business growth, leverage indicators may trend upwards going forward. Given the challenges faced by the overall NBFCs sector, successful execution of the business plan including growth in financing portfolio together with strengthening of equity over time will be an important rating consideration.
For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
Website: https://www.vis.com.pk/