The Pakistan Credit Rating Agency Limited
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Muhammad Junaid

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PACRA Maintains Stability Rating of NBP Riba Free Saving Fund

Rating Type Stability Rating
(19-Apr-22 )
(18-Oct-21 )
Action Maintain Maintain
Long Term A+(f) A+(f)
Short Term - -
Outlook Stable Stable
Rating Watch - -

NBP Riba Free Saving Fund (or the "Fund") is a moderate risk profile fund. The Fund seeks to provide preservation of capital and earn a reasonable rate of return along with a high degree of liquidity. As of end-Dec’21, the Fund has invested ~66% of its net assets in ‘A+’ and a higher-rated bank. The Fund had also placed 22% of AUMs in Government securities. Furthermore, the Fund had allocated ~10% of its net assets in 'AA' rated Sukuks. The WAM of the Fund was recorded at 485 days. The WAM is on the higher side due to the Fund’s investment in GOP Ijara Sukuks. The duration is on the lower side at 53 days, which shields the Fund from interest rate risk. The Fund is subject to moderate redemption pressure as the top 10 investor concentration stood at 33% at end-Dec’21.
Going forward, the fund intends to increase asset allocation with banks in low credit risk avenues (mostly in AA category and occasionally in A category). Material changes in the fund's asset allocation strategy, impacting its credit quality and/or exposure to interest rate risk, would affect the rating.

About the Entity
NBP Fund Management Limited (or the "Company"), established in 2005, is licensed by Securities and Exchange Commission (SECP) to carry out asset management and investment advisory business. National Bank of Pakistan is the largest shareholder of the company with a stake of ~54%. In 2019, Baltoro Growth Fund has acquired the entire 36% stake of Alexandra Fund Management Private Limited in the Company. Baltoro Capital is a Pakistan focused private equity firm. Baltoro Capital has made investments in the pharmaceutical, renewable energy and financial services sectors in Pakistan. It is actively deploying its funds in businesses positioned to achieve extraordinary growth. The CEO of NBP Fund Management Limited, Dr. Amjad Waheed, CFA and family also holds a 10% stake in the company.
The Company’s nine-member Board of Directors includes three independent directors and the CEO. With overall assets under management of PKR 169,025mln at end-Dec'21, the Company is currently managing a diversified fund slate of twenty seven open-end mutual funds, two voluntary pension schemes and an Exchange Traded Fund.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.