The Pakistan Credit Rating Agency Limited
19-Oct-22
Analyst
Madiha Sohail
madiha.sohail@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Maintains Stability Rating of NBP Riba Free Saving Fund
| Rating Type | Stability Rating | |
|
Current (19-Oct-22 ) |
Previous (19-Apr-22 ) |
|
| 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 has invested ~67.5% of its net assets in ‘AA’ and a higher-rated banks, ~11.1% in GoP Ijarah/Sukuk, ~8.6% in Corporate Sukuk whereas ~9.6% in Govt backed securities. The duration is on the lower side at 37 days in Jun’22 (Dec’21: 53 days), exposing the Fund to interest rate risk. The WAM of the Fund was recorded at 405 days in the end Jun’22 (Dec’21: 485 days) exposing low level of credit risk due to the Fund’s investment in GOP Ijara Sukuks.. The Fund moderate redemption pressure as the top 10 investor concentration stood at 27.5% at end-Jun’22.
Going forward, the fund intends to increase asset allocation with banks in low credit risk avenues. 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 177,186mln at end-Jun'22, the Company is currently managing a diversified fund slate of twenty five open-end mutual funds, two voluntary pension schemes and one Exchange Traded Fund.