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The Pakistan Credit Rating Agency Limited
Press Release

Date
29-Jun-18

Analyst
Farheen Farooq
farheen.farooq@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Modaraba Al-Mali

Rating Type Entity
Current
(29-Jun-18 )
Previous
(26-Sep-17 )
Action Maintain Maintain
Long Term A- A-
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

The ratings of Modaraba is reflective of its equity based capital structure. The ratings draw comfort from the association of the Modaraba with Bankislami, via management Company (Bank Islami Modaraba Investment Limited). Its financing book mainly comprises of Ijarah and Musharaka. Although the Asset quality is fully maintained, as NPL’s are fully provided (Loan Loss Provisions / Impaired Lending: 100%). Modaraba has been able to increase its income from financing and fuel business, which helped it registered slightly higher profits. The management would maintain largely equity based capital structure; however borrowing from the management company/sponsor bank would be an option available to the Modaraba.

The ratings are dependent on the management's ability to focus more on its core business, adding more Musharakah financing and ensure consistent improvement in its performance. Maintaining healthy asset quality, while maintaining it’s current largely equity based capital structure is important to maintain the ratings at current level. Fluctuation in oil prices may impact the Modaraba’s income.

About the Entity
Modaraba Al-Mali (MAM), incorporated in 1987, is a small sized and perpetual multi-purpose Modaraba listed on Pakistan Stock Exchange, with its head office in Karachi. BankIslami Modaraba Investments Limited (BIML) – wholly owned subsidiary of BankIslami Pakistan Limited (BIPL) owns 13% equity of MAM, whereas others certificates are distributed among NBFCs, joint stock companies and individuals. BoD comprises eight members. Seven nominees are of BIPL and among them, there is one independent director. Mr. Aziz Adil- CEO of Modaraba Al Mali has two decades of diversified experience in the field of Islamic Finance. He is supported by a qualified management team.

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.