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