The Pakistan Credit Rating Agency Limited
09-Apr-24
Analyst
Hassaan Ahmad
Hassaan.Ahmad@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
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PACRA Maintains Stability Rating of NBP Islamic Income Fund
| Rating Type | Stability Rating | |
|
Current (09-Apr-24 ) |
Previous (13-Oct-23 ) |
|
| Action | Maintain | Maintain |
| Long Term | A+(f) | A+(f) |
| Short Term | - | - |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
NBP Islamic Income Fund ( or the Fund) is a moderate-risk profile fund. The investment objective of the Fund is to provide competitive returns by investing in Shariah compliant debt securities and money market instruments. The Fund had allocated ~46.9% in bank deposits, placements & other banking instruments in A category, ~36.5% in GoP Ijarah Sukuks, ~5.5% in certificates of musharaka, and ~6% in TFC/Corporate Sukuks in AA category. The duration of the Fund stood at 67 days at end of Dec’23, limiting the interest rate risk of the fund. The WAM of the Fund stood at 213 days at the end Dec'23, exposing the moderate level of credit risk due to investment in GoP Ijarah Sukuks. The unit holding pattern of the Fund was ~14.87% at the end Dec'23 representing top ten investor concentration, exposing a low level redemption pressure of the fund.
Going forward, any material changes in the investment policy and/or compliance with the rating criteria for the assigned rating would have an impact on the ratings.
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 ~268bln at end-Dec'23, 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.