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 Riba Free Saving 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 Riba Free Saving Fund (or the Fund) is a low-risk profile fund. The investment objective of the Fund is to provide preservation of capital and earn a reasonable rate of return along with a high degree of liquidity by investing in short-term Shariah compliant banks and money market / debt securities. The Fund had invested ~52% in GoP Ijarah Sukuks and Government backed security, ~32.4% in bank deposits, placements & other banking instruments in AA category and ~12% in Placements with NBFIs in AA category at the end Dec’23. The duration of the Fund stood at 78 days at the end Dec’23, exposing low interest rate risk. The WAM of the Fund stood at 546 days at the end Dec’23, exposing high credit risk due to the Fund’s investment in GOP Ijara Sukuks. However, investment in Govt securities mitigate the overall credit risk. The unit holding pattern of the Fund stood at ~16.45% at the end Dec’23 representing top ten investor concentration; exposing the Fund to a low level of redemption pressure.
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.