The Pakistan Credit Rating Agency Limited
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PACRA Maintains Entity Ratings of First Habib Modaraba

Rating Type Entity
(22-Sep-23 )
(23-Sep-22 )
Action Maintain Maintain
Long Term AA+ AA+
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

The ratings reflect First Habib Modaraba’s (the Modaraba) sound business profile, emanating from a healthy asset base and asset quality, along with sustained profitability. Additional comfort is derived from the Modaraba’s affiliation with a renowned sponsoring entity, Habib Metropolitan Bank Ltd. The presence of industry veterans in the management structure, along with the implementation of a robust internal control system, is considered pivotal for the Modaraba's operational efficiency. The recent increase in policy rates supported the Modaraba's topline, albeit with an impact on the finance costs. The Modaraba continues to maintain robust profitability. The Modaraba managed to sail through its devised strategy to support its business volumes so as to beef up its bottom-line. Going forward, the management, while continuing with its growth strategy, intends to diversify its revenue streams through a diversified product portfolio and different business models. The Modaraba’s capital provides strong support to the funding structure of the Modaraba, equally aided by Certificates of Musharaka (CoM). The strong capital adequacy ratio portrays Modaraba's strong capital position. Moreover, liquidity is being well maintained by investing in term deposits. The Modaraba is evolving its long-term strategic vision to remain competitive in the increasingly challenging financial landscape.
The ratings remain dependent on the management's ability to sustain its competitive positioning while ensuring stable profitability. The ratings also depend upon keeping its financial profile intact. Any significant change in its risk profile may adversely impact the ratings.

About the Entity
First Habib Modaraba, established in 1985 and listed on the Pakistan Stock Exchange, is a perpetual, multi-purpose Modaraba engaged in Islamic modes of financing, mainly Diminishing Musharaka. Habib Metropolitan Modaraba Management Company (Pvt.) Limited, also owns Habib Metro Modaraba, is a wholly owned subsidiary of Habib Metropolitan Bank and is the management company of the Modaraba. Habib Metro Modaraba holds ~10% stake in the Modaraba.
The Board is chaired by Mr. Syed Rasheed Akhtar, possessing professional experience of over 37 years. All the Board members have vast experience in banking and finance. The CEO, Mr. Muhammad Shoaib Ibrahim has been associated with the Modaraba since its inception. He is supported by experienced team members.

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.