Karachi: Sindh Microfinance Bank Limited has received an upgrade in its credit ratings, reflecting a robust financial position and consistent profitability. The Pakistan Credit Rating Agency Limited (PACRA) announced the upgrade, which raises the bank’s long-term rating from A- to A and the short-term rating from A2 to A1. The outlook remains stable.
According to The Pakistan Credit Rating Agency Limited, this rating enhancement is attributed to the bank’s sustained financial profile, low infection ratio, and strong capital adequacy. The bank’s strategic expansion plans and support from financially robust sponsors, including the provincial government, have further bolstered its rating. Despite holding a small market share in terms of its Gross Loan Portfolio, the bank is experiencing rapid growth and is focusing on expanding its lending portfolio.
The bank’s recent financial performance highlights a significant increase in profitability, with PAT rising to PKR 125 million during the first nine months of 2024, compared to PKR 71 million in the same period the previous year. The bank’s capital adequacy ratio stood at a strong 43.98% as of September 2024. However, high deposit concentration poses liquidity risks, which the bank aims to manage through support from its parent bank and effective liquidity management strategies.
Sindh Microfinance Bank’s emphasis on digital platforms and customer outreach through various channels, including branch networks and women-centric loan projects, aligns with its business strategy to enhance accessibility and user experience. The bank has also applied for a nationwide operations license from the State Bank of Pakistan, which is expected to be granted soon. The rating’s future trajectory will depend on the bank’s ability to maintain its liquidity position, strengthen equity, and manage depositor concentration effectively.
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