Following is the text of press release issued by
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The assigned ratings to TMB incorporate sponsor profile and demonstrated support of both sponsors, Telenor Pakistan B.V (TP), (a Netherland based company owned by
In line with strategic partnership agreement, TMB's key strategic focus over the medium term remains on aggressive customer acquisition (both in mobile account and mobile application platform) and encouraging high frequency and mass appeal transactions in order to facilitate in developing an ecosystem for customers.
Customer acquisition witnessed noticeable growth during 2019, nevertheless expected growth in the ongoing year and beyond will have to be tracked. Given that BB segment is expected to assume an increasing proportion of overall revenues over time, risk profile emerging from the segment with higher level of customers and transactions will be a key rating driver. VIS will also track impact of competitive pressures on projected profitability indicators over the long-term.
Given the current ongoing uncertain Coronavirus pandemic scenario and accompanying impact of lockdown, status of the assigned ratings is uncertain and additional information will be necessary to take any further rating action, warranting a 'Rating Watch' status. The revision in outlook to 'Negative' takes into account weakening in advances portfolio and expected impact of economic slowdown on the same. TMB's loan portfolio decreased as the bank paused fresh lending while internal control issues have been addressed. Lending will resume during ongoing year along with increasing proportion of digital lending in the financing mix.
It has been positively noted that risk assessment function and internal control framework of the bank have been strengthened. Profitability of the bank was impacted by increase in provisions against non-performing loans and expenses incurred for BB customer acquisition. Equity base witnessed increase post capital injection in 2019. With projected losses and equity attrition emanating from further planned BB customer acquisition expenditure over the rating horizon, capitalization indicators are projected to remain slightly above the minimum regulatory requirement, despite further equity injection by shareholders, which are not commensurate with the benchmarks of the assigned ratings.
For more information, contact:Director Compliance and Rating Analytics,VIS Credit Rating Company LimitedVIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,Phase VII, DHA,
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