Press Release
VIS Maintains Entity Ratings of Khushhali Microfinance Bank Limited
Karachi, April 30, 2026: VIS Credit Rating Company Limited (VIS) has maintained entity ratings of Khushhali Microfinance Bank Limited (‘KMBL’ or the ‘Bank’) at 'A-/A2' (Single A Minus/A Two). Medium to long term rating of 'A-' indicates good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. Short term rating of 'A2' indicates good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. The assigned ratings have been is put on ‘Rating Watch – Developing’. Previous rating action was announced on July 08, 2025.
The assigned ratings of Khushhali Microfinance Bank Limited (‘KMBL’ or the ‘Bank’) reflect its established presence in the microfinance segment and continued relevance in serving underserved customer segments, supported by a stable deposit base and ongoing efforts to enhance risk management and governance frameworks. The Bank has undertaken a comprehensive transformation of its credit administration processes, including segregation of risk and business functions, strengthened underwriting standards, and a structured recovery mechanism, which has contributed to an improvement in asset quality indicators. Portfolio rationalization, with a strategic shift toward secured and higher-quality lending, has reduced exposure to high-risk segments, although legacy non-performing assets and a sizable stock of written-off loans continue to weigh on overall financial performance. Liquidity remains adequate, underpinned by granular deposits and a planned shift toward retail funding. Profitability has shown early signs of recovery driven by improved markup income and lower provisioning charges. The Bank’s capitalization profile remains the key rating constraint, with significantly eroded equity levels and dependence on timely capital injection or successful execution of its self-sustaining plan. While management’s strategic roadmap, along with active sponsor engagement, provides comfort regarding a gradual turnaround, the materialization of these plans remains critical to restoring financial stability. Going forward, the ratings remain sensitive to timely capital support, sustained improvement in asset quality, and the Bank’s ability to achieve consistent profitability, while maintaining adequate liquidity buffers.
For further information on this rating announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
Micro-Finance Banks
https://docs.vis.com.pk/Methodologies-2025/MicroFinance-Nov-2025.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf