HBFC long-term rating maintained

The Pakistan Credit Rating Agency (Pacra) has maintained the long-term rating at 'A' (Single A) and the short-term rating at 'A1' (A One) of House Building Finance Corporation (HBFC). These ratings denote a low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments.
The HBFC's ratings reflect the Corporation's sound equity base signifying high-risk absorption capacity and strong underlying security against loans. Despite substantial proportion of overdue rentals, affecting performance from core financing operations, the cashflows remain strong to service financial commitments on timely basis owing to the distinctive funding arrangements with State Bank of Pakistan (SBP).
While these funds are being repaid gradually, the ongoing concerted efforts by the management for restructuring of the organisation are expected to bring the requisite level of efficiencies and improvement in the Corporation's operations, by the time it has to rely on borrowings from the open market at competitive rates.
A multidimensional reforms programme is in various stages of implementation to make the HBFC an efficient and proactive organisation compatible with the increasingly competitive environment in the financial sector.
The House Building Finance Corporation (HBFC) was established in 1952 under the HBFC Act, to provide financial facilities for the construction, re-construction, repair and purchase of houses, particularly to the low and middle-income groups of the economy.
The government of Pakistan (GOP) and the State Bank of Pakistan (SBP) jointly hold the share capital of the Corporation.
The general direction and administration of the Corporation and its affairs is vested in the Board of Directors appointed by the GOP. The HBFC has a large network of 60 offices spanning across the country, managed through 12 zones with headquarters at Karachi. The Corporation employs more than 1300 personnel.
Unlike other financial institutions engaged in housing finance, the bulk of the loan disbursements of the HBFC are to low-income group, and for construction of house, as against outright purchase and renovation. Under its new mission, the HBFC aims to be the housing bank for Small & Medium Housing (SMH) finance.