2015

Credit Rating Report (Surveillance)

TMSS
Ratings:
L o ng Term : AA 3
O u tlook : Stable
Pr evious Ratings :
Date of Ratings : L o ng Term Outlook
30 December 2014 AA 3 Stable
31 December 2013 AA 3 Stable
20 March 2013 AA 3 Stable

Date of Rating : 24 December 2015

Validity : 22 December 2016

Ratin g Bas ed o n : Audited financial statement up to 30 June 2015 and other relevant quantitative as well as
qualitative information up to the date of rating declaration.

Methodology: CRAB’s MFIs Rating Methodology (www.crab.com.bd)

A n alysts:
Tahmina Islam Shahtaj Noor
tahmina.islam@crab.com.bd shahtaj@crab.com.bd
Companies under the Societies Registration Act 1860.
F i n ancial Highlights
TMSS was registered with the NGO Affairs Bureau of
Y e ar ended June 30
Bangladesh in 1987 and with the Micro credit
(Months) (12) (12)
Regulatory Authority (MRA) in 2008. At the end of
( Am ount in BDT in Mil) 2015 2014
2015, TMSS had loan outstanding of BDT 13,129.15
Co n solidate d:
million to borrowers spread across 596 branches.
Distr icts covered 63 63 Members Savings was BDT 4,398.21 million in 2015.
Oper ational Self Sufficiency (%) 134.02 147.22 TMSS started renewable energy program in

TMSS
Bor r owed fund to equity 2.13 1.86 collaboration with the Infrastructure Development
M i cro Finance: Company Limited (IDCOL) in 2003. At the end of 2015,
Distr icts covered 51 50 TMSS installed 12,601 solar home systems.
No. of Br anches 596 571 Outstanding loan amount was BDT 319.09 million
No. of Member s 801,978 929,457 during the same year.
No. of Bor r owers 689,345 798,883
O P ERATING AREAS:
Loan Outstanding 13,129.15 10,566.30
Member s Saving 4,398.21 3,630.54 TMSS covers 63 districts of Dhaka, Chittagong, Khulna,
PaR (180 days +) (%) 3.04 3.09 Rajshahi, Sylhet, Barisal & Rangpur division. It has 915
Por tfolio Yield (%) 23.70 23.19 Branch & project office. Total Staff of TMSS was 14,926
R e n ewable Energy (SHS): as on 30 June 2015.
Distr icts covered 36 36
No. of Br anches 156 159 R AT IONALE
No. of Bor r owers 12,601 16,723
Credit Rating Agency of Bangladesh Limited (CRAB)
Loan Outstanding 319.09 347.67
has retained “A A 3 “(Double A three) rating of TMSS in
Gr oss Pr ofit Mar gin (%) 40.15 39.27
the long term. The rating analysis was based on the
PaR (180 days +) (%) 13.77 5.85
audited financial statements up to year ended 30 June
2015 and other relevant information.
P R O FILE
TMSS is working among the rural semi urban and
The rating reflects the Organization’s strength in
urban people for more than 30 years. It started its
operational efficiency of micro finance program along
Micro finance program in a few places in Bangladesh
with operational sustainability, size of the loan
in 1986 formed as Thengamara Mohila Sobuj Sangha.
portfolio, as well as diversified income generating
In 1999 TMSS was registered with Joint Stock
activities.

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CRAB I CR AB Ratings on Corporate Cr edit Digest I 24 December 2015
 TMSS

CRAB also considers its long experience in various social development projects. However, the rating is constrained
by operational inefficiency of TMSS Renewable Energy Project (TREP).

TMSS’ loan portfolio grew by 24.25% in 2015 to BDT 13,129.15 million. Loan portfolio was mainly concentrated in
JAGORON (previous Rural Micro Credit & Urban Micro Credit) 42.44% and AGROSHOR (previous Mic r o en ter pris e
loan) 46.10%. There are 3 types of TMSS member’s savings scheme through which BDT 4,398.21 millio n s av in g s
collected registered a growth of 21.14%. Aging of loan portfolio of TMSS depicts that, 96.06% of the loan portfo lio
was regular at the end of 2015. On the other side, 2.65% of the loan portfolio was in Bad loan category (overdue
for 365+ days). TMSS’s required loan loss provision (LLP) according to 1MRA was BDT 536.02 million whereas
maintained LLP was BDT 530.09 million in 2015.

TMSS portfolio yield was 23.70% in 2015 preserving MRA regulation (below than 27.00%). Operating expense ratio
increased 1.76 percentage points due to enhanced administrative expenses. Liquid asset to deposit ratio was
25.44% maintained according to MRA regulation (liquid asset to deposit ratio >= 15.00%). Organization’s c u r r ent
assets were dominated by loan to beneficiaries (81.77%) whereas current liabilities were dominated by m em ber ’s
deposits (36.60%) followed by short term loan (47.33%). In 2015, loan portfolio was 72.32% of total assets whereas
members deposit was 23.19% of total assets.

TMSS renewable energy program (TREP) is mainly funded by loan from IDCOL (88.73% of total TREP fu n d) . L o an
outstanding was BDT 319.09 million which experienced -8.22% growths in 2015. TMSS’ sales revenue decreas ed
by 38.14% from 2014 to BDT 188.62 million due to reduced sale of solar systems. At the same period interest
expense grew 18.28% from 2014. Bad loan (dues more than 6 installment) was 13.77% of total loan outs tan din g
in 2015. TMSS kept loan loss provision to balance the risk arise from increased overdue loan. Thus ch allen g in g
impact on earnings of this program is imminent. Balance sheet liabilities to total equity of this program were 8.39
times (2014: 4.12 times) and borrowed fund to equity was 7.95 times (2014: 4.00 times).

In 2015, TMSS consolidated fund mix was mainly shared by members’ savings 26.98%, short term loan 34.88%,
own fund/equity 22.69% and remaining 13.58% from long term loan of PKSF, IDCOL and different commercial
banks. Out of long term loan, 25.46% was borrowed from PKSF, 58.76% was borrowed from commercial banks an d
15.78% from IDCOL. TMSS takes its short term loan (24.49%) from PKSF, (73.70%) different commercial banks,
(1.80%) IDCOL and Bangladesh Bank housing loan scheme in 2015. Balance sheet liabilities to total equity of TMSS
were 3.85 times and borrowed fund to equity was 2.14 times during 2015. Operating self-sufficiency ratio of TMSS
in 2015 was 134.02% (2014:147.72%). It showed the ability of the organization to cover costs of operations with
internally generated income.

Along with Micro finance program TMSS has developed an integrated developmental model named HEM (Health,
Education and Microfinance) to address all the basic needs of the poor. TMSS has 65 satellite clinics through which
health services are rendered to the poor people. Moreover the organization has established a medical college,
nursing college and several educational institutions to provide medical education and medical services to the
member of TMSS especially women and children.

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 TMSS

LONG-TERM CREDIT RATING: MICRO FINANCE INSTITUTIONS (MFIS)

RA TING DEFINITION
Extremely Strong Capacity & Highest Quality. MFIs rated 'AAA' have extremely strong capacity
AAA
to meet their financial commitments. 'AAA' is the highest issuer credit rating assigned by
Triple A
CRAB. AAA is judged to be of the highest quality, with minimal credit risk.

Very Strong Capacity & Very High Quality. MFIs rated 'AA' have very strong capacity to meet
AA 1, AA 2, AA 3*
their financial commitments. They differ from the highest-rated MFIs only to a small deg r ee.
Double A
AA is judged to be of very high quality and is subject to very low credit risk.
Strong Capacity & High Quality. MFIs rated 'A' have strong capacity to meet their financial
A 1, A 2, A 3 commitments but are somewhat more susceptible to the adverse effects of changes in
Single A circumstances and economic conditions than MFIs in higher-rated categories. A is ju dg ed to
be of high quality and are subject to low credit risk.

Adequate Capacity & Medium Quality. MFIs rated 'BBB' have adequate capacity to meet their
financial commitments. However, adverse economic conditions or changing circumstances are
BBB1, BBB2, BBB3
more likely to lead to a weakened capacity of the MFIs to meet their financial commitments.
Triple B
BBB rated MFIs are subject to moderate credit risk. They are considered medium-grade and as
such may possess certain speculative characteristics.
Inadequate Capacity & Substantial Credit Risk. MFIs rated 'BB' are less vulnerable in the near
BB1, BB2, BB3 term than other lower-rated MFIs. However, they face major ongoing uncertainties and
Double B exposure to adverse business, financial, or economic conditions, which might lead to
inadequate capacity to meet their financial commitments. BB is judged to have speculative
elements and is subject to substantial credit risk.
Weak Capacity & High Credit Risk. MFIs rated 'B' are more vulnerable than the MFIs rated ' BB' ,
B1, B2, B3 but the MFIs currently have the capacity to meet their financial commitments. Adverse
Single B business, financial, or economic conditions are likely to impair the capacity or willin g n es s to
meet their financial commitments. B is considered speculative and weak capacity and is
subject to high credit risk.

Very Weak Capacity & Very High Credit Risk. MFIs rated 'CCC' are currently vulnerable, and ar e
CCC 1, CCC 2, CCC 3
dependent upon favorable business, financial, and economic conditions to meet their financial
Triple C
commitments. CCC is judged to be of very weak standing and is subject to very high credit
risk.
Extremely Weak Capacity & Extremely High Credit Risk. MFIs rated 'CC' are currently highly
CC
vulnerable. CC is highly speculative and is likely in, or very near, default, with some pr o s pect
Double C
of recovery of principal and interest.
Near to Default. A 'C' rating is assigned to MFIs that are currently highly vulnerable to non-
payment, having obligations with payment arrearages allowed by the terms of the documents,
C
or obligations that are subject of a bankruptcy petition or similar action but have not
Single C
experienced a payment default. C is typically in default, with little prospect for recovery of
principal or interest.
Default. MFIs rated 'D' are in default. The 'D' rating also will be used upon the filing of a
D
bankruptcy petition or the taking of a similar action if payments on an obligation are
jeopardized.
NOTE: CRAB APPENDS NUMERICAL MODIFIERS 1, 2, AND 3 TO EACH GENERIC RATING CLASSIFICATION FROM AA THROUGH C CC . T H E
MODIFIER 1 INDICATES THAT THE OBLIGATION RANKS IN THE HIGHER END OF ITS GENERIC RATING CATEGORY; THE MODIFIER 2 INDICATE S

A MID -RANGE RANKING ; AND THE MODIFIER 3 INDICATES A RANKING IN THE LOWER END OF THAT GENERIC RATING CATEGORY.

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CRAB I CR AB Ratings on Corporate Cr edit Digest I 24 December 2015
 TMSS

 The Rating Committee of CRAB is the final authority to award a rating. The Rating Committee of CRA B is
comprised of external independent persons who are not members of the Board of the Company and they ensu r e
the independence of rating

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