The Caribbean Information and Credit Rating Services Limited (CariCRIS) has reaffirmed the assigned issuer/corporate credit ratings for Access Financial Services Limited.

The ratings are CariBB+ (Foreign Currency Rating); CariBBB- (Local Currency Rating) on the regional rating scale; jmBBB (Foreign Currency Rating); and jmBBB+ (Local Currency Rating) on the Jamaica national rating scale.

The regional scale local currency rating indicates that the level of creditworthiness of this obligor, adjudged in relation to other obligors in the Caribbean is adequate, and the regional scale foreign currency rating indicates below-average relative creditworthiness. The national scale ratings indicate that the level of creditworthiness of this obligor, adjudged in relation to other obligors in Jamaica is adequate.

CariCRIS has also assigned a stable outlook on the ratings. The stable outlook is based on the expectation of continued good financial performance of the group. This is underpinned by sustained growth in the overall loans and advances portfolio supported by the implementation of its digital transformation initiatives, continued promotional efforts and good economic conditions in its main market, Jamaica. 

CariCRIS expects AFS to maintain good asset quality, adequate capitalization and liquidity metrics over the next 12 to 15 months, comfortably meeting any debt obligations as they come due.

The ratings reflect AFS’ continued favourable market position in the microfinance sector supported by its long history and good brand equity. 

The continued growth in the Group’s total earning asset base alongside good asset quality, despite a deterioration, and improved financial performance, characterized by income and profitability growth, further bolster the ratings. Moreover, AFS’ adequate capitalisation and liquidity levels together with its adequate governance structure and risk management practices also drive the ratings.

Nonetheless, AFS’ small size and high-risk business model with little diversity in revenue streams coupled with concentrated sovereign risk exposure, albeit good economic conditions in Jamaica, constrain the ratings and can temper AFS’ growth potential and overall profitability in the year ahead.

Rating Sensitivity Factors

Factors that could individually, or collectively lead to an improvement of the ratings and/or outlook:

• An improvement in the credit risk profile of the Government of Jamaica
• Improving business conditions over the next 12-15 months, thereby leading to growth in total asset base > 18% and/or sustained earnings growth > 10% over the next 2 years
• Diversity in revenue streams through the successful launch of new products or new business lines

Factors that could individually, or collectively lead to a lowering of the ratings and/or outlook:

• A deterioration in the credit risk profile of the Government of Jamaica
• Change in AFS’ debt/ TNW or TNW/Total Assets ratios > 1.5 times or < 25% respectively
• A sustained decrease in yield from interest-earning assets > 600 basis points over the next 12-15 months, thereby leading to a compression of the net interest spread earned
• A fall in AFS’ net loans and advances by more than 20%
• A deterioration in AFS’ Gross NPLs/Gross Loans ratio to > 8%.

Access Financial Services Limited (AFS or the Group) is a microfinance entity incorporated in Jamaica in 2000. In 2009, AFS became the first company to list on the Junior Market of the Jamaica Stock Exchange (JSE), thus making it subject to all laws applicable to issuers of listed securities in Jamaica, as well as the regulatory authority of the JSE and the Financial Services Commission (FSC). 

AFS’ principal activity is to provide retail lending to micro-entrepreneurs and individuals underserved by traditional financial services providers in Jamaica. In keeping with its long-term growth strategy, AFS acquired 100% shareholding of its subsidiary, Embassy Loans Incorporated (Embassy) in 2018. Embassy is a consumer finance company located in Florida, United States of America (USA) and licensed under the Florida Consumer Finance Act.

The company offers auto equity loans in Florida. Notably, on July 29, 2022, AFS was the first company to be approved as a licensed microcredit institution by the Bank of Jamaica (BOJ), under the Microcredit Act 2021. As at March 2024, the 2 largest shareholders of AFS were Springhill Holdings Limited1 (47.33%) and PROVEN Investments Limited (24.72%).

AFS operates an island-wide retail network of 15 branches in Jamaica and has disbursed in excess of J $15 billion in loans since inception to the Microfinance Sector, a sector which contributes to the economic growth and development of the island. 

As a non-deposit-taking institution, funding is derived from debt financing through non-governmental financial institutions and the Development Bank of Jamaica (DBJ), which is 100% owned by the Government of Jamaica (GOJ).

AFS reported total assets of J $6.7 billion as at March 2024 and total income of J $2.3 billion in FY20242, of which 9.5% of total assets and 15.6% of total income were derived from the embassy.