Trust Modaraba Delivers Resilient Performance Despite Challenging Economic Conditions
Trust Modaraba maintained a profitable operating performance during the financial year ended June 30, 2026, despite a difficult business environment marked by geopolitical uncertainty, inflationary pressures and changes in lending rates. According to its Annual Report 2026, the Modaraba adopted a cautious financing strategy while continuing to focus on diversified, Shariah-compliant financial activities. 284038
The Modaraba reported total income of Rs. 68.21 million for FY2025-26, compared with Rs. 72.58 million in the previous year. Profit after tax stood at Rs. 11.38 million, while earnings per certificate were recorded at Rs. 0.38. Total assets increased to approximately Rs. 405.52 million, while total equity rose to Rs. 360.13 million, supported by internal capital generation and retained profits.
Diminishing Musharakah Remains a Key Business Segment
Diminishing Musharakah continued to play a central role in Trust Modaraba’s financing portfolio. The annual report states that this mode of financing contributed around 68% of gross revenue during the year. The Modaraba also generated income through dividends and capital gains, while other income included gains on asset disposal, documentation charges and profit on bank deposits.
The financing strategy remained focused on prudent credit assessment and diversification. During the year, disbursements amounted to Rs. 135 million, with vehicle financing representing a major area of activity. Management noted that this market provides an opportunity to serve customers who may face financing limitations from conventional banks. Going forward, the Modaraba intends to expand its presence in the agriculture sector to pursue additional earnings opportunities. 284038
Conservative Approach Amid Market Volatility
Trust Modaraba’s management maintained a cautious stance in response to geopolitical and economic uncertainty. The investment portfolio faced pressure as market sentiment weakened, resulting in an unrealized loss of Rs. 3.09 million, compared with an unrealized profit of Rs. 1.91 million in the previous year. The report describes this change as a non-cash mark-to-market adjustment. 284038
Despite higher input, fuel and general inflationary costs, operating expenses remained broadly stable. Management attributed this resilience to resource optimization and disciplined operational management.
Strong Capital Position and Stable Credit Profile
The Modaraba ended the year with total assets of Rs. 405.52 million and net equity of Rs. 360.13 million. Its six-year financial data also shows the continued growth of Diminishing Musharakah/Musharakah financing, which increased to Rs. 237.10 million in 2026 from Rs. 27.69 million in 2021. 284038
VIS Credit Rating Company reaffirmed Trust Modaraba’s ratings at BBB+ for the long term and A2 for the short term, with a stable outlook. The ratings reflect the Modaraba’s established position, Shariah-compliant financing portfolio, adequate liquidity and conservative leverage. 284038
No Dividend Recommended
Despite remaining profitable, the Board decided not to recommend a dividend for the financial year under review. The decision was taken after considering the Modaraba’s circumstances and future business requirements. 284038
Focus on Digital Transformation and Recoveries
Looking ahead, Trust Modaraba expects macroeconomic conditions and geopolitical volatility to remain important challenges. Nevertheless, management believes the institution is positioned to pursue sustainable growth.
One of its key priorities is the modernization of credit distribution channels through digital technology. The objective is to reduce operational overheads and speed up financing processes. Management also plans to maintain a strong focus on recoveries from litigated accounts and seek early settlements. 284038
The year also marked an important leadership transition. Following the resignation of founding member and Chief Executive Mr. Basheer A. Chowdry, the Board appointed Mr. Muhammad Yasin as Chief Executive Officer, providing continuity and strategic stability. The Board also appointed Mrs. Kauser Safdar as a non-executive female director to fill the casual vacancy.
Commitment to Shariah Compliance
Shariah compliance remains a central element of Trust Modaraba’s operations. The Shariah Advisor’s report states that the Modaraba’s policies, agreements and business transactions were in conformity with Shariah principles during the year. An independent assurance engagement by ASAS Shariah Advisory Services also concluded that the financial arrangements, contracts and transactions were, in all material respects, compliant with the applicable Shariah principles and requirements. 284038
Outlook
Trust Modaraba enters the new financial year with a cautious but forward-looking strategy. While economic uncertainty, energy prices, inflation and geopolitical developments could continue to affect profitability and financing demand, management plans to strengthen credit assessment, improve recoveries, expand selected financing sectors and accelerate digitalization.
Overall, the FY2026 annual report presents a picture of an institution prioritizing financial discipline, risk management, Shariah compliance and sustainable growth over aggressive expansion. Its stable capital base, diversified financing portfolio and focus on operational efficiency provide a foundation for navigating the uncertain economic environment ahead.
