Microfinance sector has been growing at a handsome growth rate during the past few years as its number of savers reached 30 million in 2018, with their savings valued at Rs. 204 billion, according to an estimate.
As per statistics updated by Pakistan Microfinance Network, the number of micro-savers surged to 29.9 million by the end of September 2018 with the addition of 4.1 million new savers in the quarter of July to September of the same year.
Microfinance banks offer saving rates of 10 to 12 percent on different saving accounts and products (such savings certificate), which is double than the standard rate offered by conventional banks, hence, succeeding in attracting a large number of savers who invest their money to earn a comparatively better profit.
Interestingly, the average size of the saving values is not higher and stands at just Rs. 6,821 that means that the penetration of the microfinance banks has been increased which stood at an impressive level of 32.5 percent by the end of September 2018.
On the flip side, microfinance banks charge higher interest rates than conventional banks which is usually three times more than the saving rates they offer. The handsome difference between saving rates and interest rates not only makes the case feasible for microfinance banks to operate in Pakistan but also in expanding their operations and booking handsome profits.
In 2017, banks owned by telecom operators made handsome profits including U Microfinance Bank, Telenor Bank, and Mobilink Microfinance Bank. These banks are also operating their branchless banking services and have dominant positions in the market.
Besides, other banks such as Khushhali Microfinance Bank, FINCA Microfinance Bank, Akhuwat, and Advans Microfinance Bank are also contributing well to the sector’s growth.
PMN set a target to increase the savers’ base to 50 million by the end of 2020, which sounds ambitious for a two year period. On average, banks’ depositors grow nearly 4 million per quarter.
The number of branches of microfinance banks increased to 4,000 whereas the Gross Loan Portfolio reached Rs. 254 billion by the end of September 2018.