U Microfinance Bank Set to Expand Its Branch Network to 200

The management of U Microfinance Bank plans to expand its branch network by 60 which will increase its overall touch-points to 200 in more than 100 cities across Pakistan.

According to the rating released by JCR-VIS Credit Rating Company Limited, the bank has set a target to open 60 branches in the ongoing year which will allow the bank to achieve further geographical diversification.

The bank has floated a TFC to raise funds of Rs. 4 billion through the parent company, Pakistan Telecommunication Limited.

This capital injection will enable the bank to further capitalize on the growth opportunities possible in Pakistan’s microfinance sector.

JCR-VIS Credit Rating Company Limited (JCR-VIS) has upgraded the short-term entity ratings of U Microfinance Bank Limited (UMBL) from ‘A-2’ (A-Two) to ‘A-1’ (A-One).

Over the last three years, advances portfolio has depicted strong growth with the same increasing from Rs. 913 million at the end of 2015 to Rs. 17.4 billion by December 2018. Increase in loan portfolio is a function of improved productivity indicators and expansion in the branch network.

The livestock and crop loan remains the forte of the bank with the diversification in microenterprise and related loans. Infection in the financing portfolio has increased on a timeline basis but continues to remain within manageable levels despite significant growth in financing portfolio.

The bank’s profit before tax has grown at a CAGR of 201% over the last three years on the back of an increase in financing portfolio. Growing profitability levels, as has been witnessed in 2017 and 2018 along with an incremental benefit of Tier 2 capital is projected to support growth plans of the bank.

The funding strategy of UMBL entails a mix of deposits and borrowings to finance growth in the bank’s operations. Improvement in deposit profile (including depositor concentration and cost of deposit) remains a key focus area of the management.

U Microfinance Bank is operating a branchless banking service under the banner of U Paisa in collaboration with Ufone (Pak Telecom Mobile Limited). The service is offered at nearly 45,000 agent locations across Pakistan.