The microfinance sector has been very active in Pakistan for the past two decades catering to the financing needs of small to middle-sized entrepreneurs, farmers, and traders in urban and rural areas. The growth in this sector has been phenomenal, with a significant contribution to the economy despite various challenges and issues.
The sector is being driven by microfinance banks and microfinance institutions. Here are the introductions and details of the profit and loss of the leading microfinance banks, which updated their financial results quite recently.
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HBL Microfinance Bank
HBL Microfinance Bank has emerged as the most profitable microfinance bank in Pakistan. It is a subsidiary of Habib Bank Limited. The microfinance bank reported a profit of Rs. 1.55 billion in 2021 against the profit of Rs. 574 million reported in 2020. This is the all-time high profit made by the bank.
The bank was being operated under the brand of First Microfinance Bank, which was renamed last year. The bank has actively explored its market in rural and agriculture lending, resulting in staggering growth in profitability.
HBL Microfinance Bank’s net assets surged to over Rs. 10 billion, while its deposits stood at Rs. 6.6 billion by the end of 2021.
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U Microfinance Bank
U Microfinance Bank is the second most profitable bank in its sector. It reported a profit of over Rs. 1.11 billion in 2021 against the profit of Rs. 0.906 billion reported in 2020. The bank is the subsidiary of Pakistan Telecommunication Limited (PTCL). The bank is operating the largest network of more than 200 branches across Pakistan. The bank planned to add 80 more branches in 2022 and 2023.
U Bank is Pakistan’s second microfinance bank that launched Islamic microfinance banking after the NRSP Microfinance Bank.
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Mobilink Microfinance Bank
Mobilink Microfinance Bank maintained a solid profitability spree in 2021. The bank posted a profit of Rs. 727 million in 2021 as compared to a profit of Rs. 530 million, showing an impressive growth of 37 percent or Rs. 197 million year-on-year.
The bank also widened its branches network to over 100 branches along with branchless agents of 0.164 million operating across the country. It is tapping into customers’ segments targeting urban and rural markets alike with an aggressive focus on digital banking options.
The bank maintained the highest base of active wallet account holders in the country. Mobilink Microfinance Bank is the subsidiary of VEON and Jazz is the sister organization.
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Khushhali Microfinance Bank
Khushhali Microfinance Bank Limited is the largest microfinance bank in Pakistan with a network of 239 branches and booths across the entire country. The bank’s profit declined to Rs. 572 million in 2021 from Rs. 1.74 billion reported in 2020.
Founded in 2000, KMBL has extended its services to those at the bottom of the pyramid in both rural and urban areas of Pakistan. The aim is to provide a strong channel of access to productive resources including micro-financing services, financial literacy, and training on sustainable livelihood.
In 2021, KMBL was able to expand its outreach with 201 provincial branches, 5 SME branches, 18 permanent booths, and 15 post office booths, building up the largest network of microfinancing institutes in Pakistan. Currently, Khushhali Microfinance Bank Limited is working on digitally transforming its products and services as well as introducing a new portfolio of products for more customized business needs.
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Pak Oman Microfinance Bank
Pakistan Oman Microfinance Bank reported a profit of Rs. 215 million in 2021. The bank recovered from losses of Rs. 179 million in the previous year.
Profitability of the bank took an upward trend primarily owing to increasing spreads evident from the growth in markup income and higher fee and commission income earned. The number of active loans observed a reduction due to management’s preference to deal with borrowers with sound repayment capacity, especially during the COVID-19 time.
The bank increased its network reach to 76 branches by adding ten branches in 2021. In the ongoing year, the institution plans to launch around 26 branches in the North of the country, including Islamabad, Peshawar, Skardu, and Gilgit Baltistan.
Pak Oman Microfinance Bank Limited commenced its operations in May 2006. In 2016, LOLC Pvt. Ltd. (Singapore), a member company of LOLC Group Sri Lanka, injected equity into the bank and attained 50.1 percent of the bank’s shareholding. Other than LOLC Pvt. Ltd., the Sultanate of Oman, through the Ministry of Finance, holds 33.23 percent shares, and Pak Oman Investment Company (POICL) holds 16.67 percent shares of the bank.
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Advans Microfinance Bank
Advans Microfinance Bank posted a profit of Rs. 53.39 million in 2021 against a loss of Rs. 256 million reported in 2020.
During the year 2021, the bank witnessed strong business growth coming from the economic recovery after the easing of business conditions and the COVID-19 pandemic, which improved the business situation of the bank’s beneficiaries.
The target for 2022 is to accelerate the growth, which will be achieved by focusing on all the key factors, especially productivity in numbers, an increase in the average loan size, recruitment of CROs, and dedicated efforts to circumvent the increase in the cost of risk expected while we exit the crisis period, according to the bank’s financial report.
Further, the bank plans to open 8 branches, 5 in the first semester and the remaining in the last quarter of the year.
The bank plans to apply to SBP for a national license after increasing the capital to the required level as mentioned in the regulations, which will enable the bank to expand its network to other parts of the country, the report stated.
The bank’s loan and deposit portfolios are expected to grow significantly in 2022 surging to Rs. 4.3 billion and Rs. 3.6 billion by the end of the year.
Advans Microfinance Bank is owned by Advans SA, which is incorporated in Luxembourg with its operating headquarters in Paris.
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Sindh Microfinance Bank
Sindh Microfinance Bank posted a profit of Rs. 27 million in 2021 compared to the profit of Rs. 52 million reported in 2020, showing a decrease of 48 percent. The bank offers customized loans in agriculture, SMEs, fisheries, and livestock sectors.
Sindh Microfinance Bank Ltd started its operations on May 3, 2016, from its Karachi Branch. It is a wholly-owned subsidiary of Sindh Bank.
The bank is focusing on serving the underprivileged segment of society by introducing products easily accessible to those unable to avail of banking services of conventional financial institutions. The bank plans to actively promote micro-entrepreneurship by conducting awareness campaigns designed and aimed predominantly at womenfolk.
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Apna Microfinance Bank
Apna Microfinance Bank Limited did not update its annual results. During nine months, the bank posted a profit of Rs. 9.339 million compared to a profit of Rs 35.430 million reported in the corresponding period.
The bank is currently undergoing a process of raising the issue of right shares at the Pakistan Stock Exchange being a listed company.
The bank has been operating at the national level in Pakistan through 121 business locations comprising 116 branches and five service centers. It commenced its operations in December 2004.
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NRSP Bank
NRSP Microfinance Bank Ltd reported a significant loss of Rs.1.23 billion in 2021 against a profit of Rs. 793 million. The staggering change in the profitability depicted a worrisome financial performance for the bank, which was hit badly by the repeated waves of the COVID-19 pandemic and its impact on small-scale businesses.
The bank commenced its operations in March 2011. Gradually, it expanded its operations and doubled its equity within five years.
The bank is also privileged to be the 1st regulated provider of Islamic microfinance services in Pakistan. NRSP bank’s capital has been fueled by prominent organizational holdings, including International Finance Corporation, Acumen, KFW, and simultaneously, the National Rural Support Program itself.
The bank has managed to spread its longevity across the country by establishing about 155 branches across 53 districts. The bank is set to sell off its majority stakes to a potential buyer and received attention from a couple of commercial banks.
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FINCA Microfinance Bank
FINCA Microfinance Bank serves low-income Pakistanis, 70% of which are rural, that were hit hard by the COVID-19. 88% of its loan clients saw their incomes decrease or fully stop as a result of the pandemic and 47% were forced to reduce their number of daily meals. The downstream impact resulted into a challenging 2021 for FINCA Microfinance Bank.
The Bank that holds deposits of over PKR 25 billion at 130 branches, has now reported a profit of over PKR 360 Mn before tax, in the first quarter of 2022 and is also in the midst of digital transformation to improve efficiency, scale operations and to deliver greater value for customers.
FINCA Microfinance Bank is a subsidiary of FINCA Impact Finance that has been a global provider of responsible microfinance services for over 35 years. It has 3 million customers globally, served by 10,000 dedicated staff across 800 branches in 18 countries.
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Telenor Microfinance Bank
Telenor Microfinance Bank, one of the big names in the microfinance sector, maintained a staggering loss of Rs. 10.44 billion in 2021 as compared to the losses of Rs. 10.42 billion reported in 2020.
The bank, which introduced branchless banking in Pakistan, is going through a tough period of financial crisis despite its established network of operations across the country and innovative products and services for microfinance borrowers.
The bank’s main sponsor, Telenor Group, announced in 2021 that it is considering a potential sale of its 55 percent ownership stake in Telenor Microfinance Bank in Pakistan. The subsequent process to evaluate interested partners has been initiated.
Established as a Tameer Microfinance Bank, the microfinance bank attracted renowned foreign investors, including Ant Financials and AliPay.
