Telenor Microfinance Bank will receive a capital injection to the tune of $15 million this month from the sponsors as part of the business plan finalized by its board of directors.
According to a quarterly report, the business plan envisages an equity injection of $30 million, of which $15 million is expected to be received in November 2022 and the remaining in 2023.
With the upcoming equity this month, the bank’s CAR is expected to increase from 10.16 percent in September 2022 to above 20 percent, the report further said.
Also, this amount will absorb the account losses of the bank which surged to nearly Rs. 6 billion by end of September 2022. The banking company’s accumulated loss also stood at a colossal amount of Rs. 44 billion by end of the third quarter of 2022.
Telenor Microfinance Bank already received a capital injection of $22 million from its stakeholders in February this year. The series of capital injections from the sponsors were part of the overall plan which included the contribution of $71 million from the stakeholders during the period of 2022-2024.
The business plan and strategy also focus on the expansion of digital platforms of the microfinance banks to grow the business and rationalize cost structure to achieve profitability going forward.
The board and the management of the bank are looking for setting up a Digital Retail Bank upon the approval of a license request from the State Bank of Pakistan (SBP). The bank is also working to transform its brick-and-mortar while planning to reduce its branch network as minimum as possible. The bank’s management hopes that it will regain its profitability by end of 2024.
CEO, M. Mudassar Aqil noted that Telenor Microfinance Bank/ Easypaisa is fortunate to have a dream team of investors who not only bring capital, technical expertise, and domain knowledge to the table but most importantly believe in the future of Pakistan’s potential in digital finance. Their commitment is evident from the $290 million foreign direct investment (FDI) already invested in the business, with an additional commitment to investing $30 million over the next 12 months to help pursue the Bank’s digital-first strategy. The first tranche of this investment will be received in November 2022.
Both shareholders remain excited about the potential for growth in the market and have joined hands in the quest to establish the largest digital financial services player to support the joint vision of banking the unbanked with state-of-the-art technology on inclusive principles.
The bank also engaged three banks to sell off its major shares of Telenor Pakistan to any prospective buyer including United Bank Limited and Askari Bank Limited. MCB Bank, another bank, revoked its plan to further work on the deal.
The bank is jointly held by Telenor Pakistan B.V, a joint stock company based in Amsterdam with 55 percent shareholding, and Alipay (Hong Kong) Holding Limited with 45 percent shareholding.
The holding company of Telenor Pakistan B.V. is Telenor ASA, Norway, while the holding company of Alipay (Hong Kong) Holding Limited is Ant Group Co. Ltd. China (Formerly Ant Small and Micro Financial Services Group Company Limited).
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Zahid