Pakistan Microfinance Investment Company Limited ('PMIC' or the 'Company'), incorporated in August 2016, is licensed to carry out Investment Finance activities as a Non-Banking Financial Company (NBFC) under NBFC Rules 2003 and NBFC Regulations 2008.

The establishment of PMIC is one of the key milestones in the National Financial Inclusion Strategy (NFIS) launched in May 2015. NFIS is targeted towards helping the poor segments of society through financial inclusion.

The business activities of PMIC can be divided into two categories: i) Financing and Investing Solutions and ii) Microfinance Plus Products. The latter entails the design and implementation of new financing products aligned with the needs of end clients, where PMIC also provides grant funding for technical assistance. During CY24, PMIC’s loans to lending institutions served 672,962 microfinance clients, of which 88% were women and 37% were youth. As of CY24, PMIC’s portfolio composition reflected a sectoral focus on trade and manufacturing (39.0%), services (34.0%), and agriculture and livestock (22.0%), while the remaining 5.2% was allocated to education, renewable energy, housing, and consumption segments.

PMIC was created by the Pakistan Poverty Alleviation Fund (PPAF), Karandaaz Pakistan and the KfW, a German government-owned development bank. The sponsors have the shareholding of 49%, 38% and 13% respectively.

The ownership structure has remained stable since its inception.

The business acumen of sponsors is considered strong, as these are associated with the same sector and share the same development mandate.

The strong sponsors strengthen the financial muscle of PMIC, enabling it to meet its objectives of enhancing the liquidity of the microfinance sector.

The Board of PMIC consists of six members, including two nominee directors from Pakistan Poverty Alleviation Fund, and one nominee each from Karandaaz Pakistan and KfW Development Bank. The remaining members comprise one independent director and one executive director. Notably, the Board is chaired by an independent director, ensuring an added layer of independent oversight.

The Board is chaired by Mr. Naveed A. Khan, a leading banker, carrying more than 30 years of experience in various senior positions. Along with the PMIC, he is heading the Sharmeen Khan Memorial Foundation as the CEO. Before this, he served as President of Faysal Bank Limited and ABN Amro Bank Pakistan Limited and has served in senior management positions at the Bank of America, Pakistan. Mr. Naveed Goraya, the representative of Karandaaz Pakistan, is also serving as the Chief Investment Officer of Karandaaz Pakistan. Dr. Markus Aschendorf is representing KfW on the Board.

To ensure effective oversight, the Board has constituted three key committees: the Board Audit Committee (BAC), the Board Risk Committee (BRC), and the Board Human Resource Committee (BHRC). During the year, a total of fourteen committee meetings were convened to support timely and informed strategic decision-making,  comprising 4 meetings of the BAC, 5 of the BRC, and 5 of the BHRC.

The external auditors, A.F. Ferguson and Co. (a member firm of the PwC network) have expressed an unqualified opinion for the year ended December 31, 2024. The Company has an independent internal audit department that reports directly to the board audit committee. This department is led by Mr Asif Rashid. This department regularly reviews the effectiveness of internal controls.

PMIC's organizational structure is mainly divided into nine departments i.e.; (i) Portfolio Management, (ii) Sector Development, (iii) Corporate Finance and Investment Banking, (iv) Finance and Accounts, (v) Human Resources, (vi) Legal & Procurement,  (vii) Risk Management & Compliance (viii) Internal Audit & (ix) People Communication and Business development.

Mr. Yasir Ashfaq has been serving as the CEO of the Company since August 2017. He brings nearly three decades of diverse experience in commercial and investment banking. His core areas of expertise include policy and strategy formulation, corporate finance, portfolio management, treasury operations, financial reporting, development finance, risk management, institutional development, and the design of innovative financial products and delivery mechanisms. He is a Fellow Member of ICMA and also has a Master's in Economics from the University of Sydney. He is supported by a team of professionals. Ms. Neelum Aamir, a qualified Chartered Accountant, rejoined PMIC as CFO in February 2025. She is a seasoned professional with over 18 years of diverse experience in financial management, audit, corporate compliance, and regulatory oversight. Ms. Neelum Aamir previously served PMIC as Head of Internal Audit (2017-2021), where she was instrumental in establishing the Internal Audit Department and developing its foundational policy framework, strategic roadmap, and audit plan.

To ensure the effectiveness of the decision-making process, the management has established four key committees: i) Asset and Liability Committee (ALCO), ii) Management Committee (MANCOM), iii) Management Risk Committee (MRC), and iv) IT Steering Committee (ITSC). Each committee comprises the CEO, CFO, and the respective heads of departments, ensuring cross-functional representation and informed decision-making.

The Company's core ERP system is Oracle-based Bespoke, which caters to business functionalities, reporting, and GL transactions, offering enhanced data integration, process automation, and real-time financial visibility. 

The Company has instituted a structured risk management framework, which includes, among other elements, an internal credit risk rating mechanism for borrowers, aligned with their credit history and risk absorption capacity, as well as formal site visits by the PMIC team to assess real-time operational status and performance efficiency. The presence of a tier-wise loan approval mechanism, supported by predefined approval criteria for the Management Risk Committee and the Board Risk Committee, has supplemented the Company’s risk management framework. As part of Challenge Fund Round II, PMIC, in partnership with Qarar Pakistan, progressed on the implementation of the Digital Credit Scoring Model (DCSM). The model, developed by Qarar, was initially pilot-tested with two borrowers. Upon completion of the refinement phase, the DCSM will be offered commercially to all borrowers to support improved credit evaluation and lending decisions.

Pakistan’s economy has previously contended with significant macroeconomic headwinds; however, signs of stabilization have emerged in the first half of FY25. This period has been characterized by a gradual reduction in policy rates and a notable decline in inflation, creating a more favorable environment for economic activity. These positive developments are expected to offer crucial support to several sectors, including microfinance. As of the latest data, the total Gross Loan Portfolio (GLP) of the microfinance sector stands at approximately ~PKR 598bln, comprising contributions from Microfinance Banks (MFBs), Microfinance Institutions (MFIs), and Rural Support Programs (RSPs). MFIs and RSPs collectively account for around ~23% of the total GLP. In calendar year 2024 (CY24), the number of active borrowers under MFIs and RSPs recorded a modest growth of approximately ~1.17%. Concurrently, the average loan size increased to ~PKR 44,762, up from ~PKR 38,777 in CY23. Portfolio quality also demonstrated improvement, with the infection ratio declining to ~1.57% in CY24, compared to ~2.80% in the previous year.

PMIC has been established as an apex institution for the microfinance industry.

The Company has multiple product verticals which include Renewable Energy, Micro-Insurance, Education, Agri & Enterprise Value Chains, Digital Finance, Enterprise Development, Women and Graduation Out of Poverty under the umbrella of Microfinance Plus Products.  During CY24, gross markup increased to PKR 10.5bln (CY23: PKR 8.4bln). This increase was attributable to increased financing portfolio and income from treasury operations. Further segregation reveals that 90% of this total revenue is earned against lending to microfinance institutions (core operations of PMICL). During 1QCY25, markup revenue stands at PKR 2.9bln. The asset yield witnessed a decline during CY24, primarily due to the Company's short-term placement in government securities near the reporting date.

During CY24, PMIC’s net mark-up income improved to PKR 2.4bln (CY23: PKR 2.2bln), reflecting growth in core revenue streams. However, the Company’s net profitability was adversely impacted by higher provisioning and impairment losses on financial assets. Mark-up expenses increased to PKR 8.0bln in CY24 (CY23: PKR 6.2bln). Despite this, the profitability outlook showed signs of recovery in 1QCY25. The Company reported net mark-up income of PKR 726mln, supported by an improvement in spread income amid a declining interest rate environment, which cumulatively dropped by approximately 1,000bps over the past few quarters. This translated into a profit after tax (PAT) of PKR 327mln in 1QCY25, along with a notable improvement across other profitability metrics. The non-mark-up expense-to-revenue ratio increased to 24.5% in CY24 (CY23: 21.7%), driven by inflationary pressure on operating costs and a reduction in total income. Management continues to pursue cost rationalization strategies in line with the Company’s growth trajectory. Notably, PMIC booked a general provision of PKR 1.2bln during CY24.

PMIC has entered into a risk participation agreement with the U.S. International Development Finance Corporation (DFC) on new disbursements, with a maximum risk coverage of USD 30mln. Additionally, negotiations with other development agencies are currently underway. These arrangements are expected to augment the Company’s overall risk appetite and support future portfolio growth. Looking ahead, PMIC anticipates healthy portfolio growth over the next two years. This expansion is expected to be supported by prudent credit practices aimed at preserving asset quality, along with deeper engagement with existing partners and the onboarding of new clients within its target market. To meet the evolving funding requirements of the microfinance sector, PMIC continues to develop innovative and environmentally sustainable financial products. In line with market demand and diversification objectives, PMIC has initiated the provision of Shariah-compliant financing to both existing and new Microfinance Providers (MFPs)

PMIC's gross lending to financial institutions amounts to PKR 31.8bln as of end-Dec24 and PKR 29.1bln as of Dec’23 (end-Mar25: PKR 30.8bln). The top five lenders include: i) Kashf Foundation (13.59%), ii) Rural Community Development Program (12.3%), iii) JWS Pakistan (12.29%), iv) ASA Pakistan Limited (11.23%), and v) Damen Support Programme (9.71%) as at end-Mar'25. The Company has a total of 25 borrowers, and the top 10 institutions account for 89.5% of the portfolio. The improvement in the infection ratio of PMIC has been observed and stood at 0.8% in 1QCY25 (CY24: 1.6%). 

PMIC follows a conservative investment policy, with surplus funds primarily allocated to government securities and placements with highly rated counterparties. The Company's long-term investments increased from PKR 622mln in CY23 to PKR 758mln in CY24. A significant rise was observed in short-term investments, which surged from PKR 1.2bln to PKR 151bln during CY24, primarily driven by the investment in PIBs. PMIC took substantial exposure in government securities for a shorter period, capitalizing on the availability of subsidized short-term funding from commercial banks. This strategy not only allowed the Company to optimize market risk in line with its overall risk appetite but also provided a hedge against short-term interest rate volatility.

The funding base of the Company (end-Dec24: PKR 178bln, end-Dec23: PKR 24.9bln) is mainly comprised of borrowing from financial institutions. In CY24, Commercial funding escalated by 31%. The short-term borrowings have increased significantly and clocked at PKR 149.9bln during CY24. PMIC’s funding profile is anchored in a mix of commercial bank borrowings and subordinated loans extended by its institutional sponsors. Over the long term, the Company’s liquidity position is supported by recovery trends from clients, reverse repo arrangements, and investments in government securities, which collectively underpin its ability to manage liquidity risk effectively.

The equity base of the company witnessed an increase to PKR 9.5bln as of end-Dec24 (end-Dec23: PKR 8.8bln), with a share capital of PKR 5.9bln sponsored by the three shareholders. As at end March 25, the equity base of the Company increased to PKR 9.9bln, which includes an unappropriated profit of PKR 3.9bln.