ASA Microfinance Bank (Pakistan) Limited

CREDIT RATING REPORT | Apr-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
29-Apr-25 A- A2 Stable Maintain -
17-Oct-24 A- A2 Stable Upgrade -
29-Apr-24 BBB+ A2 Positive Maintain -
04-Sep-23 BBB+ A2 Stable Initial -
About the Entity

ASA Microfinance Bank (Pakistan) Limited is a for-profit, Microfinance Bank, incorporated in 2008 under section 42 of the company’s ordinance, 1984. The Company received its MFB license for lending operations; however, after the recent implementation of Core Banking System and SBP's approval, ASA-MFB plans to proceed with mobilizing shariah compliant deposit and later on full conversion of the Bank into Islamic. The Company’s Board of Directors comprises seven members, which include two independent and five non-executive directors. Mr. Saeed Uddin Khan is the CEO of ASA-MFB and has over three decades of diversified and senior management experience in different banks and financial institutions.

Rating Rationale

ASA Microfinance Bank (Pakistan) Limited ('ASA-MFB’ or the 'Company') is a public unlisted company and is owned by ASA International (ASAI) Holding with an ownership stake of ~99.99%. ASA International is associated with ASA Group PLC which is listed in London Stock Exchange, and stands as one of the world's leading international microfinance institutions operating in 13 countries across Asia and Africa. ASA-MFB is regulated under the Microfinance Institutions Ordinance, 2001, and received SBP’s approval for initiating microfinance banking operations on November 13, 2023. Since then, the Bank has made notable strides towards operational readiness, including the upgrade of its Core Banking System, and is well-positioned for SBP’s final approval for shariah compliant deposit and later on full conversion of the Bank into Islamic. The Bank benefits from a well-structured governance framework supported by an experienced management team. Operational execution is further decorated by enhancements in backend systems and loan scrutiny mechanisms. ASA-MFB’s customer-centric lending model, which hinges on relationship-driven microfinance, continues to deliver growth and sound asset quality. The Bank reported advances of PKR ~24.8bln as of Dec'24 (Dec'23: PKR ~19.2bln), translating into a YoY growth of ~29%, and securing a ~3.7% market share in gross loan portfolio among microfinance banks and institutions, with 662,258 number of borrowers at the end-Dec'24. On the financial front, topline revenue increased to PKR ~12.5bln (CY23: PKR ~9.6bln), with PAT rising to PKR ~3.2bln (CY23: PKR ~2.5bln), underlining operational efficiency and cost controls. The Bank's equity base stood at PKR ~10.2bln, while its Capital Adequacy Ratio (CAR) remained strong at ~30%, well above the regulatory requirement. The Bank’s financial performance is underpinned by a diversified loan book, a strong capital position, and technological enhancements, reflecting its preparedness to scale operations and introduce deposit products in the near term.

Key Rating Drivers

The assigned rating is contingent upon the Company’s capacity to effectively mitigate emerging risks under the prevailing circumstances to preserve its business and financial risk profile. At the same time, the Company's ability to safeguard its performance indicators in a challenging business environment is crucial.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

ASA Microfinance Bank (Pakistan) Limited

rating analysis

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Profile
Structure

The MFB is 100% owned by ASA International Holding, which is based out of Mauritius. ASA International operates in South Asia, South East Asia, West Africa, and East Africa. In total, the Company has a presence in 13 countries.


Background

ASA Pakistan was granted a commencement of Business license on 28th July 2008 by SECP, as a microlending company. The Company is part of the ASA International group. The Company commenced operations as a Microfinance Bank in Nov’23 as a non deposit lending institution.


Operations

The principal activity of ASA-MFB is to provide micro-finance facilities to the underprivileged segments in Pakistan. As of Dec'24, the Company operates from its Head Office based in Karachi and has 82 branches and 298 Service centers across Pakistan. The branches are concentrated in Punjab and Sindh while there is one branch each present in Balochistan and KPK.


Ownership
Ownership Structure

ASA Microfinance Bank (Pakistan) Limited is a wholly owned subsidiary of ASA International (ASAI), incorporated under the Microfinance Institutions Ordinance, 2001. ASA International holds approximately 99.99% ownership of the bank.


Stability

The holding institution, ASA International, is one of the world’s largest international microfinance institutions providing small, socially responsible loans to low income entrepreneurs across Asia and Africa, most of whom are women. It has a wide network of 2028 branches in more than 13 countries.


Business Acumen

The group is one of the world’s largest international microfinance institutions providing small, socially responsible loans to low-income entrepreneurs, most of whom are women, across Asia and Africa.


Financial Strength

The group's total equity increased to USD 96.5mln as at 31 December 2024 from USD 76.6mln as at 31 December 2023, and the total funding increased to USD 499.3mln as at 31 December 2024 from USD 424.2mln at the end of 2023.


Governance
Board Structure

ASA-MFB’s Board of Directors (BoD) comprises six members, including two independent directors, four non-executive directors, and the CEO. The Board is chaired by Mr. Asif Yasin Malik.


Members’ Profile

Chris Low became Executive Chairman of ASA International Group plc on 1 November 2024, after serving as an INED since February 2023. With over 30 years in financial services, he has expertise in emerging markets, risk management, and digital transformation across Africa, Asia, and the Middle East. Rob Keijsers was appointed Interim CEO on 1 November 2024, having previously served as Chief Digital and Information Officer. With 15+ years in banking and IT, he specializes in digital transformation, post-merger integrations, and business operations.


Board Effectiveness

ASA-MFB has established three committees at the Board level: (1) Audit Committee, (2) Human Resources Committee, and (3) Risk Management Committee. Each committee is chaired by an independent director, strengthening governance oversight.


Transparency

EY Ford Rhodes, Chartered Accountants, are the external auditors of the company. They have expressed an unqualified opinion on the financial statements for CY24. The firm is categorized under 'A' in SBP’s panel of auditors. Additionally, ASA-MFB has an internal audit department to strengthen its control framework.


Management
Organizational Structure

ASA-MFB maintains a well-structured and streamlined organizational framework. The HR & OD, IT, and Admin departments report to the Deputy CEO, while all other departments, except for Internal Audit, report directly to the President/CEO. Upholding governance integrity and independence, the Internal Audit Department continues to report directly to the Board Audit Committee.


Management Team

The Management Team is headed by Mr. Saeed Uddin Khan, the President/CEO. He joined as CEO in 2019. Mr. Saeed brings 33 years of diversified senior management experience in both Conventional and Islamic Banking in different banks and financial institutions. He holds an MBA degree from IBA, Karachi.


Effectiveness

ASA-MFB has established multiple management-level committees at the senior management level to ensure effective governance and decision-making. These include the Management Committee (MANCOM), Information Technology Steering Committee (ITSC), Compliance Committee of Management (CCM), Credit Operations Committee (COC), Consumer Protection Committee (CPC), Corporate Social Responsibility Committee (CSRC), Risk Management and Compliance Committee (RMCC), Asset-Liability Committee (ALCO), Human Resource Management Committee (HRMC), and Disciplinary Action Committee (DAC).


MIS

To address evolving regulatory requirements, the Bank has implemented an advanced compliance management system to enhance regulatory compliances.


Risk Management framework

The MFB has Risk Management and Compliance departments which perform regular ‘surprise’ visits to branches to asses multiple risk and compliance parameters. Furthermore, there is a Risk Management Committee (RMC) at the Board level while a risk management manual is also present. There are also TORs defined for the RMC.


Technology Infrastructure

To modernize its technology landscape and address evolving regulatory and business demands, the Bank has upgraded its legacy Core Banking System to Temonos T24 and implemented advanced Compliance Management Systems. These initiatives enhance operational resilience, regulatory compliance, and Management Information System (MIS) generation, thereby supporting strategic growth and decision-making.


Business Risk
Industry Dynamics

Pakistan’s microfinance sector witnessed favorable conditions in CY24, supported by a decline in the State Bank of Pakistan’s (SBP) policy rate, which eased borrowing costs and improved liquidity. This monetary easing, coupled with expanding digital financial services, drove an increase in borrower acquisition, particularly among SMEs and low-income segments. Enhanced regulatory support and financial inclusion initiatives further strengthened sector growth. However, inflationary pressures and macroeconomic instability posed challenges. Overall, the year saw improved accessibility to microcredit, contributing to the sector’s resilience and expansion.


Relative Position

ASA-MFB has an Outstanding Loan Portfolio (OLP) amounting to ~USD 90mln at end-Dec’24, which constitutes a market share of ~3.7% as per the OLP of microcredit institutions in the country.


Revenue

The Company earned total revenue of ~PKR 9.9bln during CY24 as compared to ~PKR 7.4bln during CY23. The Company’s revenue stems from loan service charges (Interest income), risk coverage fees, and loan processing fees. The top line of the company is supported by profit earned on bank deposits.


Profitability

The Company earned a net profit after tax amounting to ~PKR 3.2bln during CY24 as compared to ~PKR 2.4bln during CY23.


Sustainability

As of December 2024, ASA-MFB's Outstanding Loan Portfolio (OLP) stood at approximately USD 90 million, accounting for around 3.7% of the total OLP of microcredit institutions in the country.


Financial Risk
Credit Risk

In CY24, ASA-MFB’s write-offs stood at approximately PKR 201 million in December, reflecting ASA-MFB's proactive approach to credit risk management.


Market Risk

ASA Microfinance Bank strategically allocates the majority of its deposits to savings accounts, resulting in negligible market risk. By adopting this approach, the bank effectively manages its exposure to market fluctuations and volatility.


Funding

The majority of the Company’s funding is from foreign sources and the Company has to hedge its risk through futures contracts with banks, resulting in exchange rate risk. Mobilization of deposits after the conversion to a microfinance bank may help with these risks in the future.


Cashflows & Coverages

The liabilities of ASA-MFB stood at ~PKR 20,585 million at end-Dec’24. ASA-MFB has a good amount of assets to cover its liabilities, standing at ~PKR 30,826 million at end-Dec’24.


Capital Adequacy

ASA-MFB’s equity base stood at ~PKR 10,240 million at end-Dec'24 compared with ~PKR 10,296 million at end-Dec’23. The current level of the equity base is considered good.
 
 

Apr-25

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ASA Microfinance Bank (Pakistan) Limited

financial summary

(PKR mln)

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Dec-24
12M		 Dec-23
12M		 Dec-22
12M
A. BALANCE SHEET
1. Total Finances - net 24,820 19,414 17,779
2. Investments 0 0 0
3. Other Earning Assets 1,854 1,180 1,215
4. Non-Earning Assets 4,152 2,811 3,732
5. Non-Performing Finances-net 0 (167) 130
Total Assets 30,826 23,238 22,856
6. Deposits 0 0 0
7. Borrowings 13,840 8,215 11,623
8. Other Liabilities (Non-Interest Bearing) 6,744 4,726 1,964
Total Liabilities 20,585 12,941 13,587
Equity 10,241 10,297 9,270
B. INCOME STATEMENT
1. Mark Up Earned 9,929 9,632 7,346
2. Mark Up Expensed (73) (2,188) (1,922)
3. Non Mark Up Income 8 (44) (6)
Total Income 9,865 7,401 5,417
4. Non-Mark Up Expenses (4,271) (3,127) (2,129)
5. Provisions/Write offs/Reversals (225) (273) (55)
Pre-Tax Profit 5,370 4,001 3,234
6. Taxes (2,156) (1,528) (1,172)
Profit After Tax 3,214 2,473 2,062
C. RATIO ANALYSIS
1. Performance
Portfolio Yield 54.0% 49.8% 45.2%
Minimum Lending Rate 19.6% 29.4% 25.1%
Operational Self Sufficiency (OSS) 217.6% 171.6% 177.5%
Return on Equity 31.3% 25.3% 26.0%
Cost per Borrower Ratio 6,684.5 5,121.5 3,808.5
2. Capital Adequacy
Net NPL/Equity 0.0% -1.6% 1.4%
Equity / Total Assets (D+E+F) 33.2% 44.3% 40.6%
Tier I Capital / Risk Weighted Assets 29.8% 45.4% 41.5%
Capital Adequacy Ratio N/A N/A N/A
Capital Formation Rate [(Profit After Tax - Cash Dividend ) / Equity] 31.2% 26.7% 31.4%
3. Funding & Liquidity
Liquid Assets as a % of Deposits & Short term Borrowings N/A 15.1% 38.6%
Demand Deposit Coverage Ratio N/A N/A N/A
Liquid Assets/Top 20 Depositors N/A N/A N/A
Funding Diversification (Deposits/(Deposits+Borrowings+Grants)) 0.0% 0.0% 0.0%
Net Advances to Deposits Ratio N/A N/A N/A
4. Credit Risk
Top 20 Advances / Advances 0.0% 0.0% 0.0%
PAR 30 Ratio 0.0% 0.3% 1.4%
Write Off Ratio 1.0% 0.4% 0.6%
True Infection Ratio 0.9% 0.7% 1.9%
Risk Coverage Ratio (PAR 30) N/A 383.2% 46.9%

Apr-25

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ASA Microfinance Bank (Pakistan) Limited

rating scale

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Apr-25

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ASA Microfinance Bank (Pakistan) Limited

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
    1. No director, officer, or employee of PACRA communicates the information acquired by him for use for rating purposes to any other person, except where required under law to do so. (Chapter III; 10-(5))
    2. PACRA does not disclose or discuss with outside parties or make improper use of the non-public information which has come to its knowledge during a business relationship with the customer. (Chapter III; 10-7-(d))
    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
    1. PACRA fulfills its obligations in a fair, efficient, transparent, and ethical manner and renders high standards of services in performing its functions and obligations. (Chapter III; 11-A-(a))
    2. PACRA uses due care in the preparation of this Rating Report. Our information has been obtained from sources we consider to be reliable, but its accuracy or completeness is not guaranteed. PACRA does not, in every instance, independently verify or validate information received in the rating process or in preparing this Rating Report. (Clause 11-(A)(p))
    3. PACRA prohibits its employees and analysts from soliciting money, gifts, or favors from anyone with whom PACRA conducts business. (Chapter III; 11-A-(q))
    4. PACRA ensures before the commencement of the rating process that an analyst or employee has not had a recent employment or other significant business or personal relationship with the rated entity that may cause or may be perceived as causing a conflict of interest. (Chapter III; 11-A-(r))
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  4. Independence & Conflict of Interest
    1. PACRA receives compensation from the entity being rated or any third party for the rating services it offers. The receipt of this compensation has no influence on PACRA’s opinions or other analytical processes. In all instances, PACRA is committed to preserving the objectivity, integrity, and independence of its ratings. Our relationship is governed by two distinct mandates: i) rating mandate - signed with the entity being rated or issuer of the debt instrument, and ii) fee mandate - signed with the payer, which can be different from the entity.
    2. PACRA does not provide consultancy/advisory services or other services to any of its customers or their associated companies and associated undertakings that are being rated or have been rated by it during the preceding three years, unless it has an adequate mechanism in place ensuring that the provision of such services does not lead to a conflict of interest situation with its rating activities. (Chapter III; 12-2-(d))
    3. PACRA discloses that no shareholder directly or indirectly holding 10% or more of the share capital of PACRA also holds directly or indirectly 10% or more of the share capital of the entity which is subject to rating or the entity which issued the instrument subject to rating by PACRA. (Chapter III; 12-2-(f))
    4. PACRA ensures that the rating assigned to an entity or instrument is not affected by the existence of a business relationship between PACRA and the entity or any other party, or the non-existence of such a relationship. (Chapter III; 12-2-(i))
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  6. Probability of Default
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