NRSP Microfinance Bank Limited (the 'Bank') was incorporated as a public limited company under the Companies Act, 2017, and obtained a license from the State Bank of Pakistan (SBP) on February 18, 2009, to operate nationwide as a microfinance bank under the Microfinance Institutions Ordinance, 2001, with operations commencing in March 2011. The Bank's registered office is at the 7th Floor, UBL Tower, Jinnah Avenue, Blue Area, Islamabad, while its principal place of business is in Rawalpindi.

The Bank was established to mobilize funds for providing microfinance banking and related services to low-income and underserved segments of society, aiming to mitigate poverty by granting access to financial markets at the micro level. It builds on the experience of its parent institution, NRSP, which in 2008 spun off its Micro Enterprise Development Program (MEDP) into this separate entity.

As of Dec'25, the Bank operates a nationwide branch network of 133 branches, including 37 Islamic branches, offering a wide range of financial services, including micro-lending, micro-insurance, Islamic banking products, and deposits to financially excluded individuals in both urban and rural areas across Pakistan. Branch count remained stable relative to Dec'24, reflecting a deliberate consolidation strategy. The Bank employed 2,830 staff as at December 2025 (Dec'24: 2,747), reflecting continued operational capacity-building.

During CY25, the Bank's ownership structure underwent a decisive transformation. NRSP—the majority and founding sponsor—increased its shareholding significantly from 57.40% to 81.75% through a rights issue, reinforcing its commitment to the Bank's strategic direction and financial stability. The remaining institutional shareholders, IFC (6.86%), PROPARCO (6.81%), and Acumen Fund USA (4.57%), saw proportional dilution in their respective stakes.

The concentration of ownership in NRSP provides the Bank with a decisive and supportive sponsor base. The rights issue executed in CY25—injecting PKR 2.0bln in fresh equity alongside a PKR 1.0bln advance against future rights shares—directly strengthened the Bank's capital position and underlines NRSP's long-term commitment. Continued support from international development finance institutions (IFC and PROPARCO) and impact investors (Acumen) further bolsters the Bank's reputational equity and access to concessional funding lines.

The National Rural Support Program (NRSP), a nonprofit organization founded in 1991, is the largest Rural Support Program in Pakistan by outreach, workforce, and development activities. It operates as an autonomous body with a government guarantee. IFC, a member of the World Bank Group, and Acumen, established in 2001, are globally recognized institutions committed to advancing financial inclusion and sustainable economic development in underserved communities.

The solid financial standing and strategic orientation of the Bank's sponsors continue to serve as a significant stabilizing factor. NRSP's enhanced equity position not only improved CAR but also sent a strong market signal about the Bank's long-term viability, supporting depositor and counterparty confidence.

The Bank is governed by a nine-member Board of Directors (BOD), which includes the President and Chief Executive Officer. The Board operates through four standing sub-committees: (i) Audit Committee, (ii) Remuneration & Compensation Committee, (iii) Operational Risk and Policy Committee, and (iv) Information and Technology Committee. These sub-committees ensure structured oversight of key governance domains.

The Directors are experienced professionals with exposure across diverse sectors, bringing significant breadth to the board. Dr. Rashid Bajwa, Chairman and CEO of NRSP, brings over 50 years of leadership in rural finance and public health policy. Mr. Riaz Khan Bangash, President and CEO of NRSP Microfinance Bank with an MBA and 40 years of experience, was appointed to the board in 2023 and serves as Executive Director. Mr. Fazlullah Qureshi, a former Federal Secretary, contributes deep public sector and regulatory expertise. Mr. Shoaib Sultan Khan, a pioneer of rural support programs, offers unparalleled development sector knowledge accumulated over five decades. Dr. Ayesha Khan, CEO of Acumen Pakistan, brings expertise in corporate strategy, development finance, and impact investing, and additionally serves as a Director of Bank Alfalah. Dr. Shahida Jaffrey, an educationist and development leader, brings five decades of experience in women's education, rural health, and rural development in Balochistan. Mr. Stephen Rasmussen, an independent director with 50 years of global microfinance and digital finance experience, adds critical international perspective. Mr. Jesse C. Fripp, CEO of Shining Rock Ventures and a nominee director with 40 years of experience, brings expertise in enterprise strategy and impact capital. Mr. Shahid Sattar, an independent director with over 41 years of multi-sector banking and corporate experience, strengthens governance through independent oversight; he resigned from the directorship of Insplast effective March 31, 2026.

The Board's sub-committees ensure effective oversight of the Bank's affairs and reinforce governance standards. The diversity of expertise across the board—spanning development finance, regulatory affairs, Islamic banking, and international microfinance—positions the Board to provide robust strategic guidance. Adherence to SBP's fit-and-proper criteria for directors is maintained.

M/S Yousuf Adil & Co. serve as the external auditors of the Bank. The auditor has issued an unmodified (clean) opinion on the financial statements for the year ended December 31, 2025. The financial statements are prepared in compliance with IFRS standards as adopted in Pakistan, SBP Prudential Regulations for Microfinance Banks, and the Companies Act, 2017.

The Bank's organizational structure is divided into eight functional departments, with each department head reporting directly to the President and CEO. The Head of Internal Audit reports independently to the Board's Audit Committee, ensuring an unimpeded audit function. This structure promotes accountability and facilitates effective decision-making.

The management team consists of experienced professionals with backgrounds across various sectors, including microfinance. Mr. Riaz Khan Bangash, an MBA graduate, serves as CEO/President with 38 years of experience. Mr. Asif Mahmood, a Chartered Accountant, is the CFO and Company Secretary with 18 years of experience. Mr. Obaid Riaz, holding an M.Com degree, is the Head of Business-Multan with 17 years of experience. Mr. Rehan Qazi, an EMBA graduate, is the Head of Business-Sindh with 22 years of experience. Mr. Shakil Ahmad, an MBA graduate, heads Business-North with 12 years of experience. Mr. Muhammad Zubair, an MBA graduate, is the Head of Business-Sahiwal, bringing 28 years of experience. Mr. Muhammad Rashid Rafique, an MBA holder, leads Business-Bahawalpur with 14 years of experience. Mr. Muhammad Hamid Anwar, with an M.Com degree, holds dual responsibilities as Head of Compliance and additional charge of Risk, backed by 17 years of experience. Mr. Muhammad Shafiq Khan, with an MCS degree, is the Acting Head of IT with 16 years of experience. Mr. Muhammad Naeem, a CMA/MS degree holder, is the Head of Internal Audit with 15 years of experience. Mr. Hafiz Muhammad Abad Irshad, with an MA in Islamic Studies, serves as the Resident Shariah Advisor with 15 years of experience. Mr. Muhammad Zeeshan Munir, an MBA graduate, leads Branchless Banking and Liability with 17 years of experience. Mr. Asif Shah Bukhari, an MBA holder, is the Acting Head of Operations, bringing 27 years of professional experience.

To ensure operational effectiveness, the Bank operates three management-level committees: (i) the Operations and Risk Management Committee (ORMC), (ii) the Asset Liability Committee (ALCO), which provides strategic direction on balance sheet management, and (iii) the IT Steering Committee. These forums facilitate structured deliberation on operational and financial risk matters.

Detailed Management Information System (MIS) reports are generated to support senior management in timely and effective decision-making. These reports cover key operational metrics including disbursements, repayments, recoveries, deposit mobilization, and regulatory compliance.

The Bank has instituted comprehensive policies for assessing the creditworthiness of loan applicants, which is central to its business model. The risk management function was reinforced in CY25 with the appointment of a new Head of Risk Management. The Bank utilizes key Operational Risk Management tools including Risk Control Self-Assessment (RCSA), Key Risk Indicators (KRIs), Risk Appetite Framework, and operational loss data. Stress testing is employed proactively to assess potential impacts, and RCSA exercises are conducted regularly across the institution.

The Bank uses Oracle Flexcube as its core banking software, implemented since 2012. A back-to-back support contract with Oracle ensures system stability and continuity. IT-related expenses stood at PKR 82.8mln in CY25 (CY24: PKR 106.6mln), with the decrease partly reflecting internal efficiency improvements.

Pakistan’s microfinance ecosystem comprises Microfinance Banks (MFBs), Microfinance Institutions (MFIs), Rural Support Programmes (RSPs), and FinTechs, with MFBs dominating (~77% of Gross Loan Portfolio (GLP)) and uniquely funded through customer deposits, highlighting their systemic importance. The sector entered FY25 in a phase of cautious recovery following recent macroeconomic shocks. By late CY24-Oct’25, macro conditions improved modestly, with easing inflation (~5.6%), stable currency, lower interest rates, and positive Gross Domestic Product (GDP) growth, while GDP growth is projected at ~2.6%–3.6% for FY26. Despite this improvement, the sector continues to face elevated credit risk, weak capital buffers, and uneven performance across players, with loan exposure largely concentrated in livestock and agriculture (~57%), increasing vulnerability to external shocks. During CY25, the sector reported advances of PKR 468bln (CY24: PKR 421.2bln), funded primarily through deposits and borrowings, resulting in an Advance-to-Deposit Ratio (ADR) of 65% (Dec’24: 63%). In comparison, NRSP Microfinance Bank’s ADR stands higher at 78.3%, indicating relatively more aggressive balance sheet deployment. While this supports earnings generation, it also reflects comparatively tighter liquidity buffers, thereby necessitating continued prudence in liquidity management and funding stability. The sector’s Capital Adequacy Ratio (CAR) remained weak at -1.2% (Dec’24: 2.6%). In contrast, NRSP Microfinance Bank has strengthened its capital position, with CAR improving to 16.59%, now comfortably above the regulatory requirement, reflecting a notable recovery in solvency buffers and enhanced loss absorption capacity.

In CY25, NRSP Microfinance Bank maintained its position as one of the larger players in the sector, with an estimated GLP market share of approximately 10%, improved from 9% in CY24, reflecting a 10.1% growth in net advances to PKR 40.9bln. The Bank's deposit franchise, while marginally contracted, remains one of the larger in the sector at PKR 52.3bln.

NRSP Microfinance Bank reported robust revenue performance in CY25. Total markup/return/interest earned rose 25.4% to PKR 15.70bln (CY24: PKR 12.52bln). This growth was driven by a 10.1% expansion in the net advances portfolio and continued income from the Government Subsidy Scheme (markup received from government, PKR 544mln, plus unwinding of fair value adjustments of PKR 792mln, totaling PKR 1.34bln). Markup income from investments contributed PKR 4.99bln (CY24: PKR 1.87bln), though this reflects the significantly larger investment book maintained in CY24 through PIBs that were liquidated in CY25.   Total markup expenses stood at PKR 9.29bln (CY24: PKR 8.33bln), resulting in a sharp improvement in Net Interest Income (NII) to PKR 6.40bln (CY24: PKR 4.19bln), a 53.0% expansion. This improvement was primarily driven by the repayment of the PKR 100bln National Bank of Pakistan term finance facility in March 2025, which had previously entailed high interest cost. Non-markup income contracted to PKR 218mln (CY24: PKR 298mln), primarily due to the decline in fee and commission income as branchless banking income was nil in CY25 (CY24: PKR 72.8mln).

Operating expenses rose 14.9% to PKR 3.78bln (CY24: PKR 3.29bln), largely reflecting higher staff costs (PKR 2.36bln vs PKR 2.06bln) and inflationary pressures on rent and administrative expenses. Despite the uptick in opex, pre-provision profit (profit before credit loss allowance) improved substantially to PKR 2.81bln (CY24: PKR 1.19bln). The credit loss allowance and write-offs net charge was PKR 1.01bln (CY24: reversal of PKR 682mln), reflecting the deterioration in asset quality. Profit before tax stood at PKR 1.80bln (CY24: PKR 1.87bln). After the minimum tax differential of PKR 350mln and deferred tax charge of PKR 107mln, the Bank reported PAT of PKR 1.35bln (CY24: PKR 1.23bln), reflecting 9.8% growth. Basic EPS declined to PKR 5.36 (CY24: PKR 8.18) due to a higher weighted average share count.

NRSP Bank’s sustainability is strongly backed by its sponsor’s continued support, ensuring financial stability and strategic guidance. With an effective recovery strategy in place, the Bank has successfully strengthened its asset quality. As a result, NRSP Bank has transitioned into profitability, reflecting improved operational efficiency and long-term sustainability.

Asset quality deteriorated significantly during CY25, representing the most salient risk factor in the Bank's profile. Stage 3 gross advances (non-performing loans) rose sharply to PKR 5.99bln (Dec'24: PKR 1.02bln), resulting in an infection ratio of approximately 13.9% of total gross advances of PKR 43.0bln (Dec'24: ~2.7%). This deterioration was driven predominantly by subjective classification of restructured loan portfolios—PKR 6.74bln of advances were classified as 'Subjective Classified' by management, largely in Stage 2 and Stage 3. This reflects the Bank's proactive identification of stressed borrowers in the agricultural, microenterprise, and general loan categories.   The credit loss allowance against advances rose to PKR 2.08bln (Dec'24: PKR 940mln), with Stage 3 coverage accounting for PKR 1.94bln. Crucially, the SBP—through its letter dated November 28, 2025—allowed the Bank to stagger an additional ECL allowance of PKR 2.33bln over five quarterly periods beginning Q4 CY25.

The Bank's investment book contracted significantly to PKR 22.9bln as at December 31, 2025 (Dec'24: PKR 120.1bln). This reflects the repayment of the PKR 100bln NBP term finance borrowing (which had been collateralized by PIBs) in March 2025, with the corresponding liquidation of the investment portfolio. The remaining investment portfolio consists primarily of Market Treasury Bills PKR 19.6bln,  and Ijarah Sukuks PKR 3.2bln. The investment portfolio is entirely in government securities, and the Bank's interest rate risk is managed through the ALCO framework.

The Bank's funding structure underwent a fundamental transformation in CY25. Total borrowings declined dramatically to PKR 16.1bln (Dec'24: PKR 112.2bln), following the full repayment of the PKR 100bln NBP term finance facility in March 2025. The remaining borrowings comprise NBP running finance facilities of PKR 11.4bln under the Prime Minister Youth Business & Agriculture Loans Scheme (PMYB&ALS), a PKR 121.6mln Pakistan Mortgage Refinance Company loan, and the NBP running finance of PKR 4.0bln renewed through December 2026. These facilities are predominantly at zero percent markup on the utilized portion, providing a cost advantage.   Total deposits declined modestly to PKR 52.3bln (Dec'24: PKR 55.0bln), representing a 4.9% contraction. The decline was concentrated in corporate and institutional deposits, while individual customer deposits improved to PKR 31.5bln (Dec'24: PKR 24.7bln), reflecting a healthier retail franchise. Islamic deposits (through the Islamic Microfinance Division) contracted from PKR 12.9bln to PKR 9.8bln.

The Advances to Deposits Ratio (ADR) increased to 78.3% (Dec'24: 67.6%), reflecting the faster growth of advances relative to deposits. Subordinated debt remained stable at PKR 2.49bln, comprising the KfW subordinated loan (EUR 6mln, maturity extended to December 2026) and Tier II Term Finance Certificates of PKR 770mln maturing in July 2028. Lease liabilities stood at PKR 952mln (Dec'24: PKR 894mln).   Cash and cash equivalents stood at PKR 10.8bln as at December 2025 (Dec'24: PKR 12.9bln). The Bank maintains its Cash Reserve Requirement (3% of eligible deposits) and Statutory Liquidity Requirement (12% of eligible liabilities) in compliance with SBP requirements. The liquidity position is considered adequate for near-term obligations.

The Bank's capital position was substantially restored during CY25, representing a pivotal turnaround from the distressed capital levels observed in the preceding period. Total equity increased to PKR 6.62bln (Dec'24: PKR 3.56bln), driven by the PKR 2.0bln rights issue proceeds, a PKR 1.0bln advance against future rights shares, and the PAT of PKR 1.35bln less appropriations. The paid-up capital rose from PKR 1.50bln to PKR 3.50bln following the issuance of 200,000,100 new shares. Statutory reserves increased to PKR 1.51bln (Dec'24: PKR 1.24bln) and Depositors' Protection Fund grew to PKR 656mln (Dec'24: PKR 534mln). This capital augmentation has been pivotal in remedying the Bank’s historical capital inadequacy and reinstating compliance with the minimum regulatory Capital Adequacy Ratio (CAR) prescribed by the State Bank of Pakistan. Consequently, the previously assigned Rating Watch stemming from CAR non-compliance has been withdrawn, with the Bank’s CAR improving to 16.59% as at Dec’25, comfortably above the 15% threshold.