Apna Microfinance Bank Limited (“the Bank”) was incorporated in May 2003 as a Public Limited Company under the Companies Act, 2017 (formerly Companies Ordinance, 1984). The Bank is listed on Pakistan Stock Exchange (PSX) since the commencement of its operations in 2005, under the Microfinance Institution Ordinance, 2001.

In June-15, the Bank was granted a national-level license after completion of regulatory capital requirements. The Bank has 72 business locations comprising 71 branches and 1 service center at the end of CY25.

The Bank offered a wide variety of lending products customized according to the needs of various communities. These include i) loans for farmers ii) Livestock loans iii) Agri-loans iv) House loans v) Tractor Loans vi) Salary loans vii) Business loans and viii) Apna Gold

The Bank is a part of the United International Group (UIG), 46.5% shareholding, with a pre-dominant ownership stake held by Mr. Mian Shahid through his group companies, especially United Track and United Software. The later two companies hold 22% of the Banks stake collectively. A key development during the period is the proposed merger/acquisition of Apna Bank by Mobilink Microfinance Bank Limited. The due diligence is completed and the next step is awaited, wherein regulatory approvals would also be essential. The proposed transaction is expected to strengthen the Bank’s capitalization, operational profile, and overall franchise strength.

The overall shareholding structure of the Company remains stable since the last rating review. 

United International Group (“UIG”) maintains a diversified business presence across multiple sectors, including microfinance, insurance, tracking solutions, information technology, agriculture, and business consultancy. The Group is led by its Founder and Chairman, Mr. Mian Akram Shahid, who also serves as the single largest shareholder.

United International Group derives financial strength from its diversified business portfolio and established presence across multiple sectors, including insurance, microfinance, information technology, tracking solutions, agriculture, and consultancy services. The Group’s diversified revenue streams and demonstrated willingness to support associated entities reflect adequate sponsor strength and ongoing commitment toward its strategic investments.

The overall control of the Bank vests in a nine-member Board of Directors comprising two Non-Independent Directors, six Non-Executive Directors, and one Executive Director.

All the members has divers experiance in different sectors including banking, import/export, sales, and Insurance. Mr. Muhmmad Akram Shahid - Chairperson is also founder of United International Group business includes leading General Insurance Companies in Pakistan and several related public and private limited companies. It is a diversified business conglomerate with interests in insurance, microfinance, tracking solutions, information technology, healthcare, and consultancy services. He possesses extensive leadership and managerial experience spanning over three decades and has played a pivotal role in establishing and expanding the Group’s business footprint across Pakistan. Mr. Imad Mohammad Tahir possesses a strong academic background in business management, marketing, investment, and financial risk management. He has extensive experience in real estate development, land acquisition, construction, and business management through his association with Imad International Association. Mr. Muhammad Asghar carries diversified experience in banking, financial services, and corporate governance. He has previously held senior leadership positions at United Bank Limited (“UBL”), including Group Executive roles in retail banking and human resources, while also serving on the boards of various financial and industrial institutions. Mr. Abdul Aziz Khan – Independent Director is an experienced academic and finance professional with specialization in banking, asset-liability management, and project finance. He is associated with the University of Engineering and Technology (“UET”), Lahore as Assistant Professor and has served on various academic and investment committees of reputable educational institutions. Mr. Shahid Hassan possesses experience in corporate management, project management, and the energy sector through his directorships in various private companies. He has also been associated with entrepreneurial and governance initiatives, including participation in development-oriented task forces and professional organizations.

To ensure its effectiveness, the Board has five sub-committees; (i) Audit Committee (ii) Executive Committee (iii) Risk and Compliance Committee, (iv) Monitoring Committee, and (v) HR and Remuneration Committee.
The Board met to ensure efficiency and effectiveness of operations. 

The audit committee of the Bank comprises three members and is chaired by an independent director, Mr. Abdul Aziz Khan. A separate Internal Audit Department is in place which reports independently to the Audit Committee. RSM Avais Hyder Liaquat Nauman & Co. Chartered Accountants are the external auditors of the Bank. The auditors have added emphasis of matter paragraph in the audit report for the year 2025 and have raised material uncertainty relating to going concern. Furthermore, the audit report adds that the management is executing a comprehensive, multi-faceted plan to tackle the financial and operational challenges facing the Bank.

A total of seven department heads report directly to the CEO. The SAM Department with reporting line to the COO established as collateral to the disbursements to strengthen the recovery ratio.

The management positions are held by qualified professionals to strengthen departmental results. Mr. Nazish Ali is the CEO of the Bank. He possesses diversified experience in banking operations, branchless banking, digital transformation, and strategic management within the microfinance sector. Mr. Mansoor Ahmad is serving as the Chief Financial Officer of Apna Microfinance Bank Limited. He is responsible for overseeing the Bank’s financial management framework, including financial reporting, budgeting, treasury oversight, regulatory compliance, and capital management. 

Six Management Committees are in place namely i) Asset Liability Management Committee (ALCO) ii) Credit Committee, iii) Management Committee, iv) Compliance Committee, v) HR Committee, and vi) IT Steering Committee to ensure operational efficiency and efficient decision-making. These committees provide structured oversight over the Bank’s risk management, credit underwriting, liquidity and funding profile, regulatory compliance, human resource matters, and technological infrastructure.

To enhance data safety, the management improved the data collection and management center and acquired a program for compliance handling as well.

As a consequence of the SBP inspection, the Bank envisaged betterment in risk management through improvement in the overall control environment by revisiting and devising risk management policies and control procedures to manage its credit risk.

Apna Bank uses Auto-banker III (ABIII) as its core-banking software. Developed by a local vendor, ABIII provides flexibility to consolidate records based on branch, repayment behavior, classification of loan, and borrower profile.

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 468 bln (CY24: PKR 421.2 bln) funded primarily through deposits and borrowings, resulting in an Advance-to-Deposit Ratio (ADR) of 65% (Dec’24: 63%). In comparison, Apna Microfinance Bank's ADR stood at 37% (CY24: 35%). The sector remained loss-making for the sixth consecutive year, reporting a reduced loss of PKR 2.0 bln (CY24: PKR 16.2 bln). The sector’s Capital Adequacy Ratio (CAR) remained weak at -1.2% (Dec’24: 2.6%), well below the regulatory requirement of 15%. Whereas, the CAR of Mobilink Microfinance Bank stood at -259% at the end of CY25 (CY24: 224%).

During CY25, the Bank maintained a modest market share of approximately 3% in terms of gross loan portfolio (“GLP”) (CY24: 2%). The slight improvement reflects gradual recovery in lending activity and cautious expansion in secured financing products amid a challenging operating environment.

During CY25, mark-up income of the Bank increased to PKR 3.2bln compared to PKR 2.8bln in CY24. While mark-up expense reduced materially to PKR 3.0bln (CY24: PKR 3.9bln), due to a reduction in policy rates during CY25, which positively impacted the Bank’s cost of deposits and funding profile. As a result, the Bank’s net mark-up position turned positive at PKR 146mln, compared to a negative PKR 1.2bln in the previous year. In addition, non-markup income rose to PKR 346mln, further supporting the overall earnings profile. The earning profile has shown notable improvement during the period under review.

The Bank's profitability took a major hit and recorded losses of PKR 1.6bln (CY24 : loss of PKR 3.0bln). The improvement was primarily driven by reduced funding costs, gradual stabilization in operational performance, and improvement in the Bank’s spread position following the decline in policy rates. However, profitability continues to remain constrained due to elevated provisioning requirements, weak asset quality indicators, and the Bank’s limited capacity to generate sustainable earning assets.

The Bank is only allowed to lend what it recovers. The sponsoring shareholders are finding ways to recapitalize the Bank, for which a few options are being considered. The management is striving for recoveries, where they are hopeful that a significant amount of loan can be recovered. Also, the current portfolio is being switched towards a secured portfolio against gold to further secure the Bank, while building a revenue stream.

At the end of CY25, the Bank’s gross advances increased to PKR 15.8bln (CY24: PKR 13.4bln), reflecting a growth of approximately 18%, primarily driven by expansion in secured lending products. The advances portfolio remained heavily concentrated in gold-backed financing, which constituted nearly 87% of the total exposure, highlighting the management’s cautious lending strategy and preference for relatively lower-risk secured assets amid the prevailing stressed operating environment. Despite the sizeable growth in the loan book, non-performing loans remained largely unchanged at PKR 5.0bln (CY24: PKR 4.9bln). Consequently, the infection ratio improved to 32% at end-CY25 from 37% in the preceding year, mainly supported by growth in the performing advances portfolio rather than a material reduction in impaired loans. While the improvement in infection levels is viewed positively, asset quality indicators continue to remain elevated and pose a significant challenge to the Bank’s profitability and capitalization profile.

At end of CY25, the Bank’s total investment significantly increased during the period, clocking in at PKR 2.6bln (CY24: PKR 1.9bln), largely driven by an increase in exposure to Treasury Bills. The portfolio continues to remain entirely invested in government securities. The portfolio composition underscores the Bank’s conservative risk appetite and its focus on maintaining a stable liquidity profile while minimizing exposure to market and credit risks.

At the end of CY25, the Bank’s deposit base demonstrated notable growth, increasing to PKR 30.1bln from PKR 25.7bln in CY24, reflecting a year-on-year increase of approximately 17%. The growth in deposits was primarily driven by savings deposits, which increased to PKR 15.2bln (CY24: PKR 13.5bln). The expanding deposit base also provides relative stability to the Bank’s funding structure and supports liquidity management. Meanwhile, the Bank’s borrowings stood at PKR 2.4bln at the end of CY25 (CY24: PKR 2.1bln), depicting a moderate increase during the period. The borrowings continue to supplement the Bank’s funding requirements and support operational liquidity. Going forward, the Bank’s ability to sustain deposit mobilization and gradually improve its CASA mix will remain important for strengthening its overall funding profile and containing the cost of funds.

A sizeable portion of the Bank’s liquidity is maintained in government securities and placements with financial institutions, which provides strength to its overall risk profile and liquidity management framework. Meanwhile, the net advances-to-deposit ratio stood at 37.1% at the end of CY25 compared to 35.2% in CY24, reflecting the Bank’s relatively cautious lending posture and adequate liquidity cushion.

The Bank’s capitalization profile remained under considerable pressure at the end of CY25, primarily due to persistent accumulated losses, which stood at PKR 15.9bln (CY24: PKR 14.3bln). Consequently, the Bank’s equity position remained negative and stood at PKR 10.5bln at end-CY25 compared to negative equity of PKR 9.4bln in the preceding year, reflecting continued erosion in the capital base. Furthermore, the Bank remained non-compliant with the regulatory Minimum Capital Requirement (MCR) as well as the prescribed Capital Adequacy Ratio (CAR), highlighting ongoing pressure on its solvency indicators and regulatory capital position.The CAR of the Bank stood at -259% at the end of CY25 (CY24: -224%) The weakened capitalization matrix continues to pose a key challenge for the Bank and underscores the importance of sustained sponsor support and timely capital injections. Going forward, improvement in internal capital generation, recovery from written-off exposures, and successful execution of the Bank’s recovery strategy will remain critical to strengthening its capitalization profile and achieving regulatory compliance.