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 builds on the experience of its parent institution -the National Rural Support Programme (NRSP), which in 2008 spun off its Micro Enterprise Development Program (MEDP) into a separate entity. 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. The Bank currently operates with its head office in Shalimar Arcade Plot No. 11-12C, Shalimar Avenue, Shalimar Town, Near Motorway Fatehjang Interchange, Fatehjang Road, Islamabad. As of December 2024, the Bank operates a nationwide branch network of 133 branches, including 37 Islamic branches, offering a wide range of financial services such as microlending, micro-insurance, Islamic banking products, and deposits to financially excluded individuals in both urban and rural areas across Pakistan.

The Bank is a subsidiary of the National Rural Support Program (NRSP), holding a 57.40% share. Other institutional shareholders include the International Finance Corporation (IFC) (16.02%), PROPARCO (15.91%), and Acumen (10.68%). It is the largest Rural Support Program in the country, based on outreach, workforce, and development activities. Other sponsors, including IFC—a member of the World Bank Group—and Acumen, established in 2001, share a commitment to advancing underprivileged communities in developing economies and promoting financial inclusion. The solid financial position of the sponsors significantly strengthens the Bank’s overall financial strength. The Bank benefits from consistent sponsor support and a stable ownership structure since its inception, which bolsters its stability.

The Bank is governed by a eight-member Board of Directors (BOD), which includes the Chief Executive Officer (CEO). The Board of Directors is branched into four sub-committees namely (i) Audit (ii) Remuneration & Compensation and (iii) Operational Risk and Policy (iv) Information and Technology. The Directors are experienced professionals having exposure in various sectors, including the microfinance industry. The Directors are experienced professionals having exposure in various sectors, including the microfinance industry. Dr. Rashid Bajwa, Chairman of NRSP Bank and CEO of NRSP, is a public health expert with extensive leadership experience in rural finance and poverty alleviation initiatives. Mr. Riaz Khan Bangash, President and CEO of NRSP Microfinance Bank, is a seasoned banker with over 30 years of experience in commercial, SME, consumer, and microfinance banking. The Board committees ensure effective over-sight of the Bank’s affairs and strengthen the Board’s governance role. M/S Yousuf Adil & Co. are the external auditors of the Bank. The auditor has expressed an unmodified report on the financial statements of CY24.

The Bank has divided its organizational structure into eight departments with each department head reporting directly to the CEO, while the head of the internal audit department reports to the Audit Committee. 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. To ensure the effectiveness of the operations, the Bank has three management committees in place, namely; i) Operations and Risk Management Committee (ORMC), ii) Asset Liability Committee (ALCO) and iii) IT Steering Committee. Detailed MIS reports are generated to support the senior management in timely and effective decision-making. MIS includes reports about disbursements, repayments, recoveries, deposits, and compliance. The Bank has instituted policies for assessing credit worthiness of loan applicants, which is par-amount to its business model. Recently, the Bank has particularly steered its focus toward consolidating its position by adopting more stringent and efficient risk control mechanisms.

The Microfinance Banking sector (the "Sector") continues to face persistent stress from weak asset quality, recurring losses, and a declining Capital Adequacy Ratio (CAR). Successive shocks — including the 2022 floods, economic slowdown, high inflation, and elevated interest rates during CY24 — have strained borrower repayment capacity, particularly in agriculture and livestock. During the year, there was a significant credit crunch in the country due to floods, which will also impact the microfinance sector in the near future. Total assets of the sector grew to PKR 1,068bln in CY24 (CY23: PKR 771bln) on the back of investments in government securities, but contracted to PKR 891bln by 6MCY25 (6MCY24: PKR 782bln). Advances rose moderately to PKR 421bln in CY24 (CY23: PKR 380bln) and PKR 415bln in 6MCY25 (6MCY24: PKR 376bln), mainly financed through borrowings and deposits. Despite this growth, the Sector posted losses for the sixth consecutive year and stood at PKR (16.2)bln at the end of CY24 (CY23: Loss of PKR 8.1bln) and PKR (1.8)bln at the end of 6MCY25 (6MCY24: Loss of PKR 12.1bln). Consequently, the sector's equity base declined to PKR 37.2bln in CY24 (CY23: PKR 37.4bln), resulting in the decline in CAR of the Sector, with CAR falling to -1.6% in 6MCY25 (CY24: 2.6%), falling far below the regulatory threshold of 15%. In CY24, the Bank captured a 6% share of the market based on its Gross Loan Portfolio (GLP). The markup income of the Bank increased to PKR 6.4bln during 3MCY25 (CY24: PKR 12.5bln). This increase was primarily driven by increased earnings from investments. During 3MCY25, the income from investment stood at PKR 4.2 bln. Non-markup income fell to PKR 72 mln (CY24: PKR 298mln) due to lower fee and commission earnings, but provisioning reversals of PKR 187mln (CY24: PKR 682) supported profitability. As a result, the Bank posted a profit after tax of PKR 642mln (CY24: PKR 1.2bln). Deposits declined to PKR 52.8bln (Dec'24: 55bln), while net advances remained intact at PKR 36.52bln (CY24: 37.1). Total assets expanded to PKR 75.5bln (CY24: 177.2bln). The CAR improved to 3.37% (Dec'24: 1%) and equity increased to PKR 4.35bln (CY24: PKR 3.6bln). 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.

As of Mar’25, gross advances remained intact at ~PKR 36.5bln (Dec’24: PKR 37.1bln). This growth was accompanied by a significant reduction in Non Performing Loans (NPLs), which increased to PKR 1.3bln (Dec’23: PKR 1bln). As a result, the infection ratio stood at 3.5% (Dec'25: 2.7%). As of the end of Mar'25, the Bank’s investment book decreased to PKR 17.52bln (Dec'24: PKR 120.11bln), with large exposure in government securities. The decrease is attributed to a reduction in net borrowings, primarily due to the repayment of the financial facility obtained from NBP in March 2025. At end-Mar’25, deposits stood at PKR 52.4bln, and total borrowings stood at PKR 12.2bln. By Mar’25, equity was 4.3bln (Dec'24: PKR 3.6bln). The Advances to Deposits Ratio (ADR) stood at 70% in Mar'25 (Dec'24: 67.6%). This decrease reflects a shift in the Bank's financing strategy over the years. The Bank is gradually moving towards achieving CAR compliance, as reflected in the Mar'25 results. The Capital Adequacy Ratio (CAR) improved substantially to 3.37 as of Mar'25 ( Dec'24: 1.0%), indicating a significant recovery in financial stability and progress toward regulatory compliance.

In July 2021, the Bank issued a rated, unlisted, unsecured, and subordinated TFC-II ("TFCs" or the "Instrument”) amounting PKR 770mln to contribute towards the Bank's Tier II Capital. The instrument is unsecured and subordinated as to payment of principal and profit to other indebtedness of the Bank, including deposits, but will rank pari passu with other Tier II instruments and superior to Additional Tier I instruments and common shares. The tenor of the instrument is 07 years and callable on or after five years with prior approval of SBP. The profit rate is 3MK plus 300bps and is being paid quarterly in arrears on the outstanding principal. The TFC is scheduled to mature on July 9, 2028, with principal repayments commencing in October 2027. The Bank has successfully paid 17 out of the total 28 scheduled installments, with cumulative profit payments amounting to PKR 615.8mln till date. The most recent payment of PKR 27.27mln was made on Oct 9, 2025. All previous payments and upcoming payments in CY25 have been assured by the parent company, NRSP, which remains fully committed to ensuring the timely settlement of all remaining instalments through subordinate debts.

The terms of the Tier II TFC require that, as per the Lock-in Clause, neither profit nor principal, will be payable, if such payments will result in a shortfall in the bank's MCR/CAR or cause an increase in the shortfall. Moreover, the investors shall have no right to accelerate the repayment of future scheduled payments (interest or principal) except in bankruptcy and/or liquidation.

The instrument is unsecured and subordinated.