HBL Microfinance Bank Limited ("HBL MfB" or the "Bank") was incorporated in 2001 as a nationwide microfinance bank and started business in February 2002 after receiving the license from the State Bank of Pakistan in 2002.

The Bank was created through a structured transformation of the credit and savings section of the Aga Khan Rural Support Programme (AKRSP), a development initiative pioneering microfinance in Gilgit-Baltistan and Chitral since 1982.

As of end-Sep25, the Bank operates 225 business locations, including branches and permanent booths (end-Dec24: 225), with its head office based in Islamabad. The Bank provides a diverse range of products and services for low-income wage earners and the self-employed, focusing on microlending segments such as Agriculture, Livestock, Micro-enterprise, Housing, Nano Loans, Solar Finance, and more.

The Bank's ownership is primarily held by HBL with a shareholding of 90.83% as at end-Sep25, followed by the Aga Khan Agency for Microfinance (AKAM) at 5.51%, Aga Khan Rural Support Programme (AKRSP) at 2.03%, and Japan International Cooperation Agency (JICA) with 1.63%.

This ownership structure is expected to remain stable in the near term.

The Aga Khan Development Network (AKDN), which sponsors HBL, AKAM, and AKRSP, is a group of agencies focused on development in areas such as environment, health, education, architecture, culture, microfinance, rural development, and disaster management. AKDN aims to improve the quality of life for underserved communities by fostering self-reliance.

The sponsor's business expertise is considered strong, with HBL, the direct sponsor, recognized as one of Pakistan's largest banks by deposits and advances. At end-Sep25, the HBL's deposit base stood at PKR 5.1tln, with equity at PKR 464bln.

The Board of Directors (Board) of HBL MfB comprised nine members as of Sep25, including the Chairperson and the President/CEO.  There are six nominee directors—four representing HBL, two representing other shareholders, and two independent directors.

Ms. Maya Inayat Ismail has been appointed as the Chairperson of the Bank, becoming the first woman to chair an institute in the AKDN Network worldwide, succeeding Mr. Rayomond H. Kotwal, who resigned from his directorship in Jan25. Ms. Maya Inayat Ismail brings over 25 years of experience in the financial sector, with a strong focus on financial services institutions, managing strategic partnerships, and strategy formulation to benefit people at the grassroots level. During the period under review, two changes occurred in the Bank’s Board composition. The second change was that Ms. Sobia Chughtai, who currently holds the role of Head of Corporate Risk at HBL, resigned from her position as a Board member of the Bank in Apr25. To fill these casual vacancies, two new representatives from HBL — Mr. Aamir Israr Kureshi, Head of Products, Transaction Services, and Solution Delivery at HBL, bring over 30 years of banking experience across global institutions, including Standard Chartered and Citibank, with expertise in strategic policy, credit risk, and digital transformation  holding an MBA from IBA and a Bachelor’s in Economics from Pepperdine University, USA, and Mr. Armughan Ahmed Kausar, Head of Konnect and Mass Segment at HBL, having over 25 years of international experience in financial services, including roles at Big 4 auditing and accounting firms and Goldman Sachs in the UK and the Middle East and have specialization in GRC framework implementation joined the Board. Mr. Abrar Ahmed Mir has over 30 years of experience, having worked with United Bank Limited, Citibank N.A., and ICI Pakistan, among others. He is currently HBL’s Chief Information & Transformation Officer. Mr. Mir holds an MBA from the Illinois Institute of Technology, a BE in Electronics Engineering from the College of Electrical and Mechanical Engineering, Pakistan, and completed the "Strategic Leadership in Inclusive Finance" course at Harvard Business School. Mr. Zahir Riaz is a Partner at Orr, Dignam & Co. and leads the Islamabad office. With over 42 years of experience, he specializes in corporate law, mergers & acquisitions, banking & finance, capital markets, construction, privatizations, and energy. He holds legal degrees from the London School of Economics, University of Cambridge, and is a qualified Barrister from Gray’s Inn, UK. Ms. Rashna Minwalla has extensive experience in financial securities, derivatives, and equity broking, having worked at Elixir Securities Pakistan, JP Morgan Broking Pakistan, and other firms. She is currently the CEO & Director of The Fertility Clinic in Karachi. Ms. Minwalla holds a Masters in Finance from the London Business School and both a Masters and Bachelor's in Business Administration from the Institute of Business Administration, Karachi. Mr. Tsuyoshi Hara is the Senior Representative for JICA Pakistan, with over 16 years of experience in managing development projects. He has worked at JICA and JBIC, specializing in infrastructure projects such as power, water, sanitation, and public-private partnerships. Mr. Hara holds a Bachelor's degree in Economics from Keio University, a Master's in Economics (specializing in Public-Private Partnerships) from Toyo University, Japan, and is a Ph.D. candidate in Public Policy and Public Administration at Florida State University. Ms. Kate Perkins has over 15 years of experience in the financial services sector. She is currently the Investment Director at British International Investment plc, focusing on equity investments in Africa and South Asia, with a specialization in financial inclusion. Previously, Ms. Perkins worked at Nesta, Citigroup, and EY, where she qualified as a Chartered Accountant. She holds an MPhys degree in Physics from Oxford University.

The Board has six committees: (i) Human Resource Committee, (ii) Risk & Compliance Committee, (iii) Audit Committee, (iv) Information Technology Committee, (v) Financial Inclusion & Sustainability Committee, and (vi) Board Remuneration Committee. During 9MCY25, the Board held six meetings with satisfactory attendance.

KPMG Taser Hadi & Co. are the external auditors of the Bank. They expressed an unqualified opinion on the financial statements for the year ended December 31, 2024. The internal audit department reports directly to the Audit Committee.

The Bank operates with a horizontally structured organization, comprising 11 departments that report directly to the Chief Executive Officer. Each reporting line and job description is clearly defined.

Mr. Muhammad Amir Khan, the CEO and President, has been with the Bank since 2012 and has over 30 years of experience in commercial and consumer banking. He is supported by a skilled and experienced team. Mr. Ali Raza Anjum, the Chief Operating Officer, has also been with the Bank since 2012. He brings 30 years of diverse experience in business, treasury, risk management, compliance, credit, internal audit, banking operations, finance, and human resources, having held senior management positions in prominent commercial and microfinance banks. Mr. Rizwan Maqsood, the Chief Financial Officer, has been with the Bank since 2009. He brings more than two decades of extensive experience. He has managed a variety of functions, including financial strategy, planning, management, reporting, treasury, analysis, accounting, auditing, and assurance. Mr. Junaed Rayaz, the Chief Risk Officer of the Bank, has 30 years of diverse experience in the banking industry, focusing on credit and market risk management, fraud prevention, and portfolio optimization. Furthermore, during the period under review, two key management changes took place. Ms. Mahwush Mushtaq Malik was appointed as the Company Secretary & General Counsel in May’25, taking over from Mr. Rizwan Maqsood, who held the position with acting charge, in addition to his role as CFO, for over six months. Ms. Mahwush brings over 15 years of legal experience in Pakistan and the U.S., including a decade at HBL and prior roles at the World Bank and top law firms, with strong expertise in banking law, AML, and regulatory compliance. Additionally, Mr. Malik Adeel was appointed as Head of Compliance in Dec’24, succeeding Mr. M. Ali Akram, who was looking after the position in acting capacity. Mr. Adeel brings over 20 years of experience in banking operations and compliance, having served at Citibank, MCB, and Faysal Bank, and contributed to FATF-related initiatives with the Government of Pakistan. Both appointments strengthen the Bank’s legal, control, and compliance framework.

The Bank has set up various management committees to manage and oversee operational efficiency.

The Bank has implemented a robust Management Information System (MIS) infrastructure that features system-generated reports and detailed live dashboards to facilitate effective decision-making.

A dedicated risk management department regularly monitors credit, operational, and market risks, convening monthly to ensure adherence to the risk profile approved by the Board.

The Bank's IT infrastructure, which supports core banking and other essential systems, is located in a state-of-the-art data center at its Head Office. The Core Banking System (CBS) in use is Oracle's Flexcube, which has been enhanced with features to address changing business needs and stringent regulatory requirements.

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 economic slowdown, high inflation, and elevated interest rates during the first half of CY24 — have strained borrower repayment capacity, particularly in agriculture and livestock. During the year, a significant credit crunch occurred in the country due to floods, which is expected to further impact the microfinance sector in the near future. During 9MCY25, the total assets of the sector stood at PKR  875.3bln (CY24: PKR 1,068.5bln), mostly invested in government securities. Advances were reported at PKR433.8bln (CY24: PKR 421.2bln), primarily financed through borrowings and deposits. Despite this, the Sector posted losses for the sixth consecutive year, amounting to PKR 3.1bln (9MCY24: Loss of PKR 10.7bln). Consequently, the sector's equity base declined to PKR 17.9bln (CY24: PKR 37.2bln), resulting in the CAR falling to -1.8% (CY24: 2.6%), well below the regulatory threshold of 15%.

During 9MCY25, HBL Microfinance Bank Limited reported a deposit share of 21% (CY24: 19%) and a GLP share of 16% (CY24: 15%).

During 9MCY25, the Bank's markup income increased by 10% to PKR 27.9bln (9MCY24: PKR 25.3bln), while the markup expenses decreased by 30% to PKR 13.9bln (9MCY24: PKR 19.8bln) due to lower deposit expenses. Consequently, the NIMR increased by 154% to PKR 14bln (9MCY24: PKR 5.5bln).

During 9MCY25, the non-markup income rose by 30.3% to PKR 1.9bln (9MCY24: PKR 1.5bln), mainly attributable to higher fee and commission income and gains on securities. The credit loss allowance (net of write-off recovery decreased to PKR 4.6bln (9MCY24: PKR 5.4bln). Overall, the Bank reported a profit before tax of PKR 1.3bln and a profit after tax of PKR 0.8bln (9MCY24: loss before tax of PKR 6.5bln and loss after tax of PKR 4.3bln), while the CAR improved to 19.6% (CY24: 17.1%).

HBL MfB has upgraded the Customer Origination System (LoS) to a Customer Management Solution (CMS) – an end-to-end digital model used to automate the processes and reduce the turnaround time.

As of end-Sep'25, gross advances increased by 7.6% and stood at ~PKR 97.1bln (end-Dec'24: PKR 90.3bln), while Non-Performing Loans (NPLs) were reported at PKR 7.3bln (Dec'24: PKR 7.2bln). These higher NPLs were mainly attributed to last year’s credit crunch in South Punjab amid the wheat crisis. To strengthen risk resilience amid higher NPLs, the Bank has adopted a cautious lending approach by entering into multiple risk-sharing arrangements, prominently being an unfunded 50% credit risk-sharing facility amounting to USD 80mln with an international risk-sharing agency, International Finance Corporation (IFC), for a period of six years. Specialized risk-sharing arrangement with Economic Transformation Initiative Gilgit Baltistan (ETIGB) has also been entered into, amounting to PKR 1bln, and the Bank is also in negotiations with other agencies, i.e., NCGCL. Consequently, the Bank's infection ratio stood at 7.5% (end-Dec'24: 8%).

At end-Sep'25, the investment portfolio of the Bank decreased by 12.8% and was reported at PKR 63.4bln (end-Dec'24: PKR 72.7bln), primarily comprising government securities. The deposit base increased by 6.5% and stood at PKR 130.5bln (end-Dec'24: PKR 122.6bln).

At end-Sep'25, the Bank's total borrowings declined by 26.5% and stood at PKR 32.3bln (end-Dec'24: PKR 43.9bln), followed by subordinated debt of PKR 3.5bln. The net Advances-to-Deposit Ratio (ADR) was reported at 66% (end-Dec'24: 67.6%).

At end-Sep'25, the Bank's liquidity profile, as evident from the liquid assets to borrowings and deposits ratio, declined to 59.1% (end-Dec'24: 71.6%).

At end-Sep'25, the Bank’s equity base increased by 18.8% and stood at PKR 18.3bln (end-Dec'24: 15.4bln), supported by a PKR 2.0bln injection in share capital by the parent bank (the HBL). While the Capital Adequacy Ratio (CAR) improved to 19.6% (end-Dec'24: 17.1%). Backed by enhanced liquidity, robust capitalization, and prudent portfolio management, the Bank solidified its overall financial strength and resilience.