The Pakistan Credit Rating Agency Limited
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Ayesha Qasim

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PACRA Maintains Entity Ratings of Telenor Microfinance Bank Limited (previously Tameer Microfinance Bank Limited)

Rating Type Entity
(23-Nov-17 )
(28-Apr-17 )
Action Maintain Maintain
Long Term A+ A+
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

The ratings of Telenor Microfinance Bank Limited reflect strong business profile emanating from growing customer base and diversified revenue stream of the Bank. The deposit base witnessed escalated growth, mainly in the term deposits. The spreads remained strong, though minor declined YoY. Telenor Bank accounted for 20% of system share in MFB industry deposits for Jun’17. The Bank is gradually building its non-gold loan portfolio; reached ~31% by end- Jun17 in line with MFB regulations. The financial risk profile of the Bank is strong, with high liquidity. Portfolio at risk of 1.1% at end-Jun17 reflects a strong risk evaluation framework. Beginning this year, branchless banking (BB) operations – Easypaisa – have been fully transferred to Telenor Bank. The retention of 100% revenue from Easypaisa has further augmented the income. Going forward, growth and consistency of the BB market share remains important, as the industry is becoming more competitive. Earning better profitability from Easypaisa would remain integral. Overall profitability, supported by low loss provisioning remained sanguine. The ratings take comfort from association with a strong sponsor – Telenor Group.

The ratings are dependent upon maintaining market position of the Bank. Herein, growing volumes in branchless banking should continue transpiring into profitability. Sustaining of robust asset quality is imperative. Successful execution of new business strategy by new management remains important.

About the Entity
Telenor Bank commenced operations in Sep-05 and currently operates with a network of 83 branches with head office in Karachi. Telenor Bank has become a wholly owned subsidiary of Telenor Pakistan B.V with entire shareholding being transferred to it. Telenor Pakistan B.V, based in Amsterdam, is an investment vehicle for Telenor ASA to invest in Pakistan. It is a wholly owned subsidiary of Telenor ASA. During the year, bank was awarded “Best Microfinance Bank” and “Bank the Un-Banked” awards at the Pakistan Banking Awards 2017.

Overall control of the Bank vests with an eight member board including the CEO. Four members are senior executives of Telenor Group, two senior executives of Telenor Pakistan Limited, and two independent members, Mr. Petter-Børre Furberg, the Chairperson, has been long association with Telenor Group. Mr. Shahid Mustafa, with 20+ years of experience in banking and finance, has replaced the outgoing CEO Mr. Ali Riaz Chaudhry in Sep’17. An experienced management team supports the CEO.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.