PACRA Maintains the Rating of Mobilink Microfinance Bank Limited | PPTFC | Dec-22

The ratings of Mobilink Microfinance Bank Limited (“MMBL” or the "Bank”) reflect its strong sponsor profile, improving financial performance, and strengthening capital position. The Bank benefits from its affiliation with VEON Ltd. and Jazz Pakistan, which provides technological support, and demonstrated financial backing. The sponsor’s continued commitment is evidenced by a capital injection of USD 35mln (~PKR 10bln), aimed at strengthening the Bank’s capital base, supporting MSME and digital lending growth, and enabling continued investment in digital infrastructure. Of this, USD 15mln (~PKR 4.2bln) was injected in CY24, while the remaining USD 20mln (~PKR 6bln) was disbursed in two tranches during CY25. The business model of Mobilink Microfinance Bank Limited focuses on a hybrid approach combining core and branchless banking, leveraging the sponsor’s ecosystem, particularly JazzCash, to drive scale in digital financial services. This integration enables access to a large customer base and an extensive agent network, facilitating low-cost customer acquisition and deeper penetration into underserved segments. During CY25, the Bank demonstrated strong operational performance, with its borrower base expanding to 5.5mln (CY24: 4.0mln), primarily driven by a 38% increase in nano lending clients. Consequently, the Bank’s market share in terms of Gross Loan Portfolio improved to 22% (CY24: 19%). The Bank’s earnings profile also strengthened, with markup income rising to PKR 67bln (CY24: PKR 53bln), including PKR 39bln from nano loans (CY24: PKR 26bln). Non-markup income increased to PKR 22bln (CY24: PKR 14bln), supported by a 54% growth in branchless banking income. Resultantly, the Bank posted a profit of PKR 2.4bln in CY25, compared to a loss of PKR 1.8bln in CY24, reflecting a notable turnaround. The Bank’s equity base strengthened to PKR 17.5bln, with a Capital Adequacy Ratio (CAR) of 19.5% (CY24: PKR 9.4bln), supported by sponsor-backed capital injections. On the sector front, Pakistan’s microfinance industry entered FY25 in a phase of cautious recovery following earlier economic disruptions and the impact of COVID-19. By late CY24–Oct’25, macroeconomic conditions showed modest improvement, with inflation easing to ~5.6%, relative currency stability, lower interest rates, and positive GDP growth. While recent flood-related risks persist, their impact appears limited compared to 2022. Nevertheless, the sector continues to face structural challenges, including elevated credit risk, relatively weak capitalization—particularly among microfinance banks—and uneven performance across institutions. The loan book remains concentrated in higher-risk segments, with livestock and agriculture collectively accounting for approximately 57% of outstanding loans.
The Bank's ratings are contingent upon its capacity to effectively mitigate emerging risks under the prevailing circumstances to preserve its business and financial risk profile.

About the Entity
Mobilink Microfinance Bank Limited, a nationwide microfinance Bank, was established in 2012. The Bank is a subsidiary of Veon Microfinance Holdings B.V, one of the largest telecom groups worldwide. Mr. Haaris Mahmood Chaudhary is serving as CEO of the Bank.

About the Instrument
MMBL has issued Rated, Privately Placed Listed, Unsecured, Tier II Term Finance Certificates ("TFC") of PKR 2bln with tenor of 7 years to contribute towards the Bank’s Tier II capital for complying with the MCR and CAR requirement. The profit is being paid semi-annually in arrears at the rate of 6MK+210bps p.a on the basis of the outstanding principal amount. Callable after five years, the call option is subject to SBP compliance on MCR, LR, and CAR. Principal will be repaid in four equal installments starting May 23, 2028. The Bank paid its sixth semiannual markup of PKR 136mln on Nov 23, 2025.