PACRA Maintains Entity Ratings of NRSP Microfinance Bank Limited

The ratings of NRSP Microfinance Bank Limited (the “Bank”) draw support from the demonstrated and reinforced commitment of its parent, National Rural Support Programme (NRSP), which has increased its shareholding to ~81.75% (Dec’24: ~57.40%) following a fresh equity injection of PKR ~2bln during CY25. This capital augmentation has been pivotal in remedying the Bank’s historical capital inadequacy and reinstating compliance with the minimum regulatory Capital Adequacy Ratio (CAR) prescribed by the State Bank of Pakistan. Consequently, the previously assigned Rating Watch stemming from CAR non-compliance has been withdrawn, with the Bank’s CAR improving to 16.59% as at Dec’25, comfortably above the 15% threshold. Pakistan’s microfinance banking landscape has transitioned into a gradual recovery phase post-pandemic and macroeconomic dislocations. By late CY24–Oct’25, key macro indicators exhibited relative stability, characterized by moderated inflation (~5.6%), exchange rate stability, easing interest rates, and modest GDP growth. Notwithstanding, episodic climate risks persist, albeit with relatively contained impact compared to the 2022 floods. The sector continues to grapple with elevated credit risk, capitalization constraints particularly among MFBs and heterogeneous performance dynamics. The Bank’s gross advances expanded to PKR 43.0bln as at Dec’25 (Dec’24: PKR 38.1bln; +13%), driven by both conventional and Islamic financing portfolios. However, asset quality metrics weakened materially, with non-performing loans rising to PKR 5.99bln (Dec’24: PKR 1.02bln), translating into an elevated infection ratio of ~13.9%. Provisioning coverage remains modest at ~32.5% (CLA: PKR 1.94bln), indicating latent vulnerability to loss crystallization. The earnings profile demonstrated resilience, with net mark-up income increasing to PKR 6.40bln (+53% YoY), supported by asset repricing and a sharp decline in funding costs following the early retirement of the PKR 100bln NBP facility. Despite a credit loss charge of PKR 1.01bln, profitability improved (PAT: PKR 1.35bln; CY24: PKR 1.23bln), reflecting a growth of ~9.8%. The balance sheet reflects significant deleveraging, with borrowings declining to PKR 16.1bln (Dec’24: PKR 112.2bln) alongside a reduction in the investment portfolio (PKR 22.9bln vs. PKR 120.1bln), attributable to the unwind of the NBP-backed PIB structure. Deposits moderated to PKR 52.3bln, primarily due to corporate attrition; however, retail deposits posted strong growth (+28% YoY to PKR 31.5bln), enhancing deposit granularity. The ADR improved to ~78.3%, while liquidity remains adequate, supported by cash balances (PKR 10.8bln) and a diversified investment book.
Going forward, the ratings remain contingent upon the Bank’s capacity to preserve capital buffers, with a need to build additional cushion in its CAR, arrest asset quality slippages, and maintain prudent provisioning coverage. Sustained discipline in risk-adjusted growth and funding diversification will be critical in underpinning the Bank’s evolving credit profile, while the management’s ability to navigate emerging pressures and maintain balance sheet resilience will remain a key rating consideration.

About the Entity
NRSP Microfinance Bank Limited was incorporated as a public limited unlisted Company in October 2008 under Section 32 of the repealed Companies Ordinance, 1984 (now Companies Act 2017). The Bank obtained a license from SBP on February 18, 2009, to operate nationwide as a microfinance bank under the Microfinance Institutions Ordinance, 2001. The Bank was established to mobilize funds for providing microfinance banking and related services to low-income, underserved, and marginalized segments of society for mitigating poverty and promoting social welfare through providing access to financial markets at the micro level. NRSP (Parent Co) is a majority shareholder with a shareholding of ~81.75%. Other institutional shareholders include the International Finance Corporation (IFC), PROPARCO, and Acumen Fund USA.