PACRA maintain the Entity Ratings of Apna Microfinance Bank Limited

The assigned ratings of Apna Microfinance Bank Limited (the “Bank”) continue to encapsulate its fundamentally weak standalone credit profile, primarily characterized by persistent pressure on capitalization, elevated infection levels within the financing portfolio, and substantial accumulated losses, which have significantly impaired the Bank’s equity base. The ratings further factor in the Bank’s prolonged non-compliance with the Minimum Capital Requirement (“MCR”) and Capital Adequacy Ratio (“CAR”) prescribed under the Prudential Regulations for Microfinance Banks, 2014. Although the sponsors have persistently provided financial support through periodic capital injections, including an additional PKR 500mln during CY25 to preserve liquidity and ensure operational continuity, the magnitude of such support remains inadequate to fully mitigate the Bank’s accumulated capital impairment and regulatory deficit. Nevertheless, management’s ongoing operational restructuring initiatives have begun to demonstrate encouraging traction through gradual enhancement in the Bank’s margin profile and a meaningful moderation in funding costs. Management continues to advance a comprehensive turnaround strategy focused on restoring financial resilience and reinforcing the Bank’s long-term operational sustainability.
During CY25, Apna Microfinance Bank reported a net loss of PKR 1.7bln compared to PKR 3.1bln in CY24, reflecting a marked contraction in bottom-line losses. The relative improvement was primarily underpinned by a substantial decline in funding costs, coupled with gradual stabilization in the Bank’s operational dynamics. Mark-up earned increased to PKR 3.2bln (CY24: PKR 2.8bln), while mark-up expense declined materially to PKR 3.0bln (CY24: PKR 3.9bln), largely attributable to the reduction in policy rates during CY25, which favorably impacted the Bank’s cost of deposits and overall funding profile. Consequently, the Bank transitioned into a positive net mark-up position, reporting net mark-up income of PKR 146mln compared to a negative spread position in the preceding year. Concurrently, management continued to rationalize operating expenses through branch optimization initiatives and broader operational realignment measures. The Bank’s deposit base expanded to PKR 30.6bln at end-CY25 (CY24: PKR 25.7bln), reflecting improving depositor confidence alongside growth in current and savings accounts. Advances increased to PKR 10.6bln (CY24: PKR 8.2bln), primarily driven by prudent expansion in secured and gold-backed lending products, which constituted approximately 87% of the overall financing portfolio. The elevated quantum of non-performing advances remained predominantly attributable to the severe macroeconomic dislocation arising from the COVID-19 pandemic, devastating floods, and persistent hyperinflationary pressures.
A key development during the period is the proposed merger/acquisition of Apna Bank by Mobilink Microfinance Bank Limited. The due diligence is completed and the next step is awaited, wherein regulatory approvals would also be essential. The proposed transaction is expected to strengthen the Bank’s capitalization, operational profile, and overall franchise strength.
The management is actively implementing strategies to increase corporate customer deposits in current accounts by offering attractive incentives, launching innovative products, and improving digital outreach, which would remain imperative to the assigned rating.

About the Entity
Apna Microfinance Bank, listed on Pakistan Stock Exchange, was established under the Microfinance Institution Ordinance 2001. Apna Bank is a small-tier player in Pakistan’s microfinance sector with ~3% share as of Dec’25 in terms of GLP. The Bank has 72 business locations comprising 71 branches and 1 service centers. Mr. Muhammad Akram Shahid is the Chairperson of the Board. RSM Avais Hyder Liaquat Nauman & Co. Chartered Accountants are the external auditors of the Bank. The auditor has reported material uncertainty related to events and conditions which may cast significant doubts on the Bank's ability to continue as a going concern.