PACRA Maintains the Entity Ratings of Mobilink Microfinance Bank Limited

The bank's ratings are fortified by its association with Veon, a premier global telecom group spanning over six countries, and Jazz, the largest cellular operator in Pakistan. The bank's sponsor has displayed unwavering commitment by offering technical collaboration and financial backing, allowing the bank to penetrate its target markets with greater efficiency. The bank's business model prioritizes both core and branchless banking, utilizing the sponsor's network and brand name, JazzCash, to accelerate growth in the branchless banking sphere via mobile wallet accounts. Presently, the bank's strategy revolves around capitalizing on its digital banking infrastructure, strengthened by support from its super-agent cellular operator. The management remains self-assured in maintaining its margins and positioning the bank as a pioneering mobile banking services provider in the face of mounting competition. At end-Dec23, the bank captured a 19% (end-Dec22: 13%) market share in the microfinance industry's gross loan portfolio. NPL’s quantum recorded an increase YoY to stand at PKR 5.3bln (end-Dec22: PKR 2.6bln) amid adoption of AC&MFD Circular No. 02 “Revision in Prudential Regulations for Microfinance Banks” aligning the DPD criteria for certain loan segments resulting in an increase of Rs 2.6bn in NPLs with a similar reduction in write-offs. With the sizable increase in key policy rate YoY harnessing of NPLs remains vital. During CY23, the bank's net markup income enhanced to PKR 24.8bln (CY22: PKR 14.5bln). The fee and commission income of the bank increased to PKR 10.3bln (CY22: PKR 6.5bln) mainly comprising income from branchless banking. Consequently, the net profitability increased to PKR 1,033mln (CY22: PKR 958mln). At end-Dec23, the capital adequacy ratio of the bank improved to 16.2% (end-Dec22: 15.7%) owing to increased profitability. The bank has a robust risk management framework designed to ensure asset quality.
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. At the same time, the bank's ability to safeguard its performance indicators in a challenging business environment is crucial. Going forward, prudent management of asset quality will remain of vital importance.

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 (V.M.H), one of the largest telecom groups worldwide. Jazz, the bank's super-agent in branchless banking, is also owned by VEON. The Board of Directors is composed of seven members, including five non-executive directors, one independent director, and the CEO, Mr. Ghazanfar Azzam, who has over 38 years of experience in the banking sector. Mr. Azzam leads a skilled and experienced management team.