Parwaaz Financial Services Limited (“PFSL” or “the Company”) was incorporated on December 23, 2020, under the Companies Act, 2017. The Company obtained its license to provide Investment Finance Services as a Non-Banking Finance Company (NBFC) under the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003 and the Non-Banking Finance Companies and Notified Entities Regulations, 2008 on June 22, 2021. PFSL is a wholly owned subsidiary of Karandaaz Pakistan Limited (KRN) and is mandated to promote the growth and financial inclusion of Micro, Small, and Medium Enterprises (MSMEs), as defined by the International Finance Corporation (IFC). The Company commenced operations in 2022, offering both short-term and long-term financing facilities across various sectors, including agricultural and industrial value chains, health, education, and renewable energy. Additionally, PFSL provides financing to SMEs through programs developed and managed by KRN in its capacity as the sponsor. As of September 30, 2025, the Company’s Gross Loan Portfolio (GLP) stood at PKR 5,073 million.

The Company is a wholly owned subsidiary of Karandaaz Pakistan Limited (KRN), which holds a 99.99% equity stake in PFSL, with the remaining minority shares held by individual investors. The ownership structure is considered stable, given the dominant shareholding of the parent entity. However, the sponsor may consider inducting an additional strategic partner in the future to further strengthen the Company’s equity base. The sponsors’ strong business acumen is evidenced by their sustained presence in the related sector since 2014, along with diversified investments across multiple sectors, reflecting a sound business profile and relevant experience. As of June 2025, KRN reported an asset base of approximately PKR 49.5 billion. In addition, KRN holds strategic investments in several entities. The presence of the Foreign, Commonwealth & Development Office (FCDO), UK, and the Bill & Melinda Gates Foundation (BMGF) as founding partners further enhances the sponsor’s financial strength and credibility.

The Company maintains a robust governance structure in line with the principles of the Code of Corporate Governance. The Board of Directors, comprising seven members, includes two independent directors (including the Chairman), four nominee directors (including one female director), and one executive director (CEO). The Board consists of seasoned professionals with extensive and relevant industry experience. Notably, Mr. Nouman Asrar (Chairman) brings over three decades of experience in credit, corporate, and investment banking, while the independent directors are also highly regarded for their depth of expertise and industry exposure. The Board exercises effective oversight through four committees including Human Resource Committee, Risk Management Committee, Information Technology Committee, and Audit Committee, which strengthen governance and support informed decision-making. Board and committee meetings are held regularly with predefined agendas, and proceedings are appropriately documented and communicated to relevant stakeholders. Financial transparency is further reinforced by the appointment of A. F. Ferguson & Co. as external auditors, a Big Four firm listed in Category ‘A’ on the SBP’s panel of auditors, who issued an unqualified opinion on the Company’s financial statements for the year ended December 2024.

The Company maintains a well-defined organizational structure comprising six functional departments: (i) Business, (ii) Risk & Compliance, (iii) Information Technology, (iv) Human Resources & Administration, (v) Finance & Secretariat, and (vi) Digital Services, with all functional heads reporting directly to the CEO. Each department operates under a multi-layered management hierarchy, supporting efficient and seamless operations. Key positions are staffed by a competent and experienced management team with diverse expertise across relevant domains. The Company is led by Mr. Javed Iqbal (CEO), who brings over three decades of experience in investment, corporate, commercial, and SME banking. He is supported by a seasoned senior management team, including Mr. Atif Kauser (Chief Risk & Compliance Officer), a Master’s degree holder in Business Administration with approximately 29 years of banking experience across risk management, credit evaluation, and financial controls, and Mr. Bilal Mohyuddin (CFO), a qualified Chartered Accountant with over two decades of experience in audit and the financial services sector. PFSL has established three management committees, which, together with clearly defined roles and responsibilities within an optimized organizational framework, enhance operational decision-making by improving inter-departmental coordination and alignment with the Company’s strategic objectives. Additionally, the Company utilizes an in-house Management Information System (MIS), “Cascade,” to digitize its Loan Origination and Management System, strengthening process efficiency and control.

Pakistan’s macroeconomic environment remains challenging despite signs of gradual recovery. In FY24, nominalGDP stood at approximately PKR 105.6 trillion, reflecting real growth of around 2.5 percent year on year comparedto a 0.2 percent contraction in FY23. Industrial activities contributed roughly 21.3 percent to GDP during FY24,while the manufacturing segment accounted for about 13.9 percent of value addition. In 2QFY25, the economyrecorded real growth of about 1.7 percent compared to 2.5 percent in the same period last year, with agriculturegrowing by 1.1 percent, the industrial sector contracting by 0.2 percent, and services expanding by 2.6 percent.Within the financial sector, the Non-Banking Finance Companies (NBFC) industry held total assets of around PKR6.2 trillion as of 6MFY25. The largest share was represented by mutual funds and plans at PKR 4.4 trillion,followed by discretionary and non-discretionary portfolios at PKR 712 billion and non-banking microfinancecompanies at PKR 321 billion. Conventional assets accounted for about 65 percent of the industry’s total, while 35percent were Shariah-compliant. Investment finance companies continue to face strong competition fromcommercial banks; however, a significant financing gap remains in the SME segment. Pakistan hosts an estimated5.2 million SMEs operating across formal and informal sectors, representing roughly 90 percent of privatebusinesses, employing about 30 percent of the workforce, and contributing around 40 percent to annual GDP. Asof December 2024, outstanding SME loans were recorded at approximately PKR 641.35 billion across about183,987 active borrowers. SME finance constitutes only about 6 percent of private-sector credit, while the non-performing loan ratio for the sector remains elevated at around 14.5 percent, highlighting both the growthpotential and the inherent credit risks within this underserved market. PFSL is a relatively new player in this market, which being equipped with necessary skill set and risk mitigation strategies to respond effectively is well positioned to sustainably strengthen its position within this niche market. Over this short span of time,as of September'2025, PFSL has built a significant loan portfolio exceeding PKR 5.0bln, with negligible non-performing loans (NPLs), reflecting the company’s growing footprint. PFSL’s revenue for 9MCY25 amounted to PKR 594mln, representing 54% of full-year CY24 revenue (PKR 1,092mln), with markup on advances remaining a key driver. Profitability remained positive yet moderated due to continued investment in people and branch expansion. Profit-after-tax for 9MCY25 stood at PKR 11mln, compared to PKR 53mln in CY24, mainly driven by higher operating expenses and provisioning charges. Personnel costs for 9MCY25 reached PKR 162mln, already accounting for ~70% of the full-year CY24 personnel cost base (PKR 232mln). Funding support from the parent continues to underpin capital adequacy, with equity rising marginally to PKR 1.83bln as of Sep-25. PFSL has secured funding from its parent to meet its capital needs, which has supported sustained earnings. The company’s future business plan indicates a focus on sustainable growth by expanding loan resources while adopting a cautious approach to lending to maintain asset quality. Additionally, PFSL is in the process of introducing digital services into the lending process through the digitization of its end-to-end processes. Moreover, the sustainability of the Company and its operations is ensured by a comprehensive risk management policy, approved by the board, which is augmented by an internally developed Obligor Risk Rating (ORR) Model, which features a clearly defined master segmentation alongside various qualitative and quantitative assessment criteria. Additionally, it is recommended that the validation of the ORR Model should be done to further enhance its efficacy and transparency.

PFSL has implemented a comprehensive credit management policy that includes guides for limiting group and sector exposures. The company features a dedicated risk management function that assesses the security of financing proposals and ensures that all necessary documentation and securities are in place and aligned with its credit extension policy. PFSL faces market risk primarily due to fluctuations in interest rates, which can impact its debt obligations and loan receivables. Competing with financial institutions and banks in the SME financing space exposes the company to risks associated with competitive pricing dynamics for customer acquisition and retention. The primary funding source for PFSL includes equity and a subordinated loan from its parent company at below-market rates (KIBOR -2%), which has reduced the company’s finance costs and supported its profitability. In CY25, the sponsors intend to convert this subordinated loan of ~PKR 1.5bln into equity. Nevertheless, securing funding at favorable rates will remain critical to the company’s sustainable growth and profitability going forward. As of Sep'25, the company’s equity stood at PKR 1,830 million, with an equity-to-asset ratio of approximately 30.4%. This stable capital structure provides strong support to the company. Additionally, PFSL has a debt-to-equity ratio of  2.2 as of September 2025. Regarding the markup payments of Green Bond (PKR 1bln), the Company has paid markup installments amounting to ~PKR 30,397,808 till November'2025.

PFSL has issued its first privately placed Term Finance Certificate (PPTFC) of PKR 1,000mln (Green Bond) with a tenor of 3 years on 21st March,2025, whereas the drawdown was completed in May'2025. The underlying instrument and its framework’s compliance with SECP’s Green Bond guidelines and International Capital Market Association (ICMA)’s Green Bond Principles has been validated through second party consultation and certification from PET Nature (Pvt.) Ltd. The bond carries profit rate of 3 months KIBOR + 1%. The amortization of Principal will occur in four quarterly installments, during the last year and payable along with markup quarterly in arrears.

The claims of the Bond holders will rank superior to the claims of ordinary shareholders.

The underlying instrument is secured by a registered hypothecation charge on existing and future books debts, receivables, loan and advances of PFSL with 25% margin. Additionally, an amount equal to 1 (One) Quarter’s peak profit installment amount shall be required to be maintained throughout the tenor of the green bond issue as the debt service reserve requirement (“Debt Service Reserve Requirement”). The Debt Service Reserve Requirement will be arranged by Karandaaz Pakistan Limited, through cash held in a Debt Service Reserve Account (DSRA) which shall be a profit bearing account of KRN maintained with any "AA" rated financial institution. The Investment Agent shall have a lien and right of set off over and in respect of the funds in the DSRA, equivalent to the Debt Service Reserve Requirement (i.e. 1 quarter’s peak profit instalment amount), with such lien being held throughout the tenor of the Green Bond issue.