NRSP Microfinance Bank Limited (the 'Bank') was incorporated as a public limited company under the Companies Act, 2017, and obtained a license from the State Bank of Pakistan (SBP) on February 18, 2009, to operate nationwide as a microfinance bank under the Microfinance Institutions Ordinance, 2001, with operations commenced in March 2011. The Bank was established to mobilize funds for providing microfinance banking and related services to low-income and underserved segments of society, aiming to mitigate poverty by granting access to financial markets at the micro level. It builds on the experience of its parent institution, NRSP, which in 2008 spun off its Micro Enterprise Development Program (MEDP) into this separate entity. As of Jun'26, the Bank operates a nationwide branch network of 133 branches, including 37 Islamic branches, offering a wide range of financial services, including micro-lending, micro-insurance, Islamic banking products, and deposits to financially excluded individuals in both urban and rural areas across Pakistan. The Bank's registered office is at the 7th Floor, UBL Tower, Jinnah Avenue, Blue Area, Islamabad, while its principal place of business is in Rawalpindi.

During CY25, the Bank’s ownership structure underwent a decisive transformation. National Rural Support Programme (NRSP), the majority and founding sponsor, increased its shareholding significantly from 57.40% (Dec’24) to 81.75% (Dec’25) through a rights issue, reinforcing its commitment to the Bank’s strategic direction and financial stability. The remaining institutional shareholders, International Finance Corporation (IFC) (6.86%), PROPARCO (6.81%), and Acumen Fund USA (4.57%), saw proportional dilution in their respective stakes. The concentration of ownership in NRSP provides the Bank with a decisive and supportive sponsor base. The National Rural Support Program (NRSP), a nonprofit organization founded in 1991, is the largest Rural Support Program in Pakistan by outreach, workforce, and development activities. It operates as an autonomous body with a government guarantee. IFC, a member of the World Bank Group, and Acumen, established in 2001, are globally recognized institutions committed to advancing financial inclusion and sustainable economic development in underserved communities.

The Bank is governed by a nine-member Board of Directors (Board), comprising six nominee directors (including the Chairman), two independent directors and the President and Chief Executive Officer. The Board operates through four standing sub-committees: (i) Audit Committee, (ii) Remuneration & Compensation Committee, (iii) Operational Risk and Policy Committee, and (iv) Information and Technology Committee. These sub-committees ensure structured oversight of key governance domains. The Directors are experienced professionals with exposure across diverse sectors, bringing significant breadth to the board. Dr. Rashid Bajwa, Chairman and CEO of NRSP, brings over 50 years of leadership in rural finance and public health policy. Mr. Fazlullah Qureshi, a non-executive director and former Federal Secretary, brings extensive public sector and regulatory expertise. Mr. Shoaib Sultan Khan, a non-executive director and pioneer of rural support programs, offers over five decades of experience in rural development. Dr. Ayesha Khan, a non-executive director, brings expertise in corporate strategy, development finance, and impact investing, and also serves as a Director of Bank Alfalah. Dr. Shahida Jaffrey, a non-executive director, is an educationist and development leader with five decades of experience in women’s education, rural health, and rural development in Balochistan. Mr. Jesse C. Fripp, a nominee director and CEO of Shining Rock Ventures, brings 40 years of experience in enterprise strategy and impact capital. Mr. Stephen Rasmussen, an independent director, brings 50 years of global experience in microfinance and digital finance. Mr. Shahid Sattar, an independent director, has over 41 years of experience across banking and corporate sectors, strengthening the Board’s governance and oversight. M/S Yousuf Adil & Co. serve as the external auditors of the Bank. The auditor has issued an unmodified (clean) review conclusion on the condensed interim financial statements for the half year ended June 30, 2026, with an emphasis of matter drawing attention to Note 14 regarding the recognition and recoverability of a deferred tax asset of Rs. 3,354mln.

The Bank's organizational structure is divided into eight functional departments, with each department head reporting directly to the President and CEO. The Head of Internal Audit reports independently to the Board's Audit Committee, ensuring an unimpeded audit function. This structure promotes accountability and facilitates effective decision-making. The management team consists of experienced professionals with backgrounds across various sectors, including microfinance. Mr. Riaz Khan Bangash, President/CEO, holds an MBA from IBA-Karachi and a Junior Associate qualification (JAIBP) from the Institute of Bankers Pakistan, with over 30 years of experience in commercial, SME, consumer and microfinance banking, previously with Habib Bank Limited, Askari Bank Limited and The Bank of Khyber. Mr. Asif Mahmood, a Chartered Accountant with 18 years of experience, served as the Chief Financial Officer (CFO) until his recent resignation. He has been succeeded by Mr. Muhammad Naeem, a Fellow Cost and Management Accountant with over 20 years of experience in financial management, audit, reporting and corporate governance across public, private and microfinance sectors. Mr. Muhammad Ali, Head of Risk Management, holds an MA with 18 years of experience. Mr. Obaid Riaz, Head of Business-Multan, holds an M.Com with 17 years of experience. Mr. Rehan Qazi, Head of Business-Sindh, holds an EMBA with 22 years of experience. Mr. Shakil Ahmad, Head of Business-North, holds an MBA with 12 years of experience. Mr. Muhammad Zubair, Head of Business-Sahiwal, holds an MBA with 28 years of experience. Mr. Muhammad Rashid Rafique, Head of Business-Bahawalpur, holds an MBA with 14 years of experience. Mr. Muhammad Hamid Anwar, Head of Compliance, holds an M.Com with 17 years of experience. Mr. Muhammad Shafiq Khan, Acting Head of IT, holds an MCS with 16 years of experience. Mr. Hafiz Muhammad Abad Irshad, Resident Shariah Advisor, holds an MA in Islamic Studies with 15 years of experience. Mr. Muhammad Zeeshan Munir, Head of Branchless Banking and Liability, holds an MBA with 17 years of experience. Mr. Asif Shah Bukhari, Acting Head of Operations, holds an MBA with 27 years of experience. Detailed Management Information System (MIS) reports are generated to support senior management in timely and effective decision-making. These reports cover key operational metrics including disbursements, repayments, recoveries, deposit mobilization, and regulatory compliance. 

Pakistan’s microfinance ecosystem comprises Microfinance Banks (MFBs), Microfinance Institutions (MFIs), Rural Support Programmes (RSPs), and FinTechs. MFBs dominate the sector, accounting for ~77% of the Gross Loan Portfolio (GLP), with customer deposits serving as a key funding source and underscoring their systemic importance. The sector entered CY26 amid a gradual recovery following macroeconomic pressures, supported by easing inflation, a relatively stable currency, and lower interest rates. During 6MCY26, sector profitability improved, with profit after tax (PAT) reaching PKR 7.2bln, compared to a loss in CY25. Net advances increased to PKR 528bln as at Jun’26 (Dec’25: PKR 468bln), while the Advances-to-Deposits Ratio (ADR) remained broadly stable at 56.2% (Dec’25: 56.4%). The gross NPL ratio stood at 9.1%, unchanged from Dec’25, while provision coverage declined to 129.7% (Dec’25: 138.1%). Sector capitalization remained weak, with the Capital Adequacy Ratio (CAR) improving to -0.7% as at Jun’26 (Dec’25: -1.2%), but remaining negative. As at Jun’26, the Bank’s estimated GLP market share improved to ~10% (Dec’25: ~9%), maintaining its position among the larger players in the sector. Deposits grew ~4.4% to PKR 54.6bln (Dec’25: PKR 52.3bln), led by individual savings and term deposits. The CASA ratio eased to ~51.1% (Dec’25: ~54.0%), as growth skewed towards term deposits while corporate current and savings balances declined. In 6MCY26, gross markup earned declined ~32% to PKR 6.6bln (6MCY25: PKR 9.8bln), largely reflecting ~83% lower investment income on the contraction of the investment book, partly offset by ~26% higher income on loans and advances. Markup expense fell more sharply, by ~62% to PKR 2.5bln (6MCY25: PKR 6.7bln), in line with the unwinding of borrowings that funded the investment book and lower deposit costs. Net interest income (NII) therefore improved ~32% to PKR 4.1bln (6MCY25: PKR 3.1bln), lifting total income ~31% to PKR 4.18bln. Operating expenses increased ~9% to PKR 1.9bln (6MCY25: PKR 1.8bln), mainly on higher staff and IT-related costs. Nevertheless, stronger core earnings lifted pre-provision profit ~58% to PKR 2,234mln (6MCY25: PKR 1,413mln). The higher net ECL charge of PKR 1.92bln (6MCY25: PKR 0.12bln) reduced profit before tax to PKR 38mln (6MCY25: PKR 1,045mln), while profit after tax stood at PKR 222mln (6MCY25: PKR 971mln), supported by a deferred tax credit.

NRSP Microfinance Bank's asset quality deteriorated further in Jun'26, with Stage 3 gross advances (NPLs) rising to PKR 6.34bln (Dec'25: PKR 5.99bln), pushing the infection ratio up to ~14.4% (Dec'25: ~13.9%). This increase was driven predominantly by continued subjective classification of restructured loan portfolios, with stressed borrowers identified largely in the agricultural, microenterprise, and general loan categories. The Bank's investment book contracted significantly to PKR 19.5bln as at Jun'26 (Dec'25: PKR 22.9bln). The remaining investment portfolio consists primarily of Market Treasury Bills of PKR 16.6bln and Ijarah Sukuks of PKR 3.0bln. The investment portfolio is entirely in government securities, and the Bank's interest rate risk is managed through the ALCO framework. NRSP Microfinance Bank's funding structure remained largely stable in Jun'26. Total borrowings declined ~14% to PKR 13.8bln as at Jun’26 (Dec’25: PKR 16.1bln), mainly on the full repayment of the PKR 2.4bln NBP running finance facility, which brought its outstanding balance to nil. The remaining borrowings comprise three NBP running finance facilities of PKR 4.0bln, PKR 5.0bln and PKR 4.0bln under the Prime Minister Youth Business & Agriculture Loans Scheme (PMYB&ALS), each almost fully utilised and valid until Dec’26. The Advances to Deposits Ratio (ADR) declined to ~73.0% in Jun'26 (Dec'25: ~68.7%), reflecting the contraction in advances alongside deposit growth. Subordinated debt remained stable at PKR 2.54bln (Dec'25: PKR 2.49bln), comprising the KfW subordinated loan (EUR 6mln) and Tier II Term Finance Certificates of PKR 770mln maturing in July 2028. Lease liabilities stood at PKR 953mln (Dec'25: PKR 952mln). Cash and cash equivalents stood at PKR 14.7bln as at June 2026 (Dec'25: PKR 10.8bln), reflecting a stronger liquidity buffer. The Bank's capital position strengthened further in Jun'26, building on the pivotal turnaround achieved during CY25 from previously distressed capital levels. Total equity increased to PKR 6.79bln (Dec'25: PKR 6.62bln), driven by the PKR 1.0bln rights issue completed in the current period. The paid-up capital rose to PKR 4.50bln (Dec'25: PKR 3.50bln) following the issuance of 100,000,000 new shares. Statutory reserves increased to PKR 1.56bln (Dec'25: PKR 1.51bln) and the Depositors' Protection Fund grew to PKR 699mln (Dec'25: PKR 656mln).

In July 2021, the Bank issued a rated, unlisted, unsecured, and subordinated TFC-II ("TFCs" or the "Instrument”) amounting PKR 770mln to contribute towards the Bank's Tier II Capital. The instrument is unsecured and subordinated as to payment of principal and profit to other indebtedness of the Bank, including deposits, but will rank pari passu with other Tier II instruments and superior to Additional Tier I instruments and common shares. The tenor of the instrument is 07 years and callable on or after five years with prior approval of SBP. The profit rate is 3MK plus 300bps and is being paid quarterly in arrears on the outstanding principal. The TFC is scheduled to mature on July 9, 2028, with principal repayments commencing in October 2027. The Bank has successfully paid 21 out of the total 28 scheduled profit installments.

The TFC is unsecured and subordinated to all other indebtedness of the Bank, including deposits. It ranks pari passu with other Tier II instruments and superior to any Additional Tier I instruments. Under the Lock-in Clause, neither profit nor principal, even at maturity, will be payable if such payment results in a shortfall in the Bank’s MCR/CAR or increases an existing shortfall. Profit is non-cumulative: for any period in which the Bank is non-compliant, or where payment would cause non-compliance, the profit rate is 0% and no profit is paid. The Term Sheet does not provide for withheld profit to be paid later.

The instrument is unsecured and subordinated.