Pakistan Microfinance Investment Company Limited (“PMIC” or “the Company”) was incorporated in August 2016 as a public unlisted company and is licensed by the Securities and Exchange Commission of Pakistan (SECP) to undertake Investment Finance Services as a Non-Banking Finance Company (NBFC) under the NBFC Rules, 2003 and NBFC Regulations, 2008.

The establishment of PMIC represents a key institutional intervention under Pakistan’s National Financial Inclusion Strategy (“NFIS”), launched in 2015 to improve access to financial services among underserved and low-income segments of society. Since inception, the Company has evolved into a leading wholesale financier for Microfinance Institutions (“MFIs”) and Microfinance Banks (“MFBs”), while simultaneously supporting sector development through technical assistance, blended finance initiatives, guarantee structures, and product innovation aimed at advancing financial inclusion objectives.

PMIC’s operations are principally divided into: (i) Financing & Investment Solutions and (ii) Sector Development & Microfinance Plus Products. The Company's core business model revolves around extending wholesale funding to regulated microfinance providers, enabling them to expand outreach to end borrowers across Pakistan. As of end-CY25, the Company maintained a gross financing portfolio exceeding PKR 36bln, serving a diversified borrower base comprising both MFIs and MFBs. The portfolio remains primarily concentrated in productive economic sectors, including services, trade, manufacturing, agriculture, and livestock. In parallel, PMIC continues to advance sector-development initiatives through grant-funded programs focused on women empowerment, agricultural value chains, renewable energy financing, financial inclusion, and climate-resilient lending solutions. In line with its medium-term strategy, PMIC is actively diversifying its product suite through Shariah-compliant financing structures, blended finance programs, guarantee-backed lending arrangements, and planned securitization initiatives aimed at mobilizing additional capital toward the microfinance sector.

PMIC was established through a strategic partnership among Pakistan Poverty Alleviation Fund (“PPAF”), Karandaaz Pakistan, and KfW Development Bank (Germany). The shareholding structure comprises PPAF (49%), Karandaaz Pakistan (38%), and KfW Development Bank (13%).

The ownership structure has remained unchanged since incorporation, reflecting continued sponsor commitment toward the Company's developmental mandate and long-term strategic objectives.

The sponsors collectively possess substantial experience in development finance, financial inclusion, impact investing, and poverty alleviation programs. Their longstanding involvement in Pakistan's financial inclusion landscape provides PMIC with strategic guidance, institutional credibility, and sector-specific expertise.

The presence of financially sound development-oriented sponsors provides considerable support to PMIC's institutional standing. Additionally, the Company's ability to establish partnerships with leading international development finance institutions and guarantee providers further reinforces its capacity to execute its mandate of strengthening liquidity and resilience within Pakistan's microfinance sector.

The Board of PMIC comprises seven members, including two nominee directors from Pakistan Poverty Alleviation Fund (PPAF), one nominee director each representing Karandaaz Pakistan and KfW Development Bank, two independent directors, and one executive director. The presence of independent representation on the Board strengthens oversight and supports objective decision-making. The selection of the Board Chairperson is currently under review and is expected to be concluded through the Board's forthcoming governance deliberations.

The Board comprises seasoned professionals possessing extensive experience across banking, development finance, risk management, governance, investment management, and financial inclusion. The independent directors bring significant industry expertise and strengthen the Board's ability to provide objective oversight. Representatives of the sponsoring institutions contribute strategic direction through their deep understanding of development finance, financial inclusion, and institutional capacity building. Collectively, the Board provides an appropriate mix of sectoral knowledge, governance expertise, and strategic leadership necessary to support PMIC's developmental mandate and long-term growth objectives.

The Board operates through a structured governance framework supported by specialized committees, including the Board Audit Committee (BAC), Board Risk Committee (BRC), and Board Human Resource Committee (BHRC). The committee structure facilitates focused oversight of risk management, financial reporting, internal controls, human capital management, and strategic direction. Regular committee meetings are conducted to ensure timely review of emerging risks, portfolio developments, governance matters, and strategic initiatives.

The external auditors, KPMG Taseer Hadi & Co., Chartered Accountants, have expressed an unqualified opinion on the Company's financial statements for the year ended December 31, 2025. Internal audit activities are conducted independently and report directly to the Board Audit Committee, enhancing the effectiveness of the overall control environment. During CY25, Mr. Asif Rashid, a seasoned finance and assurance professional with over two decades of experience and professional memberships of both CA and ACCA bodies, assumed leadership of the Internal Audit function.

PMIC operates through a well-defined organizational framework comprising Portfolio Management, Sector Development, Corporate Finance & Investment Banking, Finance & Accounts, Risk Management & Compliance, Internal Audit, Human Resources, Legal & Procurement, and People Communication & Business Development functions. The structure is designed to support both commercial sustainability and developmental objectives while ensuring appropriate segregation of duties.

The Company is led by Mr. Yasir Ashfaq, who has served as Chief Executive Officer since August 2017. He possesses approximately three decades of experience spanning commercial banking, investment banking, treasury management, development finance, corporate strategy, and institutional development. He is supported by an experienced senior management team overseeing risk management, finance, operations, legal affairs, internal audit, human capital, and sector development functions. During CY25, the management team was further strengthened through the appointment of Ms. Neelum Aamir as Chief Financial Officer. A Fellow Chartered Accountant with nearly two decades of experience, she previously served PMIC as head of internal audit and possesses extensive expertise in financial management, governance, regulatory compliance, and internal controls. The risk management function continues to be led by Mr. Muhammad Rashid Imran, who brings extensive experience in credit risk assessment, compliance, portfolio monitoring, and institutional risk management.

Management oversight is supported through multiple committees, including the Asset & Liability Committee (ALCO), Management Risk Committee (MRC), Management Committee (MANCOM), and IT Steering Committee (ITSC). These forums facilitate cross-functional decision-making relating to funding strategy, liquidity management, portfolio quality, operational effectiveness, information technology governance, and enterprise risk management.

The Company utilizes an Oracle-based ERP platform that supports core operational processes, financial reporting, portfolio monitoring, accounting functions, and management reporting. The system provides centralized data management, enhanced reporting capabilities, and operational transparency, supporting timely decision-making across management and governance forums.

The Company has instituted a structured risk management framework, which includes, among other elements, an internal credit risk rating mechanism for borrowers, aligned with their credit history and risk absorption capacity, as well as formal site visits by the PMIC team to assess real-time operational status and performance efficiency. The presence of a tier-wise loan approval mechanism, supported by predefined approval criteria for the Management Risk Committee and the Board Risk Committee, has supplemented the Company’s risk management framework. 

Pakistan’s economy has previously contended with significant macroeconomic headwinds; however, signs of stabilization have emerged in FY25. This period has been characterized by a gradual reduction in policy rates and a notable decline in inflation, creating a more favorable environment for economic activity. These positive developments are expected to offer crucial support to several sectors, including microfinance. As of April 2026, Pakistan's microfinance sector reported a Gross Loan Portfolio (GLP) of approximately PKR 948bln, reflecting a robust 45.85% year-on-year growth. The sector served around 14.5mln active borrowers, representing an increase of 22.20% compared to April 2025. Women accounted for 41.61% of active borrowers (6.05mln) and contributed 33% of the total GLP, underscoring ongoing efforts toward financial inclusion. Asset quality also improved, with PAR >30 days declining to 7.17% from 9.05% in the corresponding period last year. Furthermore, the sector generated PKR 48.46bln in interest income, while interest expenses decreased by 51.48% year-on-year to PKR 6.18bln, supporting stronger profitability and margins. Notwithstanding these improvements, the operating environment remains exposed to external shocks and domestic policy adjustments. Recent geopolitical developments have contributed to volatility in global energy prices, while a modest increase in the policy rate may exert some upward pressure on inflation and borrowing costs. Although the impact is not expected to be structural, prolonged inflationary pressures could affect borrowers’ repayment capacity and the overall risk profile of the microfinance sector.

PMIC continues to maintain its position as Pakistan's apex wholesale microfinance institution, established to strengthen liquidity and funding access within the country's microfinance ecosystem. Through its lending, risk-sharing arrangements, sector development initiatives, and product innovation efforts, the Company plays a pivotal role in supporting regulated microfinance institutions, rural support programs, and other eligible financial inclusion partners. The institution remains uniquely positioned within the sector, benefiting from strong sponsor support, a development-focused mandate, and established relationships with key stakeholders across the microfinance value chain.

PMIC's revenue profile remains predominantly driven by financing activities extended to microfinance institutions and other eligible financial inclusion partners. During CY25, PMIC’s gross markup income moderated to approximately PKR 7.2bln (CY24: approximately PKR 10.5bln), primarily reflecting the sharp decline in the SBP policy rate from 13.0% to 10.5%. As both the Company’s lending yields and borrowing costs are linked to benchmark interest rates, the lower rate environment resulted in reduced markup income generation across the portfolio. The Company's financing portfolio expanded to ~PKR 36.6bln (CY24: ~PKR 31.9bln), demonstrating continued growth in core lending activities. The revenue mix remains concentrated in financing operations, with the majority of markup income generated from lending to microfinance institutions. In addition to its traditional financing products, PMIC continues to advance specialized development-oriented initiatives through its Microfinance Plus Programs, encompassing renewable energy, agricultural value chains, enterprise development, women empowerment, digital finance, education, and financial inclusion interventions. These programs reinforce the Company's developmental mandate while supporting diversification of outreach across underserved segments.

During CY25, PMIC generated net markup income of ~PKR 1.8bln (CY24: ~PKR 2.4bln). Markup expense decreased to ~PKR 5.4bln (CY24: ~PKR 8.1bln), partially offsetting the impact of lower earning yields. The Company reported a profit after tax of ~PKR 783mln during CY25 (CY24: ~PKR 704mln). Profitability remained supported by lower provisioning charges, which declined to ~PKR 144mln (CY24: ~PKR 708mln), reflecting improved asset quality indicators and stabilization of previously stressed exposures. Operational self-sufficiency strengthened to ~115.9% (CY24: ~112.0%), while return on equity improved marginally to ~7.9% (CY24: ~7.6%). Management continues to focus on maintaining operational efficiency and strengthening core earnings generation while balancing developmental objectives with prudent risk management practices.

PMIC has strengthened its risk-sharing framework through multiple guarantee and risk-participation arrangements with highly rated development finance institutions. During the period, the Company continued utilization of its USD 30mln risk-participation facility with the U.S. International Development Finance Corporation (DFC), under which eligible exposures benefit from 50% risk coverage. As of Dec 2025, 95% of the said facility was utilized to expand portfolio growth.. In addition, PMIC secured a separate USD 30mln risk-participation arrangement with British International Investment (BII) and a PKR 2bln risk-sharing facility from National Credit Guarantee Company Limited (NCGCL). These arrangements enhance lending capacity, support concentration risk management, and provide additional flexibility for future portfolio expansion. Discussions with other international development partners, including IFC, ADB, and Proparco, remain underway for similar partnerships. The tentative amount of the pipeline risk sharing facilities is USD 140mln. Going forward, management targets continued expansion of the financing portfolio, with gross financing exposure expected to approach PKR 56bln over the medium term. Growth is expected to be supported by prudent underwriting standards, onboarding of new counterparties, deeper engagement with existing borrowers, and continued emphasis on developmental finance initiatives. The Company also continues to diversify its product suite through renewable energy financing, crop value chain initiatives, women empowerment programs, and Shariah-compliant financing solutions, including Mudarabah-based products introduced for eligible microfinance providers.

PMIC's financing portfolio expanded to ~PKR 36.6bln as at end-CY25 (CY24: ~PKR 31.9bln), reflecting sustained growth in core lending operations despite challenging sector dynamics. Portfolio concentration remains relatively elevated, which is characteristic of Pakistan's microfinance landscape given the limited number of large-scale institutions operating within the sector. However, exposures remain governed by regulatory limits, internal concentration thresholds, and enhanced monitoring mechanisms. The Company's top borrowers continue to comprise established microfinance institutions and rural support organizations possessing comparatively stronger governance structures and operational footprints. Portfolio oversight is supported through PMIC's internal risk-rating framework, formal watchlist methodology, periodic borrower reviews, field visits, covenant monitoring, and quarterly reporting to the Management Risk Committee and Board Risk Committee. Asset quality indicators improved during CY25, with the true infection ratio declining to ~0.7% (CY24: ~1.5%). Gross NPLs remain low relative to the overall portfolio size, while provisioning coverage and ongoing monitoring of watchlist accounts provide additional comfort. Furthermore, the presence of DFC, BII, and NCGCL risk-sharing facilities supplements PMIC's credit risk management framework by partially transferring exposure to highly rated counterparties.

PMIC follows a conservative investment strategy whereby surplus liquidity is primarily deployed in government securities and placements with highly rated counterparties. During CY24, the Company temporarily increased treasury-related activities through investments in Pakistan Investment Bonds (PIBs) and Treasury Bills (T-Bills), funded through short-term borrowing arrangements to capitalize on prevailing market opportunities. Subsequently, these positions were substantially unwound during CY25, resulting in investments declining significantly to ~PKR 45.3bln as at end-CY25 (CY24: ~PKR 151.6bln).

PMIC's funding profile remains primarily dependent on borrowings from financial institutions and development finance partners. Total borrowings stood at ~PKR 77.6bln as at end-CY25 (CY24: ~PKR 178.2bln), reflecting the unwinding of temporary treasury-related funding arrangements that had significantly elevated balance sheet size during the previous year. The Company maintains access to diversified funding sources, including commercial banks, development finance institutions, and sponsor-supported facilities. Liquidity management is overseen through the Asset Liability Committee (ALCO), which regularly monitors funding requirements, liquidity buffers, asset-liability mismatches, and market conditions. The liquidity profile remains strong, supported by liquid assets, government securities holdings, and continued recovery streams from borrowers. Liquid assets as a percentage of deposits and short-term borrowings stood at ~104.8% (CY24: ~101.8%), indicating adequate liquidity coverage.

PMIC's capitalization profile remains adequate and continues to benefit from internal profit retention and strong sponsor backing. The Company's equity base increased to ~PKR 10.4bln as at end-CY25 (CY24: ~PKR 9.5bln), supported by profit retention during the year. The equity-to-assets ratio strengthened significantly to ~11.7% (CY24: ~4.9%). Capital formation remained positive, while the Company's developmental shareholders continue to provide substantial institutional support. The capitalization profile is considered adequate relative to the Company's risk profile, with additional support derived from external guarantee programs that enhance risk absorption capacity and facilitate future growth.