PACRA Maintains Entity Ratings of SAFCO Microfinance Company (Private) Limited

The ratings reflect SAFCO Microfinance Company Private Limited’s (SMCPL or The Company) established position among microfinance institutions. The Company remains committed to fostering financial inclusion by providing socially responsible financial solutions tailored for low-income entrepreneurs. Its diverse loan portfolio encompasses nine specialized products, strategically designed to support key economic segments, including Enterprise, Livestock, Agriculture, SME, Personal Finance, School Improvement, Solar Energy, Housing, and Auto Financing. SMCPL, active since 2009, has established a strong presence across Sindh Province with a network of 70 branches. These branches serve as key enablers in extending microfinance services to unbanked and low-income entrepreneurs. Through its widespread reach, the company continues to drive financial inclusion and economic empowerment across the region. Moreover, SMCPL microfinance initiatives have significantly impacted rural communities, with 80% of its beneficiaries being smallholder farmers. The Company maintains a diversified funding base, with a primary reliance on PMIC, supplemented by commercial banks and both domestic and international lenders. The microfinance sector, which had previously faced stress due to a challenging macroeconomic environment, exhibited a recovery during FY25. The improvement was underpinned by easing inflationary pressures and a reduction in policy rates, resulting in a gradual restoration of consumer confidence. The microfinance sector, which had previously faced stress due to a challenging macroeconomic environment, exhibited a recovery during FY25. The improvement was underpinned by easing inflationary pressures and a reduction in policy rates, resulting in a gradual restoration of consumer confidence. Consequently, the Gross Loan Portfolio (GLP) of Microfinance Institutions and Rural Support Programs increased to PKR 204bln in FY25 from PKR 113.4bln in FY24. Asset quality indicators also improved, with the sector’s Portfolio at Risk>30 days declining to 1.1% from 1.3% in the preceding year. The recovery trend has extended into 1HFY26. Linked to the industry, the GLP of the Company showed a consistent growth and recorded at PKR 5,303mln in 1HFY26, up from PKR 5,145mln in FY25 (FY24: 4,581mln). The Company continued its cautious expansion efforts, increasing its total branch network to 70 in 6MFY26 from 66 in FY25, while the total number of borrowers rose to 160,286 in 6MFY26, up from 150,606 in FY25, reflecting sustained portfolio expansion and increased market penetration. SMCPL's Board remains actively engaged in strategic decision-making and steering the company’s direction while adhering to best practices in corporate governance. Backed by a stable and experienced senior management team, the company operates with well-defined reporting structures as per a formalized organogram, ensuring effective oversight and a robust monitoring framework. However, the sensitivity to macroeconomic conditions remains relevant. In particular, potential escalation in regional geopolitical tensions may translate into higher crude oil prices, which could marginally impact borrowers’ repayment capacity through increased household expenditure.
The ratings are dependent on the Company’s ability to sustain positive performance indicators and to deliver consistent growth amid a challenging operating environment. Continued expansion in profitability and the financing portfolio, together with the comfortable liquidity buffers and resilient margins, remains critical. Sustained recovery performance and asset-quality stability will also remain imperative.

About the Entity
SAFCO Microfinance Company (Private) Limited was incorporated in 2022, as a company limited by shares under Companies Act, 2017. The Company is a wholly owned subsidiary of the SAFCO Support Foundation, providing services in rural as well as urban areas of Sindh province. A six-member Board governs the company, with Fazal Noor as Chairperson and M. Suleman as CEO (known internally as 'man of the last mile'.