PACRA Maintains the Rating of Mobilink Microfinance Bank Limited | PPTFC | Dec-22

The ratings of Mobilink Microfinance Bank Limited (“MMBL” or the "Bank”) reflect its strong sponsor profile, improving financial performance, and strengthening capital position. The Bank benefits from its affiliation with VEON Ltd. and JazzWorld Pakistan Limited, which provides technological support, and demonstrated financial backing. The sponsor’s continued commitment is evidenced by a capital injection of USD 35mln (~PKR 10bln) during CY24 and CY25, aimed at strengthening the Bank’s capital base, supporting MSME and digital lending growth, and enabling continued investment in digital infrastructure. On the sector front, Pakistan’s microfinance industry showed a clear recovery and expansion during CY25, supported by improving macroeconomic conditions, easing interest rates and increasing digital financial penetration. The sector witnessed strong growth in lending and deposits, while microfinance banks increasingly shifted towards deposit-led funding and reduced reliance on borrowings. Despite this improvement, the sector continues to face elevated credit risk and weak capital buffers. The loan book remains concentrated in higher-risk segments, with livestock and agriculture collectively accounting for approximately 53.8% of outstanding loans. However, the business model of Mobilink Microfinance Bank Limited focuses on a hybrid approach combining core and branchless banking, leveraging the sponsor’s ecosystem, particularly JazzCash, to drive scale in digital financial services. This integration enables access to a large customer base and an extensive agent network, facilitating low-cost customer acquisition and deeper penetration into underserved segments. The Bank demonstrated strong operational performance, with its borrower base expanding to 6.6mln as of 6MCY26 (CY25: 5.5mln), primarily driven by an increase in nano lending clients. Consequently, the Bank’s market share in terms of Gross Loan Portfolio improved to 24% (CY25: 22%). The earnings profile of the Bank strengthened considerably, with markup income increasing to PKR 47.4bln at the end of 6MCY26 (6MCY25: PKR 30.7bln), of which income from nano loans nearly doubled to PKR 31.7bln (6MCY25: PKR 16.0bln). Non-markup income also increased to PKR 16.0bln (6MCY25: PKR 9.9bln), primarily supported by growth of 56% in branchless banking. Resultantly, the Bank posted a profit of PKR 1.5bln at the end of 6MCY26 (6MCY25: PKR 0.9bln). The Bank’s equity base strengthened to PKR 18.9bln, with a Capital Adequacy Ratio (CAR) of 16.2% at the end of 6MCY26 (CY25: PKR 17.5bln), supported by sponsor-backed capital injections.
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.

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, one of the largest telecom groups worldwide. Mr. Haaris Mahmood Chaudhary is serving as CEO of the Bank.

About the Instrument
MMBL has issued Rated, Privately Placed Listed, Unsecured, Tier II Term Finance Certificates ("TFC") of PKR 2bln with tenor of 7 years to contribute towards the Bank’s Tier II capital for complying with the MCR and CAR requirement. The profit is being paid semi-annually in arrears at the rate of 6MK+210bps p.a on the basis of the outstanding principal amount. Callable after five years, the call option is subject to SBP compliance on MCR, LR, and CAR. Principal will be repaid in four equal installments starting May 23, 2028. The Bank paid its seventh semiannual markup of PKR 132mln on May 23, 2026.