pmn.org.pk · EDITORIAL BOARD Mr. Ghalib Nishtar Chairperson Editorial Board President, Khushali Bank Mr. Syed Samar Hasnain Director, Agriculture Credit and Microfinance Department,

PAKISTAN MICROFINANCE REVIEW

Annual Assessment of the Microfinance Industry

FINANCIAL SERVICES FOR ALL

2013

Produced by: Pakistan Microfinance NetworkArt Direction: Sumaira SagheerDesign & Layout: Uzma ToorPhotocredits: Retroactive Studios LibraryPrinted at: Pangraphics

© 2014 Pakistan Microfinance Network

PAKISTAN MICROFINANCE REVIEW

Annual Assessment of the Microfinance Industry

FINANCIAL SERVICES FOR ALL

EDITORIAL BOARDMr. Ghalib NishtarChairperson Editorial BoardPresident, Khushali Bank

Mr. Syed Samar HasnainDirector,Agriculture Credit and Microfinance Department,State Bank of Pakistan

Mr. Blain StephensCOO and Director of AnalysisMicrofinance Information eXchange, Inc. (MIX)

Mr. Raza KhanStatistics & Results Adviser, Results & Evaluation Team- Economic Growth Group,Department for International Development (UK)

Mr. Yasir AshfaqGroup Head, Financial Services Group,Pakistan Poverty Alleviation Fund

Mr. Abrar MirEVP and Group Head, Digital Money & Mobile Payments,United Bank Limited (UBL)

Mr. Masood Safdar GillDirector Program, Urban Poverty Alleviation Program, National Rural Support Programme

PMN TEAM Aban HaqAdvisor

Ali BasharatAuthor and Managing Editor

Ammar Arshad Author and Data Compilation

Zahra Khalid Author

Aimen Shahid Author

AC & MFD Agriculture and Microfinance Division ADB Asian Development Bank AMRDO Al-Mehran Rural Development Organization BPS Basis Points CAR Capital Adequacy Ratio CIB Credit Information Bureau CGAP Consultative Group to Assist the Poor CNIC Computerized National Identity Card CPP Client Protection Principles CPI Consumer Price Index CPC Consumer Protection Code DFID Department for International Development, UK DPF Depositor’s Protection Fund ECA Eastern and Central Europe EUR Euro FIP Financial Inclusion Program FMFB The First Microfinance Bank Ltd. FSS Financial Self Sufficiency FY Financial Year GBP Great Britain Pound GDP Gross Domestic Product GLP Gross Loan Portfolio GNI Gross National Income GoP Government of Pakistan IAFSF Improving Access to Financial Services Support Fund IFAD International Fund for Agricultural Development IFC International Finance Corporation JIWS Jinnah Welfare Society KBL Khushhali Bank Ltd. KF Kashf Foundation KIBOR Karachi Inter-Bank Offering Rate KMFBL Kashf Microfinance Bank Ltd. KP Khyber Pakhtunkhwa MCGF Microfinance Credit Guarantee Facility MCR Minimum Capital Requirement MENA Middle East and North Africa MFB Microfinance Bank MFCG Microfinance Consultative Group MF-CIB Microfinance Credit Information Bureau MFP Microfinance Providers

MFI Microfinance Institution MIS Management Information System MO Micro-Options NADRA National Database and Registration Authority NGO Non-Governmental Organization NFLP National Financial Literacy Program NMFB Network Microfinance Bank Limited NPLs Non-Performing Loans NRDP National Rural Development Program NRSP National Rural Support Programme OPD Organization for Participatory Development OSS Operational Self Sifficiency PAR Portfolio at Risk PBA Pakistan Banks Association PKR Pakistan Rupee PMN Pakistan Microfinance Network PPAF Pakistan Poverty Alleviation Fund PRISM Programme for Increasing Sustainable Microfinance PRSP Punjab Rural Support Program PTA Pakistan Telecom Authority ROA Return on Assets ROE Return on Equity RSP Rural Support Programme SBI Shore Bank International SBP State Bank of Pakistan SC The Smart Campaign SDS SAATH Development Society SECP Securities and Exchange Commission of Pakistan SPTF Social Performance Task Force SME Small and Medium Enterprise SRSO Sindh Rural Support Organization SRDO Shadab Rural Development Organization SVDP Soon Valley Development Program TMFB Tameer Microfinance Bank Ltd UBL United Bank Limited USD United Sate Dollar USSPM Universal Standards for Social Performance Management VDO Village Development Organization WPI Wholesale Price Index

ACRONYMS AND ABBREVIATIONS

HIGHLIGHTS

YEAR 2009 2010 2011 2012 2013

Active Borrowers (in millions) 1.4 1.6 1.7 2. 0 2.4

Gross Loan Portfolio

(PKR billions) 16.8 PKR 20.2 PKR 24.8 PKR 33.1 PKR 46.6

Active Women Borrowers

(in millions) 0.6 0.8 0.9 1.3 1.4

Branches 1,221 1,405 1,550 1,460 1,606

Total Staff 11,557 12,005 14,202 14,648 17,456

Total Assets

(PKR billions) 30.4 35.8 48.6 61.9 81.5

Deposits

(PKR billions) 7.2 10.1 13.9 20.8 32.9

Total Debt

(PKR billions) 23.2 27.5 38.3 24.9 26.9

Total Revenue

(PKR billions) 6.4 7.5 10.1 12.5 17.3

OSS (percentage) 104.6 99.7 108.4 109.5 118.1

FSS (percentage) 86.8 81.7 100.5 107.5 116.5

PAR > 30 (percentage) 3.4 4.1 3.2 3.7 2.5

CONTENTS

SECTION 1: THE YEAR IN REVIEW

1.1. Macro-economy and the Microfinance Industry . . . . . . . . . . . . . . . . . . . . . . . . . 101.2. Policy and Regulatory Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121.3. Microfinance Industry Initiatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 141.4. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

SECTION 2: INDUSTRY PERFORMANCE

2.1. Industry Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252.2. Scale and Outreach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 262.3. Financial Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342.4. Funding Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 362.5. Profitability and Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 372.6. Efficiency and Productivity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 402.7. Risk Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 422.8. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

SECTION 3: THE WAY FORWARD

3.1. Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 463.2. Opportunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

ANNEXURES

Annexure A-1: Performance Indicators-Industry Aggregate (2007-2011) . . . . 56Annexure A-2: Performance Indicators-Individual Institutions and Peer Groups (2012) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64Annexure B: Regional Benchmarks 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94Annexure C: Sources of Data 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96Annexure D: Adjustments to Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106Annexure E: Terms and Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108

SECTION 1The Year in Review

10 Copyrights © 2014 · Pakistan Microfinance Network

A very important highlight of the year was the emergence of leading MFPs which can now be clearly distin-guished among their peers.

In the year 2013, microfinance industry in Pakistan witnessed another year of continued growth and expansion. The industry posted consistent increase in not only credit outreach and gross loan portfolio but also in micro-savings.

Growth in Pakistan’s economy remained modest due to persistent energy shortages and security challenges. Some macroeconomic indicators turned relatively favorable such as inflation, which eased up to remain in single digits. Importantly, the year saw a smooth political transition in the country with one elected government transferring power to another. This not only kept the economy in general and the microfinance industry in particular safe from adverse effects that could have resulted from a problematic political transition, but also buoyed investor confidence in the country.

On the regulatory side micro-insurance regulations were launched by the Securities and Exchange Commission of Pakistan (SECP) in an effort to provide a framework for micro-insurance operations in Pakistan but also promote further development of this sector.

Investors continued to show interest in the microfinance industry in Pakistan, leading to another acquisition of a microfinance bank (MFB) by an international entity and importantly placement of funds in an MFP by an international lender. MF-CIB -a key development for microfinance in the country - was rolled out nationally and opened for enquiries. A number of new responsible finance initiatives were launched including Transparent Pricing Initiative in collaboration with Microfinance Transparency.

A very important highlight of the year was the emergence of leading MFPs which can now be clearly distinguished among their peers. These MFPs can be distinguished by their market share, financial strength, profitability, experience curve and mature business models.

MACRO-ECONOMY AND MICROFINANCE INDUSTRY

Pakistan’s economy grew by 3.6 percent in 2013 as compared to 4.4 percent in the previous financial year. The economic outcome was below the target of 4.0 percent for the year. Although industrial sector showed recovery but it could not compensate for slower growth in the services and agriculture sector1. Despite the modest growth in the economy the microfinance industry in Pakistan grew by 20 percent in terms of outreach while GLP grew by 36 percent to close at PKR 52 billion2. This relationship is consistent with findings of a study conducted in 2008 which showed that GDP growth rate does not have any relation with the performance of microfinance providers. MFPs can perform well in terms of profitability, operational self-sufficiency and portfolio quality even in economic downturns and periods of slow economic growth.3

The investment rate, which has been already low in Pakistan, declined further in 2013. The investment to GDP ratio declined to 14.2 percent from 14.4 percent in the previous year as shown in the Exhibit 1.14. Persistent macro imbalances, structural bottleneck in the energy sector, and an uncertain security environment continue to impede investment. On the contrary microfinance industry continued to attract foreign investment both in terms of equity and debt. The year saw the acquisition of Kashf Microfinance Bank (KMFB) by FINCA International (see Box 1.1) and lending to NRSP Bank by ECO Trade and Development Bank.

1: Pakistan Economic Survey 2012-13, Ministry of Finance, Government of Pakistan

2: MicroWATCH, A Quarterly Update on Microfinance Outreach in Pakistan, Issue 30, Qtr 4, 2013. PMN.

3: Microfinance Performance and Domestic GDP Growth:Testing the Resiliency of Microfinance Institutions to

Economic Change, Stanford University USA, J. Woolley, May 2008

4: Economic Survey of Pakistan, 2012-13, Ministry of Finance, Government of Pakistan

SECTION 1

THE YEAR IN REVIEW

Pakistan Microfinance Review - 2013Annual Assessment of the Microfinance Industry

FINANCIAL SERVICES FOR ALL 11

BOX 1.1: ACQUISITION OF KMFB

FINCA International, a global microfinance network, acquired majority shareholding in Kashf Microfinance Bank Limited (KMFB) through an equity investment of PKR 824.7 million. FINCA Microfinance Cooperative (UA), the Netherlands-based investment arm of FINCA, acquired a majority holding with 82.8 percent of the shares in May 2013.

FINCA, a global microfinance organization with operations in 22 countries across five continents was founded almost 30 years ago. It is considered a pioneer of the modern microfinance industry and has been recognized throughout its history for innovation, efficiency, ethical practices, and focus on social performance.

After six months of acquisition, KMFBL was formally renamed and rebranded as FINCA Microfinance Bank.

2013 saw a higher than anticipated drop in inflation with the annual inflation dropping to single digits for the first time in five years. This led to the lowering of the policy rate by the State Bank of Pakistan by 300 bps to 9.0 percent. Resultantly, the 6-months KIBOR also fell to single digits as show in the Exhibit 1.2 below. The drop in inflation was largely due to subdued global commodity prices5.

Despite the fall in interest rates loans to private sector businesses expanded by only 0.7 percent in 2013 – almost unchanged from the 0.8 percent growth seen in 2012. This can be attributed to the continued heavy government borrowing in order to finance the budget deficit which stood at 8.0 percent of the GDP against a target of 4.76 percent.

While this drop in interest rate will result in the lowering of borrowing costs for the sector, MFPs are likely to find it difficult to raise loans from commercial sources because of excessive government borrowing.

POLICY AND REGULATORY REQUIREMENTS

Pakistan’s microfinance regulatory environment continues to be recognized as one of the best internationally7. This has led to the continued investor interest and growth of the industry. Efforts to further strengthen the regulatory and policy framework are underway. State Bank of Pakistan has revised Prudential Regulations for Microfinance Banks; SECP has developed regulations on micro-insurance as well as exploring the possible framework for regulating non-bank MFIs. The government launched number of lending schemes with an aim to generate employment and alleviate poverty. In addition, a number of new initiatives were announced in the budget

for fiscal year 2014-15.

5: Annual Report 2012-13 (State of the Economy),

State Bank of Pakistan

6: Annual Report 2012-13 (State of the Economy),

State Bank of Pakistan

7: Global Microscope on the Microfinance Business

Environment 2013, The Economist

Exhibit 1.1: Investment to GDP Ratio and Acquisition of MFBs

0%

2%

4%

6%

10%

12%

Inv

est

me

nt

to G

DP

Rat

io (

%)

14%

16%

18%

20%

2009 2010 2011 2012 2013

Acq

uis

itio

n o

f K

BL

& N

MF

B

Acq

uis

itio

n o

f R

MF

B

Acq

uis

itio

n o

f K

MF

B

Exhibt 1.2: Discount Rate, 6-Months KIBOR And CPI

0

5

10

15

20

25

Pe

rce

nta

ge

6 Months KIBOR

FY 09 FY 10 Fy11 Fy12 Fy13

Discount Rate Consumer Price Inflation (Average)


One of the key highlights of the year on the policy and regulatory side was the approval of the micro-insurance regulations by Securities and Exchange Com-mission of Paki-stan (SECP).

Micro-Insurance Regulations

One of the key highlights of the year on the policy and regulatory side was the approval of the micro-insurance regulations by Securities and Exchange Commission of Pakistan (SECP).

In February 2014, the Policy Board of the Securities and Exchange Commission of Pakistan (SECP) approved the Micro-insurance Rules, 2014. These rules were put out for public opinion in June 2013. The drafting of the regulations was preceded by release of a diagnostic study which not only highlighted the micro-insurance potential in the country but also the need for a sound regulatory framework.

The micro-insurance regulations cover the following broad areas:-

» Contract and disclosure requirements

» Product features and submission requirements

» Intermediation specifications

» Requirements for authorized risk takers

» Claims handling procedures

» Complaints and grievance handling mechanisms

» Code of conduct and consumer protection

» Prudential regulation

» Regulatory reporting and information sharing requirements.

The regulations are quiet specific on the definition of the micro-insurance based on income levels of the clients and maximum level for the sum insured. In addition, regulations ensure consumer protection by requiring clearly stated policies, specific compliance of codes of consumer protection and conduct of agents.8

Revision of Prudential Regulations for Microfinance Banks (MFBS)

SBP in June 2014 issued revised prudential regulations (PR) for MFBs. The aim of these revisions is to improve their corporate governance, consumer protection practices, and anti-money laundering (AML) policies of MFBs. It is hoped that that the revised regulations will help MFBs to better position themselves for managing higher level of

8: Full text of the Micro-insurance Rules, 2014

can be accessed at http://secp.gov.pk/notifi-

cation/pdf/2014/SRO_116_Microinsurance_

Rules_20140219.pdf

growth in future. Currently, there are ten MFBs operating in the country. Nearly all are well capitalized and owned by diverse owners including mobile network operators (MNOs), commercial banks and international microfinance institutions. PRs for MFBs were first issued in the year 2002, and have subsequently been revised and strengthened from time to time keeping in view evolution and changing dynamics of the sector.

The annual income ceiling for eligible borrowers has been revised to incorporate the impact of inflation and expand market space for MFBs from PKR 300,000 to PKR 500,000. The prudential regulations have been categorized into risk (R), Risk (R), Corporate Governance (G), Customer Due Diligence and Anti Money Laundering (M), and Operations (O). The revisions are briefly explained below:-

Corporate Governance

Governance standards have been enhanced for the MFBs. The revised regulations define role and responsibilities of board of directors, require induction of two independent directors, and prescribe fit and proper test for the appointment of key executives of MFBs.

Customer Due Diligence and Anti Money Laundering (AML)

Customer due diligence and AML has been strengthened in light of FATF recommendations 2012, to avoid usage of MFB channels for illegal activities. MFBs will have to implement comprehensive AML framework covering areas such as customer identification and verification requirements, ongoing & enhanced due diligence, record retention, and cash & suspicious transactions reporting in line with the standards prescribed by Financial Action Task Force (FATF).

Consumer Protection

Regulations pertaining to consumer protection have been revised from basic instructions on transparency and client education to a comprehensive set of instructions. MFBs are also required to improve their consumer protection policies through basic financial literacy programs, enhanced transparency & disclosures, fair debt collection



Corporate gover-nance is seen as a key deter-minant in any organization’s success...

practices, and effective complaint redressal mechanism9.

Government Sponsored Loan Schemes

The current government soon after coming into power announced a number of initiatives to generate employment and alleviate poverty in the country. Two schemes have been launched as part of these initiatives: Prime Minister (PM) Youth Loan Scheme and Prime Minister (PM) Interest Free Loans. These schemes particularly the latter can have important implications for the microfinance industry.

PM Youth Loan Scheme

Prime Minister’s Youth Loan Scheme aims to support sef employment within the country’s youth. Under the scheme, loans of up to PKR 2.0 million may be given with tenure of up to 8 years (with first year as the grace period). The debt equity proportion will be maintained at 90:10 and loans will be disbursed to SMEs across the country. 50 percent of the loans are reserved for women whereas a 5 percent quota has been earmarked for disabled, widows and families of shaheeds. Up to one hundred thousand loans under the scheme shall be disbursed. The loans shall be priced at a below market rate. Small and Medium Enterprise Development Authority has been tasked with an advisory role in implementation of the loan scheme. SMEDA has provided 55 pre feasibilities for referencing by loan applicants and lenders.

Despite the initial positive vibes, the scheme has only been able to attract two public sector banks namely, National Bank of Pakistan (NBP) and First Women Bank Limited (FWBL) with other commercial banks shying away from the scheme.

PM Interest Free Loan Scheme (PMIFL)

In order to address the issue of rising poverty and unemployment in the country, under this scheme interest free microloans are being extended to poor and destitute who score of 0-40 on the poverty score card. PKR 3.5 billion have been earmarked for the scheme and shall be routed through the national apex, PPAF. Up to PKR 50,000 loans

9: To access the revised prudential regulations text,

please see the following link http://www.sbp.

org.pk/publications/prudential/index.htm

can be extended under the scheme and 50 percent of the loans are earmarked for women borrowers. Given the overlap of conventional microfinance clients with the target market for these loans, PPAF and the sector has taken proactive measures to mitigate distortions in the market. In order to safeguard the MFPs, interest free loans will only be extended to those clients that have not been tapped by MFPs yet. Therefore, these loans will be extended to borrowers in selected areas of 62 districts of the country which score low Human Development Index (HDI) and have low or no conventional microfinance. Managing the scheme to avoid such distortions is critical at this stage when the industry has become sustainable and is shifting from subsidized financing to commercial financing to meet it

requirements for on-lending.

MICROFINANCE INDUSTRY INITIATIVES

Governance needs of the Microfinance Industry: A Customized Training Program

One of the key challenges faced by the industry in Pakistan is corporate governance. Corporate governance is seen as a key determinant in any organization’s success, whether it relates to transformation, reaching scale, attaining sustainability or delivering against its social goals and objectives. However, the issue has multiplied in importance as the sector has shifted towards accessing commercial funding. Gaps in risk management, financial transparency, succession planning and the family’s role in business need to be addressed to improve standards of corporate governance. Boards need to be made more effective, equipped with required and diverse skills, and be able to operate independently.

Keeping the above in view the State Bank of Pakistan (SBP) awarded the Pakistan Microfinance Network (PMN) the project titled “Governance needs of the microfinance industry: A Customized Training Program” under the Institutional Strengthening Fund (ISF) of the Financial Inclusion Program (FIP). Implemented by Hikmah Consulting and supported by the Pakistan Poverty Alleviation


...the branch-less banking sector of Paki-stan continued to excel on all fronts in the calendar year 2013

Fund (PPAF), the program addresses the governance needs of the microfinance sector and also helps MFPs build their capacity for growth and to overcome the challenges ahead. Part of the objectives is to enhance the governance awareness and skill levels of Directors and senior management of Microfinance Institutions (MFIs) and Microfinance Banks (MFBs) while simultaneously increasing the ability of MFIs and MFBs to attract Directors with the relevant skills. Two trainings have been rolled out to date, with further offerings anticipated during 2014.

Branchless Banking

With a firmly established regulatory environment and supporting institutional framework, the branchless banking sector of Pakistan continued to excel on all fronts in the calendar year 2013. Four new players emerged, and there was staggering growth in the number of branchless banking transactions.

The new players include HBL Express, U-Paisa, Mobile Paisa and MCB Lite, bringing the total number of branchless banking deployments to eight in the country. “HBL Express” is a branchless banking solution provided by the largest private sector bank in Pakistan - Habib Bank Limited (HBL). The model followed by HBL Express is similar to the one followed by UBL’s OMNI i.e. one-to-many branchless banking model. This essentially means that HBL express can offer branchless banking services to customers of any mobile operator. Exhibit 1.3 highlights the timeline and modus operandi of all the branchless banking service providers in Pakistan.

Ufone, in collaboration with U Microfinance Bank (formerly

Exhibit 1.3: Entry of Branchless Banking Model 2009-13

Rozgar Microfinance Bank Limited), commercially launched its branchless banking services under the brand name of U-Paisa. This is the first example of a Mobile Network Operator (MNO) entering the market by acquiring 100% stake in an existing microfinance bank. Currently, U-Paisa offers three main services which include utility bill payments, remittances and mobile account.

MCB Lite, a product of MCB Bank, is another example of a commercial bank setting foot in the branchless banking sector. However, MCB Lite is slightly different from conventional branchless banking service providers; it is basically a mobile account that supports VISA Card

and can be managed via both Internet and ATM machines. Hence, a user can conduct transactions through a Visa Card and a Mobile Wallet. An MCB Lite user can pay utility and mobile phone bills, transfer funds and shop online (local and international).

Warid Telecom in partnership with Bank Alfalah Limited launched its Mobile Financial Service (MFS) by the name of ‘Mobile Paisa’ in December 2013. Currently, Mobile Paisa is only offering services such as money transfer and utility bill payment services to Warid customers across Pakistan. It follows the one-to-one model of branchless banking with Bank Alfalah as the partner financial institution

Exhibit 1.4: Growth in Number and Value of Transactions

Va

lue

of

Tra

nsa

ctio

ns

(in

PK

R M

illio

n)

Nu

mb

er

of

Tra

nsa

ctio

ns

('00

0)

Value (PKR Million) Number (in 000's)

44,760

10,000

--

20,000

30,000

40,000

50,000

60,000

50,000

100,000

150,000

200,000

250,000

Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013

151,108 170,796 173,231 224,024 234,646

41,130

54,100

51,911

35,319



... successfully launched the nation-wide rollout of the Microfinance Credit Infor-mation Bureau (MF-CIB).

NADRA verifica-tion and data consolidation has significant-ly increased the integrity of the repository...

and branchless banking license holder, and Warid as the telecom providing agent network.

The emergence of six branchless banking players within a period of two years has led to a sizable expansion on the supply side of the market. The influx of new players is encouraging the market to offer innovation in products and improved value in customers’ accounts. During the year under review, 192 million BB transactions worth PKR 802 billion were carried out across the country – reflecting 59 percent more volume and 63 percent higher value in comparison to 201210. Exhibit 1.4 highlights the growth in branchless banking in the year 2013.

Over the counter (OTC) transactions continue to dominate the BB landscape. OTC transactions are facilitated by an agent, rather than by the customer using their own mobile phone as in the case of mobile-wallets (see Box 1.1). Transactions through m-wallets are only a fraction of the total transactions carried out through OTC; 80 percent of the BB transactions performed in the fourth quarter of 2013 were over the counter, whereas only 14 percent were carried out through m-wallets. Albeit slow, share of m-wallet transactions did rise from 12 percent to 14 percent during the year mainly due to increased customer usage for utility bill payments, loan repayments, and mobile top ups.

Microfinance Credit Information Bureau (MF-CIB)

In the midst of 2012, PMN, with the support of State Bank of Pakistan (SBP), Pakistan Poverty Alleviation Fund (PPAF), Department for international Development (DFID) and International Finance Corporation (IFC), successfully launched

Exhibit 1.5: Role of a Credit Bureau in the Decision making

Process of a MFP

New Micro-credit

Client

Request a new

(or renewal) loan

Credit Bureau

MFP Loan Officer

Makes decision to

deny or accept credit

based on credit bureau

information, loan

application and

MFP policy

MFP Loan Officer

Consults credit

bureau database

(Enquiry)

- Provides actual

information

- updates database

-seeks new financial

and other relevant

information

the nation-wide rollout of the Microfinance Credit Information Bureau (MF-CIB). The project was launched with an aim of institutionalizing MF-CIB in the microfinance eco system to facilitate the sector in managing credit risk and assessing the true credit worthiness of existing and prospective micro-credit clients.

The year 2013 saw some major developments and milestones achieved in the nation-wide implementation of MF-CIB. As of Dec 2013, 50 MFPs (including banks, microfinance institutions, rural support programs and smaller microfinance institutuions) have been registered. Collectively, these organizations have submitted 4.1 million records out of which 3.1 million unique CNICs have been verified by NADRA. The NADRA verified database is now up and live for enquiry purposes. NADRA verification and data consolidation has significantly increased the integrity of the repository as previously, non-NADRA verified repository was

being used for enquiry purposes. For the partner organizations of

PPAF (23 in total), collaborations with their respective vendors have been made and the business rules of the Bureau reporting format have been implemented at the vendor end. It is expected that these organizations shall start reporting their data in the first quarter of 2014.

Vis-à-vis enquiry generation, some institutions like PRSP, DAMEN, CSC, JWS, OLP, RCDS, SDF and TMFB have completely operationalized the enquiries whereas others like FINCA MFB, , WF, FMFB, KB, KF, ASA Pakistan, Apna MFB and Asasah have partially operationalized their enquiries. Akhuwat, , BLCC, BRAC Pakistan, GBTI, NRSP, SRSO, SRSP, TRDP and smaller MFIs (23) have yet to implement enquiry procedures. Since enquiry generation requires change in SOPs of organizations, this activity is expected to gain full steam by the middle of next year. Already there is a consistent increase in


A major achie-vement in 2013 was the fina-lization of the Bureau Code of Conduct, deli-neating rights and obligations of MFPs and Bureau.

the number of enquiries being made per month, with the sector crossing the 100,000 enquiries milestone in the month of May 2014 (see Exhibit 1.6).

A major achievement in 2013 was the finalization of the Bureau Code of Conduct, delineating rights and obligations of MFPs and Bureau. The finalized draft would be presented to PMN Board of Directors in January for final approval.

Responsible Finance Initiatives

Pricing Transparency Initiative in collaboration with MFTransparency

PMN, in partnership with MicroFinance Transparency (MFTransparency) and with support from the Financial Inclusion Program (FIP), SBP, UK-Aid and PPAF completed the first data publication under the Transparent Pricing Initiative. Pricing information was collected and standardized calculation methods employed to calculate Annualized Percentage Rate (APR) interest rates for all products of the 31 participating MFPs. This was the first sector-led move towards greater transparency and standardization in pricing calculations and disclosures in the local industry. The results of the initiative are discussed in detail in Box 1.2.

Social Performance Implementation Fund

Fourteen MFPs participated in an 18 month long (2013-14) social performance management implementation drive to better comply with the Universal Standards for Social Performance Management (the Standards), choosing areas such as ‘ensure Board, management and employee commitment to social goals’, ‘treating clients responsibly’ and

‘designing appropriate products and delivery channels that suit client needs.’ Participating MFPs were able to make moderate to significant changes in their policies and operation to better comply with the Standards.

Client protection assessments in collaboration with the Smart Campaign

Externally client protection assessments based on the Smart Campaign’s assessment format (Smart Assessments) were carried out for 10 MFPs during the year in review, covering about 60 percent of the market. This was made possible with support of SBP-FIP. These assessments provided MFPs with a gap analysis of their practices in comparison with globally accepted minimum standards of client protection and suggested recommendations for institutional improvements to better comply with these minimum standards. In addition, training was conducted for local technical assistance providers to build local capacity to conduct such assessments in-country going forward, with three Smart Assessor accreditations received for Pakistani assessors.

May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14

Exhibit 1.6: Enquiries per month

Nu

mb

er

of

En

qu

irie

s

10,000

(10,000)

30,000

50,000

70,000

90,000

110,000

Box 1.2: OTC and M-Wallet Transactions

Over-the-counter (OTC) Transaction

A mobile money transaction where the customer does not have an electronic account, but simply hands over cash to an agent who facilitates the transaction on the customer’s behalf using their own mobile money account.

Mobile Wallets Transaction

A payment service performed by a consumer via an electronic account held on their mobile phone. The account can be used to store and transfer money, as well as, pay for services and goods by means of a simple SMS.



Box 1.3: Transparent Pricing Initiative for Pakistan, 2013-14*

The Transparent Pricing initiative provided MFPs in the Pakistani market the platform to demonstrate their commitment to responsible and transparent pricing through the exchange of information and adoption of standard pricing practices. Prices for 31 MFPs from Pakistan are available by product at the MFTransparency website www.mftransparency.org

The following Exhibit A shows the Pakistan pricing curve, with APR on the y-axis and loan sizes as a percentage of per capita Gross National Income (GNI). Each bubble shows one credit product, and the size of the bubble denotes the number of clients for the product.

Exhibit A: Comparison of APRs and Loan Sizes

The following Exhibit B give similar information for some other microfinance markets, namely India, Cambodia, Philippines, Uganda, Tanzania and Kenya for comparison.

In reviewing the pricing data, analysis on the Pakistan pricing data and comparison with other countries shows some significant findings:

» Loan products target very small loan amounts relative to the economic indicators of Pakistan. In other words, microcredit in Pakistan is much smaller in size than microcredit in other comparative countries. This means loans are targeted toward a needier population, and brings with that the financial challenges of providing extremely small loans.

» Pricing levels in Pakistan look to be ‘moderate’ to ‘low’ relative to other countries, and for the scale of loan amount, are much lower than most other countries.

» Loan product pricing is more transparent in Pakistan than in most countries, however there is room for improvement. Countries with higher transparency in comparison have in place legislation requiring more transparency in their pricing.

* MFTransparency Country Pricing Report for Pakistan, 2013-14.


CONCLUSION The year saw continued growth and expansion in the microfinance

industry in Pakistan. Overall, the industry seems well poised for continued expansion in the future.

On the whole easing of inflation and subsequent reduction in policy rate by the SBP bodes well for the industry but external challenges remain, like energy shortages and adverse security situation in the country. Slower growth in private sector credit can be a challenge for MFPs as the look towards commercial sources for their funding needs. Approval of micro-insurance regulations would lead to product diversification, entry of new players and innovation in delivery models. Prudential regulations were revised for MFBs by the SBP with focus on corporate governance, anti money laundry and consumer protection. In addition, government launched two schemes to provide subsidized and interest free loans with an aim to alleviate poverty and generate employment. Also, the budget for fiscal year 2014-15 saw the announcement of number of initiatives including guarantee schemes for loans to small farmers and low cost housing and insurance for crop and livestock loans. Industry continues to generate investor interest especially for international lenders. It was evident from the acquisition of KMFB by FINCA International and loan extended to NRSP by international financial institution. It is likely that we would see further lending to MFPs by these global microfinance lenders.

With over eight systems now deployed in branchless banking, it will lead to increase competition and product innovation with focus on M-wallets and G2P payments. MF-CIB was fully implemented last year and can play key role in improving credit decisions by MFPs and enhancing the quality of the microfinance portfolio.

Among the responsible finance initiatives the most important was the Transparent Pricing Initiative in collaboration with MF Transparency. The endorsement of Transparent Pricing Initiative by the microfinance industry in Pakistan and subsequent findings from the data showed that loan pricing by MFPs was well in line with global benchmarks and standards. The initiative will likely have far-reaching effect by reducing the risk of political interference leading to arbitrary price caps and protect consumer rights



SECTION 2Industry Performance


SECTION 2

INDUSTRY PERFORMANCE Analysis of the financial performance of Pakistan’s microfinance industry

This section provides a detailed analysis of the financial performance of Pakistan’s microfinance industry in 2013. Performance has been assessed on three levels: industry wise, across peer groups and institution wise.

The analysis is backed by 88 financial indicators, calculated from the audited financial statements of the reporting organizations. These indicators have been compared across time and regions to develop a reliable and fair assessment of sector.

Detailed financial information is provided in the Annex A-I and A-II of the PMR. Aggregate data has been reproduced for five years, whereas, the peer group and institution specific data has been made available only for the year 2013.

A total of 37 MFPs submitted their audited financial statements for PMR 2013. 15 new respondents are included in this year’s dataset. For a complete list of reporting organizations refer to Annex B.

Industry players are categorized into three groups for benchmarking and comparison purposes: Microfinance Banks (MFBs), Microfinance Institutions (MFIs) and Rural Support Programmes (RSPs). See Box 2.1 for detailed definitions.

The distribution of respondents (number of reporting organizations) by peer group is given in Exhibit 2.1. The MFI peer group is comprised of the largest number of respondents followed by MFBs and then RSPs.

Box 2.1: Peer Groups

Microfinance Institution: A non-bank non-government organization (NGO) providing microfinance services. Organizations in this group are registered under a variety of regulations, including the Societies Act, Trust Act, and the Companies Ordinance. The MFI peer group includes local as well as multinational NGOs such as BRAC-Pakistan and ASA-Pakistan.

Microfinance Bank: A commercial bank licensed and prudentially regulated by the SBP to exclusively service the microfinance market. The first MFB was established in 2000 under a presidential decree. Since then, seven MFBs have been licensed under the Microfinance Institutions Ordinance, 2001. MFBs are legally empowered to accept and intermediate deposits from the public. Currently there are 10 MFBs operating in the country.

Rural Support Programme: An NGO registered as a non-profit company under the Companies Ordinance. An RSP is differentiated from the MFI peer group based on the purely rural focus of its credit operations. As a group, the RSPs are registered with and supervised by the Securities and Exchange Commission of Pakistan (SECP).

5

8

24

MFIs

MFBs

RSPs

Exhibit 2.1 Distribution of respondents by peer groups




SCALE AND OUTREACH: BREADTH

This section focuses on outreach indicators to provide performance analysis of the industry in terms of the growth and composition of the different financial services (credit, deposits and insurance) , depth of outreach and gender.

Exhibit 2.2: Growth in Number of Active Borrowers and GLP

Act

ive

bo

rro

we

rs in

mill

ion

s

GL

P in

PK

R B

illio

ns

Active Borrowsers GLP

0

5

15

10

20

0.50

0.00

1.00

1.50

2.00

2009 2010 2011 2012 2013

25

2.50

30

40

35

45

503.00

Scale and Outreach: Breadth

Microcredit outreach witnessed substantial growth in the year 2013 where the number of active borrowers grew by 21percent to touch 2.4 million and the sector gross loan portfolio (GLP) grew by a staggering 41percent to close at PKR 46.6 billion (Exhibit 2.2). It is pertinent to mention here that the inclusion of fourteen additional MFP’s in the current years report also has a noticeable impact on the outreach figures – the fourteen MFPs collectively added 0.95 million active borrowers and a GLP worth of PKR 3.0 billion in

the current years dataset. Among the MFPs, growth in

borrowers was led by National Rural Support Programme (NRSP) whose borrowers increased by 46,000 from 345,000 in 2012 to 391,000 in 2013; NRSP-Bank, KBL and TMFB also continued to witness excellent growth by adding 45,000, 44,000 and 43,000 new borrowers respectively. On the other hand, BRAC – Pakistan saw its number of borrowers declining (by 17percent) from 68,000 in 2012 to 56,000 in 2013.

The industry in terms of outreach was dominated by nine MFPs that accounted for 81 percent of the outreach as shown in Exhibit 2.3. Khushhali Bank Limited (KBL) maintains its position as the largest provider of microcredit in terms of active

KBL

NRSP

KF

TMFB

ASA-P

NRSP Bank

FMFB

PRSP

TRDP

50 100 150 200 250 300 350 400 450

Exhibit 2.3: Active Borrowers of Nine Largest MFPs

2012 201355

409

391

312

198

180

172

130

73

71

366

345

286

155

147

127

123

63

Active Borrowers in Thousands


borrowers with a client base of 409,000 borrowers followed by NRSP with 390,000 borrowers and KF with 312,000 borrowers. The reduction in the active borrowers by BRAC-Pakistan resulted in its exit from the nine largest MFPs, replaced by TRDP which has a client base of 71,000.

When analyzed by peer group, the market continues to be dominated by MFBs followed by MFIs and RSPs. The market share of MFBs and MFIs increased by a meager 1 percent, whereas, in the same period the share of RSPs decreased from 27 percent to 25 percent (see Exhibit 2.4). This shift can be attributed to the inclusion of three additional MFBs and eleven additional MFIs reporting in the current year.

In terms of GLP, MFBs account for 60 percent of the total GLP, followed by MFIs with a share of 22 percent and RSPs with a share of 18 percent (Exhibit 2.5 A and Exhibit 2.5 B). The overall GLP of the sector has increased by PKR 8.3 billion to touch PKR 46.6 billion in 2013. MFBs witnessed the largest increase in GLP (by PKR 9.3 billion) primarily on the back of KBL, NRSP-B and TMFB as their loan portfolios increased by PKR 3.0 billion, PKR 1.7 billion and PKR 1.6 billion respectively. Moreover, the average loan sizes of MFBs remain the highest among peer group (PKR 33,472), indicating a greater GLP. Resultantly, the share of loan portfolio of MFBs increased from 57 percent to 60 percent in the year under review.

RSP MFI MFB

Exhibit 2.4: Share in Active Borrowers by Peer Group

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2009 2010 2011 2012 2013

44%40%

44%39% 40%

19%25%

28% 34% 35%

37% 35% 28% 27% 25%

RSP MFI MFB

Exhibit 2.5 A: GLP by Peer Group

-

5

10

15

20

25

30

35

40

45

50

2009 2010 2011 2012 2013

8.69.8

14.6

18.7

28.1

2.5

3.9

5.0

7.6

10.2

5.7

6.6

5.3

6.7

8.4

PK

R in

Bill

ion

s



RSP MFI MFB

Exhibit 2.5 B: Percentage change in GLP by Peer Group

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2009 2010 2011 2012 2013

51%48%

59%57%

60%

15% 19%

20% 23%

22%

34% 33% 21% 20% 18%

29.1

33.5

14.6

20.6

22.7

15.1

18.6

21.1

Exhibit 2.6: Average Loan Size by Peer Group

0

5

10

15

20

25

30

35

40

In T

ho

usa

nd

s

2009 2010 2011 2012 2013

16.4

20.8

23.3

17.5

17.217.6

20.2

RSP MFI MFB Industry Average

The average loan size of the sector has increased from PKR 24,000 in 2012 to PKR 27,000 in 2013. The greatest increase in the loan size came from the MFB peer group whose loan size increased by 14 percent, going up from PKR 29,000 to PKR 33,000 (Exhibit 2.6). Among the MFBs, TMFB has an average loan size of PKR 48,000 (highest among the peer group), while at the same time, KBL continues to see an increasing trend in its average loan size, growing approximately 19 percent from PKR 21,000 in 2012 to PKR 25,000 in 2013. This is a trend that is likely to continue as the sector rationalizes its loan size in light of rising price levels in the country and MFBs begin entering the microenterprise market with bigger, individual loans.



More than 80 percent of the industry’s GLP is accounted for by nine MFPs (see Exhibit 2.7). In the year under review, KBL surpassed TMFB to become the largest player in terms of size of its portfolio which stands at PKR 8.9 billion as compared to PKR 8.3 billion of TMFB. This is reflective of the active borrowers of KBL (highest in the sector) coupled with a shift towards higher average loan size. TMFB, the second largest player in terms of portfolio size has a GLP of PKR 8.3 billion despite a market share of 8.2 percent in terms of client outreach. This is driven by TMFB’s above average loan size, primarily on the back of secured financing products which constitute 80percent of its total loan portfolio. Other sizeable players include the National Rural Support Program (NRSP), NRSP Bank and Kashf Foundation (KF).

On the savings side, the number of depositors grew by more than 24 percent, rising to 2.2 million in 2013 as compared to 1.7 million in 2012. The value of deposits witnessed an even more significant growth of 58 percent from PKR 21 billion in 2012 to PKR 33 billion in the year under review (Exhibit 2.8). Resultantly, deposits now represent 74 percent of the total liabilities of the MFB peer group – an increase from 66 percent in the previous year. Deposits continue to outgrow the loan portfolio of MFBs, as is evident from the rise in deposits-to-gross loan portfolio ratio from 111 percent in 2012 to 117 percent in 2013.

2012 2013

- 5 10

Billions

8.9

8.3

5.6

4.8

3.5

3.5

2.0

1.9

1.1

5.8

6.7

4.4

3.1

2.9

3.1

1.5

Exhibit 2.7: GLP by of Eight Largest MFPs

0.9

KBL

TMFB

NRSP

NRSP Bank

KF

FMFB

FINCA

ASA-P

SRSO

Exhibit 2.8: Growth in deposits and number of depositors

De

po

sito

rs in

th

ou

san

ds

Depositors Deposits Outstanding

1,000

500

0

1,500

2,000

2,500

2009 20132010 2011 2012

De

po

sits

ou

tsta

nd

ing

in b

illio

ns

0

5

15

10

20

25

30

35



The largest increase in the number of depositors came from KBL which added 215,000 new depositors followed by NRSP Bank which added 28,000 depositors. Similarly, KBL was also the largest contributor to the value of deposits; by adding PKR 3.1 billion worth of deposits to increase its deposit base from PKR from PKR 4.0 billion in 2012 to PKR 7.1 billion in 2013 (exhibit 2.9). KBL was followed by TMFB whose deposits grew by PKR 2.3 billion to close its balance sheet at PKR 10.6 billion deposits.

In percentage terms, NRSP Bank saw the greatest percentage increase (98 percent) in the value of deposits which had increased from PKR 1.8 billion in 2012 to

PKR 3.6 billion in 2013.

The average deposit size of the MFBs stood at PKR 15,000, an increase of 25 percent from previous year. However, except for FMFB, NRSP Bank and AMFB, average deposit size of MFBs is below the industry average as shown in the Exhibit 3.0. NRSP Bank has the highest average deposit size at PKR 33,400 followed by FMFB with PKR 29,700 showing a significant amount of institutional deposits in

their mix.

2012 2013

50 10

Exhibit 2.9: Deposit Growth by MFB

In PKR Billions

TMFBTMFB

FMFB

KBL

NRSP-B

FINCA

AMFB

Ubank

POMFB

10.63

7.81

7.13

3.62

2.74

8.37

6.57

4.04

1.83

0.030.03

0.76

0.21

Exhibit 2.10: Average deposit size of MFBs

In P

KR

Th

ou

san

ds

Average Deposit Account Balance Industry Average

10.0

5.0

0.0

15.0

20.0

KBL TMFB POMFB FMFB NRSP-B AMFB U-BankFINCA

25.0

35.0

30.0

40.0

10.612.8

1.5

29.7

33.4

13.6

24.0

10.0


The Deposit-to-GLP ratio has shown modest improvement for MFBs; the ratio increased from 111 percent in 2012 to 117 percent in 2013 (Exhibit 2.11 A). The increase in the ratio depicts MFBs heavy reliance on deposits as a primary source of financing as it keeps their cost funding at reasonably low levels. During the year, the cost of funds of MFBs stood at 7.3 percent as compared to an average of 9.5 percent of non-bank MFIs. The liquidity position of MFBs can also be determined by the deposit-to-GLP ratio; a high ratio implies that MFBs have excess funds at hand and are adequately liquid. Moreover, the cost of funds has remained in single digits despite mobilizing deposits at above market rates.

A comparison across MFBs shows that U-Bank carried the high Deposit-to-GLP ratio of 496 percent (Exhibit 2.11 B). In a span of one year, U-Bank has managed to attract a deposit base of PKR 205 million as compared to a loan portfolio of only PKR 41 million. It is important to mention here that the value of deposits of five MFBs (out of eight reporting MFBs) is greater than the value of their loan portfolios. This shows that MFBs continue to be successful in tapping deposits.

Micro-insurance indicators – number of policy holders and sum insured – continued to show a positive trend in the year 2013. The number of policy holders grew by 6.2 percent over the year, going from 2.8 million to 3.0 million, while the sum insured increased by 11.7 percent. It grew from PKR 36 billion in 2012 to PKR 40 billion at end of 2013. The greatest increase in micro-insurance came from the MFB peer group whose policy holders and sum insured increased by 15 percent and 40 percent

0%

20%

40%

60%

80%

100%

120%

140%

De

po

sit

-to

-G

LP

Rat

io

In P

KR

Bill

ion

s

Exhibit 2.11A: Deposit-To-GLP Relation for MFBs

0

5

10

15

20

25

30

35

2009 2010 2011 2012 2013

Deposits GLP Deposit-to-GLP

De

po

sit

-to

-G

LP

Rat

io

In P

KR

Bill

ion

s

Exhibit 2.11B: Deposit-To-GLP Relation for individual MFBs

0

2

4

6

8

10

12

Deposits GLP Deposit-to-GLP

-50%

50%

150%

250%

350%

450%

550%

TMFB POMFB FMFB NRSP-B FINCA AMFB U-Bank



0

10

20

30

40

50

1.20

1.40

1.60

1.80

2.00

2.20

2.40

2.60

2.80

3.00

3.20

3.40

3.60

Po

licy

Ho

lde

rs in

mill

ion

s

Exhibit 2.12: Growth in Number of Policy Holders and Sum Insured

Policy Holders Sum Insured

2009 20132010 2011 2012

Su

m In

sure

d in

PK

R B

illio

ns

Exhibit 2.13: Depth of Outreach by Peer Groups

0%

5%

10%

15%

20%

25%

Av

era

ge

Lo

an

Ba

lan

ce P

er

GD

P

2009 2010 2011 2012 2013

RSP MFI MFB Industry Cut - off

respectively. However, RSPs reaming the largest providers of micro-insurance and hold 41 percent of the market share in terms policy holders. Among the types of insurance policies, credit life insurance policies constitute almost 61 percent of total insurance policies followed by health insurance policies at 39

percent.

SCALE AND OUTREACH: DEPTH

The depth of outreach in micro-credit operations is measured by a proxy indicator: average loan balance per borrower in proportion to per capita gross national income (GNI). A value of below 20 percent of GNI is assumed to mean that the MFP is poverty focused (exhibit 2.13). Comparison across peer groups shows that MFBs tend to target the upper end of the market through relatively larger loans, with a ratio of 20.2 percent whereas MFIs and RSPs are more focused on the lower end, with ratios of 8.6 percent and 9.6 percent respectively. Except for five institutes (TMFB, NRSP Bank, FINCA, AMFB and U-Bank) all of the other MFPs fall below the benchmark of 20 percent.

The ratio of average loan balance to per capita GNI witnessed a modest decline for RSPs and MFIs, while the ratio for MFBs remained stagnant at 20.2 percent. This could be interpreted as the sector continuing to target the poor but also has implications for appropriate loan sizes in the context of Pakistan’s inflationary environment. Erosion in the value of money means that a loan of a loan worth of PKR 30,000 in one year would be considerably lower in value in the following year.


The different values for the ratio among the peer group point toward market segmentation as MFBs move towards upper segment of the microfinance market whereas non-bank MFPs including MFIs and RSPs target lower segment of the same market.

Lending Methodology

Majority of MFPs follow the group lending methodology – in 2013, 73 percent of the active borrowers represented group lending (see Exhibit 2.14). Over the years, individual lending has gained momentum and its share has increased from 10 percent in 2009 to 27 percent in 2013. During the current year, Kashf Foundation and TMFB were the main drivers for the increase in the share of individual borrowing from 24 percent in 2012 to 27 percent in 2013.

Gender Distribution

The proportion of women borrowers showed a slight decline in the current year, decreasing from 63.4 percent in 2012 to 60.3 percent in 2013 (exhibit 2.15). On the other hand, the percentage share of women depositors saw a significant increase to 27.9 percent as compared to a 19.4 percent in 2012. The shift in proportions was a consequence of KBL and NRSP Bank which were one of the largest contributors to active borrowers in the current year, and more than 70 percent of their client base constitute of male borrowers.

Women borrowers remain an integral part of the Pakistan microfinance sector and lending to women has been encouraged by various donor and regulatory bodies. The national apex – PPAF – provides funding to MFPs based on a commitment that at least 40 percent of the borrowers will

Exhibit 2.14: Lending Methodology

Act

ive

Bo

rro

we

rs In

Th

ou

san

ds

Group Borrowing Individual Borrowing

1,000

500

0

1,500

2,000

2,500

3,000

3,500

20132010 2011 20122009

90%

88% 78%76%

73%

12%

22%24%

27%

10%

Exhibit 2.15: Outreach to Women: Credits and Deposits

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

Proportion of active women borrowers Proportion of active women depositors

2009 2010 2011 2012 2013

45

.6%

51

.8%

55

.2% 63

.41

%

60

.3%

16

.9%

8.4

%

19

.4%

19

.4%

27

.9%



be women. Large players such as ASA Pakistan, BRAC Pakistan and NRSP have portfolios that mostly constitute of women borrowers, whereas, Kashf Foundation only lends to women borrowers.

MFIs and RSPs contribute the most to female outreach. Only 26 percent of the MFB clients are women (Exhibit 2.16).

Portfolio Distribution by Sector

The trading and agriculture sectors continue to dominate the sector-wise distribution of microcredit, together accounting for 52 percent of borrowers in 2013 (Exhibit 2.17). These are followed by livestock which makes up 16 percent of the borrowers, while the manufacturing sector continues to be a distant third by accounting for only 9 percent of the borrowers. However, during the year portfolio distribution witnessed noteworthy change with the trade sector lending which decreased from 35 percent in 2012 to 30 percent in 2013. The trade sector primarily comprises of general stores, karyana shops, stall hawkers, fruit vendors, etc.

The predominant share of services and trade is reflective of the general trend in the country’s economy where services sector has continued to account for over 50 percent of the GDP (see Exhibit 2.18). In addition, due to persistent energy shortfall, manufacturing even at the micro level is hardest hit. With MFBs focusing on the microenterprises we are likely to see the continuation of increase in the share of services and trade.

Exhibit 2.16: GenderDistribution ofCredit Outreach by PeerGroups

Female Borrowers Male Borrowers

0%

10%

20%

30%

40%

70%

80%

90%

100%

MFI RSP TotalMFB

26% 90% 74% 60%

10%

26%

40%

74%

50%

60%

Agriculture Livestock/Poultry Trade Services

Manufacturing/Production Housing Other

Exhibit 2.17: Active borrowers by sector

0%

10%

20%

40%

50%

60%

70%

80%

90%

100%

30%

2009 2010 2011 2012 2013

29%23%

23% 22% 22%

15%

14% 15% 16% 16%

36%36% 38%

35%30%

9%11%

7%9% 8%

9%9%

9%

0%0%

6%

6% 8% 8% 9% 15%

7%0% 0%

0%

Exhibit 2.18: Composition of GDP from 2010-2013

0%

10%

20%

30%

40%

70%

80%

90%

100%

50%

60%

Services Industry Agriculture

2013

40%

2010 2011 20122009

25% 21% 21% 20% 21%

22% 22% 22% 22%21%

53% 57% 57% 58% 58%


Exhibit 2.19: Active Borrowers by Urban/Rural Areas

Rural Urban

0%

10%

20%

30%

40%

70%

80%

90%

100%

2010 2011 201320122009

50%

60%

45% 48%54%

44% 42%

55% 52% 46% 56% 58%

Rural- Urban Lending

The share of rural borrowers continues to dominate the sector; out of total borrowers, 58 percent belong to rural areas while 42 percent belong to urban areas (Exhibit 2.19). In the year under review, the share of rural borrowers saw an increase of 2 percent, primarily on the back of NRSP, NRSP Bank and KBL. As mentioned earlier, these three institutions were the main drivers of growth in terms active borrowers, cumulatively adding 134,000 borrowers in 2013. Majority of the borrowers of these organizations belong to the rural segment of the population, resultantly increasing the share of rural borrowers. On the other hand, BRAC P, whose portfolio mostly consists of urban clients, witnessed a significant decrease in the number of borrowers in the current year.



MFB

RSP

MFI

Exhibit 2.20: Total Asset Base of the Industry

16%

16%

68%

Exhibit 2.21: Total asset base by peer group

0.0

20.0

30.0

40.0

50.0

60.0

2009 2010

MFB RSPMFI

2011 2012 2013

PK

R in

bill

ion

s

21

.1

29

.8

38

.7

55

.4

5.2 6.4 10

.4

13

.5

9.6 12

.5

11

.4

12

.717

.8

10.0

8.9

3.8

FINANCIAL STRUCTURE

This section focuses on the asset base and capital structure of the microfinance industry.

Asset Base

The asset base of the industry stood at PKR 81.5 billion in 2013, up from PKR 60.5 billion in the previous year showing a growth of more than 34 percent. This increase has been partially due to the inclusion in the dataset of FINCA MFB, AMFB, U Bank and number of smaller non-bank MFIs which accounted for PKR 7.8 billion increase in the asset base for the year.

As shown in the Exhibit 2.20 above, MFBs accounted for more than 68 percent of the total assets of the industry followed by RSPs and MFIs with 16 percent share each. The asset size of MFBs continues to increase with time. In 2013, the asset base of MFBs stood at PKR 55.4 billion as compared to PKR 39.7 billion in the previous year (see Exhibit 2.21). This can also be attributed to inclusion of data of FINCA MFB, AMFB and U-Bank data.

The expansion in the RSP and MFI peer group has been more modest as compared to banks. MFIs asset size stood at PKR 13.5 billion in 2013 as compared to PKR 10.4 billion 2012. The asset base of RSPs stood at PKR 12.7 billion up from 11.4 billion in the previous year.

Among the MFPs, TMFB continues to remain the largest player in terms of asset size with balance sheet of PKR 15.1 billion. This is closely followed by KBL whose asset base stood at PKR 13.2 billion. Among the MFIs, KF


2012 2013

0

Exhibit 2.22: Asset base of larger MFPs

In PKR Billions

KBL

TMFBTMFB

NRSP Bank

FMFB

NRSP

Kashf

FINCA

PRSP

ASA-P

10 20

15.2

13.3

9.8

9.5

7.3

4.6

4.0

2.8

2.0

13.3

10.0

6.3

8.3

7.1

3.8

2.4

1.6

Exhibit 2.23: Asset utilization ratio 2009-13

Asset Utilization Ratio

0.0%

2009 20132010 2011 2012

55

.0%

56

.7%

51

.2%

54

.7%

54

.5%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Exhibit 2.24: Asset utilization ratio by peer group

Asset Utilization Ratio

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

MFBs

50

.7%

MFIs

71

.6%

RSPs

52

.9%

continues to have the largest asset size with PKR 4.5 billion. The same hold for RSPs where NRSP continues to hold the top position with an asset base of PKR 7.3 billion.

Overall, the industry continues to remain concentrated with nine MFPs constituting up to 84 percent of the asset base of the total industry. Five of these are MFBs as shown in the Exhibit 2.22 below.

Asset Composition

The asset utilization ratio for the industry stood at 54.5 percent, slightly lower than last years as shown in the Exhibit 2.23. The trend over last five years shows that generally asset utilization ratio has largely remained range bound. Among the peer groups, the ratio shows great variation (see Exhibit 2.24). MFIs have the highest ratio with 71.6 percent followed by RSPs with 52.9 percent and MFBs with the lowest at 50.7 percent. Low asset utilization ratio for MFBs can be attributed to lower GLP of large players like FMFB and FINCA and secondly, due to recently acquired banks like U-Bank and AMFB.



Exhibit 2.25: Regional comparison of asset utilization ratio

0%

10%

20%

30%

40%

70%

80%

90%

100%

50%

60%

Afr

ica

Lat

inA

me

rica

&

Th

e C

ari

bb

ea

n

Pa

kist

an

Mid

dle

East

Nor

thA

fric

a

65

.6%

69

.1%

67

.5%

89

.8%

76

.4%

79

.4%

54

.5%

East

ern

Euro

pe&

Cent

ral A

sia

East

Asi

a&

the

Pac

ific

So

uth

Asi

a

Compared regionally, the asset utilization ratio for the industry is low as shown the Exhibit 2.25 below and there is sufficient room for improvement.

Asset composition remained varied across the peer groups as shown in the Exhibit 2.26. Overall, proportion of cash among all the peer groups witnessed a decline. This decline is largely due to extended grace periods being offered for loans offered by national apex. Proportion of advances witnessed an increase in all of the peer groups which is reflective of the growth being experienced by the industry. However, lower proportion of advances among MFB peer group as compared to RSPs and MFIs shows despite increase in GLP there is surplus funds available with them. Moreover, MFBs continue to hold significant portfolio as investments, which witnessed an increase from 20 percent to 24 percent in 2013.

Funding Profile

Over past couple of years, the funding structure of the industry has been tilting towards deposits, whereas, the share of debt financing has been continuously declining (Exhibit 2.27). As mentioned earlier in the report, MFBs have been successful in mobilizing deposits over the year as part of their deposit led strategy to fund portfolios. This has resulted in an increase in the deposit base of MFBs from PKR 21 billion in 2012 to PKR 33 billion in 2013. The share of debt in the capital structure decreased from 44 percent to 39 percent in the current year, whereas, the share of equity saw a slight increase of 1 percent.

Exhibit 2.26: Asset composition by peer group

18% 24% 21% 27%

3% 5% 4% 2%

24% 0% 0% 6%

55% 71% 76% 65%

16%

5%

9%

70%

Cash and Bank Balance

Fixed assets

Investments

Advances

24%

3%

20%

53%

201220132012 20132012 2013

70%65%76%71%55%53%

MFB MFI RSP

0

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Pro

po

rtio

n o

f T

ota

l Ass

ets

6%0%

24%20%3%

24% 18% 24% 21% 27% 16%

3%5%

4%2%

5%

9%0%

Exhibit 2.27: Capital structure of micro finance industry 2009-13

Deposits Debt Equity

0%

10%

20%

30%

40%

70%

80%

90%

100%

2010 201320122009

50%

60%

24% 23%

53% 48% 50%44%

39%

24% 28% 29% 37% 40%

2011

21% 20% 21%


Exhibit 2.28: Funding profile by peer group

Deposits Debt Equity

0%

10%

20%

30%

40%

70%

80%

90%

100%

2013 2012 201320132012

50%

60%

2012

MFBs MFIs RSPs

Exhibit 2.29: Deposit to GLP relation

Gross Loan PortfolioDeposits

0.0

2.0

4.0

6.0

8.0

10.0

12.0

KBL TMFB POMFB FMFB NRSP-B FINCA AMFB U-Bank

PK

R in

bill

ion

s

The funding structure varies significantly among the peer group as shown in Exhibit 2.28. The portion of equity remains low for MFIs with just 17 percent of their capital structure. On the other hand, the share of equity for MFBs and RSPs remains at a safe level of 20 percent and 28 percent respectively. MFBs remain adequately capitalized due to the Minimum Capital Requirements (MCR) set by the State Bank of Pakistan. Inadequate capitalization of MFIs can seriously impair the ability to access commercial finance and expand their outreach. In order to increase the equity of MFIs, PPAF, under its PRISM program, continued to place equity funds in mid-sized MFPs to strengthen their balance sheets.

By the close of the current year, five MFBs, TMFB, FMFB, FINCA, AMFB and U-bank had a deposit base higher than their total GLP (see Exhibit 2.29). The overall Deposit-to-GLP ratio of the MFB peer group remains above 100 percent and in the year 2013, the stated ratio had increased from 111 percent to 117 percent – indicating a greater increase in deposits as compared to loan

portfolio.

The industry continued its transition to commercial financing with the ratio of commercial liabilities to total debt reaching 81 percent in 2013 as compared to 75 percent in the previous year as seen in Exhibit 2.30. Commercial debt currently stands at PKR 22 billion for the sector against PKR 5 billion subsidized debt. The increasing trend of commercial liabilities is likely to continue as commercial financial institutions (local and international) are opening up to Pakistan’s microfinance sector. The year 2013 witnessed

Exhibit 2.30: Commercial liabilities to total debt

0%

10%

20%

30%

40%

70%

80%

90%

2013 201320132012

50%

60%

2012



successful placement of funds by international lender. For detail see Box 2.1.

This was the first successful deployment of debt by an international lender to a Pakistani microfinance provider and is reflection of its credit worthiness. A number of funds have been exploring the local market to extend debt over the last few years but pricing and hedging premiums became the stumbling blocks. It is anticipated that this transaction will be a prelude to other similar transactions in the future.

Furthermore, commercial banks, which have been heavily relying on government securities for generating interest income, will be exploring new avenues of revenue as the country’s policy rate is expected to stay stable if not decline.

Profitability & Sustainability

The total revenue for the industry stood at PKR 17.3 billion at the close of the year showing an increase over 38 percent from PKR 12.6 billion in 2012. The net income from the industry stood at PKR 1.2 billion as compared to PKR 0.9 billion in the previous year. Unadjusted ROA stood at 2 percent showing a slight increase as compared to 1.9 percent in the same time period whereas ROE stood at 9.0 percent as against 9.7 percent in the previous year. The slight decline can be attributed to inclusion of the recent acquired MFBs which have recently seen injection of equity running into billions.

Operational Self Sufficiency (OSS) and financial self sufficiency (FSS) for the sector continued to remain above 100 percent for the third year running as show in the Exhibit 2.31 below. OSS for the industry showed a healthy increase to close at 118.1 percent as compared to 109.5 percent in the previous year. Similarly, FSS stood at 116.5 percent as against 107.5 percent in the same time period. Out of 37 MFPs whose data has been reported in the review, 30 have an OSS above 100 percent. Among the peer groups, RSPs have the highest OSS with 140.1 percent followed by MFIs and MFBs at 117.8 percent and 113.1 percent respectively. Continued improvement in OSS is fuelled by increased income from loan portfolio on the back of increasing GLP as opposed to rising yields that was witnessed few years ago. Key future drivers of profitability will be the increase in GLP which in turn would be a function of expanding outreach and increasing loan sizes.

Yield on the portfolio which peaked in 2011 has gradually been declining over the last two years as shown in the Exhibit 2.32. In 2013, the yield on portfolio declined

Box 2.1: International debt placement

In September 2013, Economic Cooperation Organization (ECO) Trade and Development Bank (ETDB), a multilateral development bank with their Head Office in Turkey signed a Micro SME loan agreement with NRSP Microfinance Bank Limited. The aim of the facility is to boost the microfinance services by providing Micro SME loans to the final beneficiaries in Pakistan. The facility worth USD 7.5 million has tenor of three years with a grace period of two years.

Exhibit 2.31: OSS & FSS 2009-13

0.0%

10.0%

20.0%

30.0%

2007 2008 20102009 2011 2012 2013

Adjusted total expense / total assets

Adjusted financial expense/ total assets

Adjusted loan loss provision expense/ total assets

Adjusted operating expense/ total assets

0

50

100

150

200

250

300

350

Exhibit 2.32: Yield on gross portfolio (nominal & real) 2009-13

2009 2010 2011 2012 2013

Loans per staff Depositors per staff Loans per Loan Officers


to 33.5 percent from 34.3 percent in the previous year. Yield on portfolio in real terms increased slightly from 21.7 percent in the last year to 22.3 percent in 2013 due to lower inflation rate.

Compared globally the yield on gross portfolio continues to be toward the higher side despite declining over the last two years as shown in Exhibit 2.33.

The total revenues for the industry stood at PKR 17.3 billion. Out of this MFBs accounted for PKR 10.8 billion whereas MFIs and RSPs revenues stood at PKR 4.0 billion and PKR 2.5 billion respectively. Nearly 78 percent of the revenues come from income from loan portfolio as show in the Exhibit 2.34. However, the percentage of the revenue from financial services which includes branchless banking is steadily rising and closed at PKR 2.0 billion. Out of this, just PKR 0.6 billion is the revenues earned by TMFB from its branchless banking operations. Earnings from branchless banking are likely to grow as other MNO owned banks like U-Bank and Waseela expand their operations.

Costs after declining over the last four years appear to plateau in 2013 as shown in the Exhibit 2.35 below. The declining trend was due to decrease in all three; financial expense, loan loss provision expense and operating expense. However, in this year operating expense witnessed a slight increase to close at 12.7 percent as compared to previous year’s 12.1 percent. Among the peer groups RSPs continue to have the lowest expense ratio with 15.2 percent, followed by MFBs with 20.8 percent and MFIs with 26.0 percent.

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

PK

R in

bill

ion

s

Loan Portfolio Financial Services Financial Assets

Exhibit 2.34: Revenue streams

2010 201320122009 2011

Exhibit 2.35: Expense to asset ratios

0.0%

10.0%

20.0%

30.0%

2007 2008 20102009 2011 2012 2013

Adjusted total expense / total assets

Adjusted financial expense/ total assets

Adjusted loan loss provision expense/ total assets

Adjusted operating expense/ total assets



Compared globally, operating expense continues to be on the higher side. Higher operating costs can be attributed to comparatively smaller loan sized being offered by the industry.

Operating expense to GLP continues to decline after peaking in 2010 (see Exhibit 2.37). Currently, it stands at 22.1 percent as compared to 23.3 percent in the previous year. The decline in the ratio is largely due to continued increase in the GLP for the industry. A closer look shows the administrative expense has largely remained constant over time and decline has largely been fuelled by decline in personnel expense. One reason for this decline in personnel expense can be relatively lower average salaries for the industry. Among the peer groups, RSPs have the lowest operating expense with 13.1 percent, followed by MFIs with 22.8 percent and MFBs with 24.7 percent.

Despite the declining trend if we compare globally (Exhibit 2.38), expense to GLP ratios for the industry are on the higher end and there is room for further improvement.

Exhibit 2.36: Regional comparison of operating costs

Afr

ica

Lat

inA

me

rica

&

Th

e C

ari

bb

ea

n

Pa

kist

an

Mid

dle

East

&N

orth

Afr

ica

East

ern

Euro

pe&

Cent

ral A

sia

East

Asi

a&

the

Pac

ific

So

uth

Asi

a

Operating Expense / Assets

18

.3%

10

.1%

7.2

%

11

.2%

13

.4%

8.8

% 12

.7%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%18.0%

20.0%

Exhibit 2.37: Operating expense & personnel expense to GLP

0%

5%

20%

10%

25%

15%

30%

2009 2010 2011 2012 2013

Operating expense / Gross loan portfolio

Personnel expense/ Gross loan portfolio

Admin expense/ Gross loan portfolio

Exhibit 2.38: Regional comparison of operating expense

& personnel expense to GLP

Lat

inA

me

rica

&

Th

e C

ari

bb

ea

n

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Afr

ica

Pa

kist

an

Mid

dle

East

&N

orth

Afr

ica

East

ern

Euro

pe&

Cent

ral A

sia

East

Asi

a&

the

Pac

ific

So

uth

Asi

a

Operating Expense / GLP Personnel Expense / GLP


Productivity

The total staff for the industry stood at 15,673 in 2013 out of which 6,892 are loan officers. The personnel allocation ratio for the industry stood at 44.0 percent as compared to 49.8 percent in the previous years. Overall, the personnel allocation ratio for the industry has been on a declining trend for the last three years as shown in the Exhibit 2.39.

This decline has largely been due to the fall in the value of the ratio for the MFB peer group. One of the reasons for this declining trend can be the MFB’s focus on mobilizing deposits as shown by the following trend.

Compared with other regions as shown in the Exhibit 2.41, personnel allocation ratio is higher than few of the regions but there is potential for further increase.

Exhibit 2.39: Personnel allocation ratio 2009-13

Personal allocation ratio

0.0%

2009 20132010 2011 2012

10.0%

60.0%

70.0%

50

.5

49

.8%

44

.0%

20.0%

30.0%

40.0%

50.0%

57

.9 %

42

.9 %

10.0

15.0

20.0

25.0

30.0

Exhibit 2.40: Deposits and personnel allocation ratio trends

PK

R in

bill

ion

s

Deposits Personnel allocation ratio (MFBs)

2009 20132010 2011 20120

0.00%

0.0

35.0

5.0

10

.1 13

.9

20

.8

32

.9

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

7.2

0.0%

10.0%

Exhibit 2.41: Regional comparison of personnel allocation ratio

Afr

ica

Lat

inA

me

rica

&

Th

e C

ari

bb

ea

n

Pa

kist

an

Mid

dle

East

&N

orth

Afr

ica

East

ern

Euro

pe&

Cent

ral A

sia

East

Asi

a&

the

Pac

ific

So

uth

Asi

a

Personnel allocation ratio

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

38

.4%

46

.2%

35

.9% 43

.2%

55

.5%

59

.8%

44

.0%



0

50

100

150

200

250

300

350

Exhibit 2.42: Productivity of MFPs

2009 2010 2011 2012 2013

Loans per staff Depositors per staff Loans per Loan Officers

0

100

Exhibit 2.43: Regional comparisons of productivity indictors

Afr

ica

Lat

inA

me

rica

&

Th

e C

ari

bb

ea

n

Pa

kist

an

Mid

dle

East

&N

orth

Afr

ica

East

ern

Euro

pe&

Cent

ral A

sia

East

Asi

a&

the

Pac

ific

So

uth

Asi

a

Loans per Staff Loans per Loan Officers Depositors per Staff

200

300

400

500

600

700

800

Overall, all the main productivity indicators continued to exhibit an improving trend (see Exhibit 2.42). Loans per staff stood at 144 in 2013 as compared to 135 in the 2012. Loans per loan officers stood at 327 up from 264 in the previous year. Also, depositors per staff decreased slightly from 283 in previous year to 269 in 2013. The ratios vary among the peer groups and individual MFIs due to difference in their lending methodologies.

Compared to other regions as show in the Exhibit 2.43 below, the industry is better placed than many but there is room for improvement.

Risk

Credit Risk

Overall, the Portfolio at Risk > 30 days continued to remain below 5 percent cut off which reflects on the quality of the microfinance portfolio in the country. The PAR > 30 days for the year stood at 2.5 percent as opposed to 3.7 percent in the previous year showing an improvement as shown in the Exhibit 2.44. Similarly, write offs fell to 1.5 percent from 2.3 percent in the same time period. In absolute terms the PAR > 30 days stood at PKR 1.1 billion against PKR 1.2 billion in the previous year. All these indicators point to improving portfolio quality.


However, PAR > 30 days varies among the three per groups as shown in the Exhibit 45 below. The PAR value was lowest for MFB peer groups at 1 percent, followed by RSPs at 1.6 percent and MFIs at 7.7 percent. Higher value among MFI peer group was driven by higher PAR value among leading MFIs like KF (17.5 percent), OPP (17.6 percent) and BRAC-P (5.5 percent).

The risk coverage ratio remained stable in the year 2013 at 61.2 percent as compared to 61.6 percent in the previous year. The ratio varied among the peer groups with RSPs having the highest value at 150.4 percent, followed by MFBs at 96.3 percent and MFIs are 31.3 percent. The lower value of the risk coverage ratio is primarily due to higher PAR value for the MFI peer group.

On the whole, with the PAR>30 days value remaining below 5 percent cut off point and slight improvement over the year reflects positively on the quality of the portfolio for the industry. However, the lower value can also point towards risk averseness among the players.

With the national roll out of MF-CIB and initiation of enquiries by the practitioners, credit risk will be further mitigated by identifying cases of multiple borrowing and intentional defaulters. According to data extracted from MF-CIB, initial findings show the occurrence of multiple borrowing up to 21 percent. The CIB is a new phenomenon for the sector but already service providers are using this information for their outreach expansion, and scaling up loans and managing delinquencies.

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

Exhibit 2.45: PAR > 30 days by peer group

Portfolio at Risk >30 days

0.0%

MFBs MFIs RSPs

7.7%

1.6%

1.0%

1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

Exhibit 2.44: PAR >30 days & Write offs

Act

ive

Bo

rro

we

rs In

Th

ou

san

ds

Portfolio at Risk >30 days Write Off Cut off

20132010 2011 20122009

3.4%

4.1%

2.9%

3.7%

3.6%

1.8%

2.6%

2.3%

2.5%

1.5%



Introduction

Microfinance in Pakistan is essentially a double-bottom line industry – sustainability is not the end in itself; rather it is the means to achieving social goals. These goals can differ: some MFPs may have a vision of poverty alleviation, others of women empowerment, while yet others may be working for increasing access to formal financial services.

In order to better attain an institution’s intended goals, microfinance stakeholders around the world now believe that unless an MFP’s systems, activities and outputs are deliberately geared towards its social vision, it is difficult to make the impact that the institution is aiming at. For an MFP, therefore, performance management thus means focusing simultaneously on its financial and social bottom lines.

Analysis of the sector’s institutional profiles

The Microfinance Information eXchange (MIX), in collaboration with the Social Performance Task Force (SPTF) has developed a social performance reporting framework for MFPs. This framework currently focuses on capturing information on an institution’s vision, target segments and services. An analysis of selected self-reported1 indicators from the 2013 institutional profiles of 39 reporting MFPs2 from Pakistan follows.

Target Market

Identifying their target markets helps to focus MFP efforts and optimize the limited resources available. Providing services that are relevant, client oriented and effective in serving an organization’s mission requires a clear understanding of the population that an MFP aims to reach. MFPs target markets are highlighted in Exhibit 2.46, panel 1, and a peer group wise breakdown is given in Exhibit 2.46, panel 2. Generally, clients are targeted based

1: Reporting on social performance indicators is a new develop-

ment in the global microfinance landscape. The indicators

themselves, their collection and validation process and analyt-

ics are in evolution. Efforts have been made by PMN and MIX

to validate the information provided by MFPs but it should be

kept in mind that it remains largely self reported.

2: These include AGAHE, Akhuwat, AMFB, AMRDO, ASA, Asasah,

BEDF, BRAC, CSC, DAMEN, FFO, FINCA MFB, FMFBP, GBTI, JWS,

KBL, KF, Micro Options, MOJAZ Foundation, Naymet Trust,

NRDP, NRSP, NRSP-B, OCT, OLP, OPD, POMFB, PPCBL, PRSP,

RCDS, SDF, SRSO, SRSP, SSF, SVDP, TMFB, TRDP, U-Bank, and

WASIL.

Women

Clients living

in rural areas

Clients living in

urban areas

Adolescents

and youth

Other

0

Target Markets

No. of MFP responses

10 15 20 25 30 35 405

8

9

32

36

37

By peer group

No

. of

MF

P r

esp

on

ses

RSPs MFIs MFBs

20

10

0

30

40

Wo

me

n

Clie

nts

liv

ing

in

rura

l are

as

Clie

nts

liv

ing

in

urb

an

are

as

Ad

ole

sce

nts

an

d y

ou

th

Oth

er

79

25 22

55

9

18

16

10

19

4

Top priorities

No

. of

MF

P r

esp

on

ses

20

10

0

30

40

Wo

me

n

(1st

pri

ori

ty)

Wo

me

n (

top

3)

Clie

nts

livin

gin

rura

lare

as(1

stpr

iori

ty)

Clie

nts

livin

gin

rura

l are

as(t

op

3)

Clie

nts

livin

gin

urb

anar

eas

(1st

prio

rity

)

Clie

nts

livin

gin

urb

anar

eas

(top3

)

Target Market

18

36

17

34

7

30

Exhibit 2.46: MFPs' key statistics

SOCIAL GOALS

Review of Institutional Profiles and Services


on gender and location, with a few MFPs also targeting youth as well as other groups such as government pensioners, religious minorities and persons with disabilities, and microenterprises working with renewable energy.

Amongst the identified target markets, a few were much more popular amongst MFPs in Pakistan than others. The top three priority target groups were women, closely followed by clients living in rural areas and clients living in urban areas, respectively (see Exhibit 2.46 , panel 3).

Development Goals

A look at mission statements of MFPs clearly shows that nearly all MFPs have some social ideals built into their mission and there are common themes across them. Interestingly, mission statements of the microfinance banks are relatively more focused on expanding access to quality financial services to low income population and as a result improve their quality of life, economically and socially. Themes of poverty alleviation, empowerment of the ‘marginalized’ and expanding economic opportunities emerged as more common amongst the non-bank MFPs, especially the multidimensional organizations. Social mobilization and organizing the poor is a common goal of all rural support programmes. A focus on women is quite common in the sector as well.

These broad themes translate into a range of development objectives for service providers. The most common objective is poverty reduction, with all 39 reporting MFPs citing this as one of their objectives. This is followed by growth of existing businesses, employment generation, and gender equality and women’s empowerment as the most common development objectives across all peer groups (Exhibit 2.47).

RSPs MFIs MFBs

No

. of

MF

P r

esp

on

ses

0

5

10

15

20

25

30

35

40

Ho

usi

ng

Wat

er

an

dsa

nit

a tio

n

Ch

ildr e

n's

sch

oo

ling

Yo

uth

op

po

rtu

nit

ies

He

alt

him

pro

ve

me

nt

De

ve

lop

me

nt

of

sta

rt-u

pe

nte

rpri

ses

Imp

rov

em

en

to

f a

du

lt e

du

cati

on

Ge

nd

er

eq

ua

lity

an

dw

om

en

's e

mp

ow

erm

en

t

Em

plo

ym

en

tg

en

er a

tio

n

Incr

ea

sed

acc

ess

to f

ina

nci

al s

erv

ice

s

Gro

wth

of

ex

isti

ng

bu

sin

ess

es

Po

ve

rty

red

uct

ion

9

25

5

8

23

5

9

17

5

6

21

4

4

21

5

4

18

3

2

122

2

12

4

2

8

3

0

8

3

1

53

2

62

Exhibit 2.47: Development goals by peer group

45

No

. of

MF

P r

esp

on

ses

Exhibit 2.48: Poverty targets by peer group

MFIsRSPs MFBs

Po

or

clie

nts

Ve

ry p

oo

r

clie

nts

0

5

10

20

25

40

30

35

No

sp

eci

fic

po

ve

rty

ta

r ge

t

Low

inco

me

clie

nts

Poverty targets



Poverty Targeting

In terms of poverty level of targeted clients, 70 percent of institutions reported targeting more than one segment of the poor. The most common target market for the sector in terms of income is low income clients, closely followed by poor clients. Eight non-bank institutions reported targeting very poor clients. MFIs and RSPs are largely targeting both poor and low income clients.

Products and Services: Financial

Microfinance refers to a range of financial services for the low income and poor households. These include savings, insurance and money transfer services along with credit. This sub-section summarizes the different financial products offered by MFPs in Pakistan.

Credit

All reporting organizations offer microcredit services. However, the number and kinds of credit products vary across institutions. Due to the different needs of clients, it is important for MFPs to develop a product mix that accounts for these needs. In addition, increasing competition and maturing markets require MFPs to go beyond ‘cookie cutter’ approaches and differentiate their products to serve different market segments and customer demands. Exhibit 2.49 shows the range of activities for which microcredit services are available in Pakistan.

Loans for microenterprises are by far the most common, with 38 out of 39 reporting organizations offering these, followed by agricultural microcredit, with 31 MFPs offering this. Other activities for which a limited number of MFPs offer credit products include other household and consumption needs, livestock, education, housing, alternative energy and community infrastructure.

This range suggests that product differentiation in credit is under way and MFPs are beginning to offer products beyond the typical microenterprise loan. However, while it is important to offer a pertinent product mix to clients, it is also important to maintain an optimal balance between the range of products and the institution’s capacity to manage information, clients and staff to ensure effective provision of services to clients.

Deposits

Only 10 out of 39 reporting MFPs offer savings services. The ability to offer this service is largely determined by the legal status of an MFP: all MFBs, by virtue of being regulated banks, are allowed to intermediate3 client deposits, and thus all nine reporting MFBs take deposits.

3: Intermediation: Public deposits are used to finance an organi-

zation’s loan portfolio. Only the central bank -- State Bank of

Pakistan (SBP) regulated institutions (includes MFBs only) can

accept and intermediate deposits from the general public.

Exhibit 2.49: Credit offerings by peer group

No

. of

MF

P r

esp

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ses

10

0

30

40

20

RSPs MFIs MFBs

5

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35

Credit products offered

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RSPs MFIs MFBs

Yes

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Exhibit 2.50: Savings products offered, overall and

by peer group

10

29

9 98

4

3

1

1

2

4

6

8

10

12


Non-bank MFPs can only mobilize4 deposits. Only one reporting RSP reported mobilizing deposits. Exhibit 2.50 depicts savings offerings by MFPs in Pakistan by sector and peer groups.

All MFBs offer fixed term deposits as well as voluntary savings accounts, followed by checking accounts. making this the most popular savings product offered by them. On average, MFBs offer four kinds of savings services. There is room for MFBs to further diversify kinds of savings products on offer.

Insurance

Offering micro insurance serves to protect vulnerable clients against risk of losses. Majority of reporting MFPs offer insurance products to meet clients’ needs. This indicator looks at compulsory insurance, which is typically clubbed with credit products. Out of the 26 reporting MFPs offering insurance products, the majority of MFPs offer credit life insurance only, with limited MFPs offering other types of insurance such as health and agriculture etc. (see Exhibit 2.51). However, over the past few years, some MFIs have introduced varied insurance products from only offering credit life insurance to offering accidental death, livestock and agricultural insurance products as well. Generally, there is need to expand insurance services to cover a wider set of risks that vulnerable clients face.

4: Mobilization: MFPs not regulated

by the SBP (includes MFIs, RSPs

and Others) can neither hold nor

intermediate deposits from the

public. These organizations how-

ever, can mobilize savings from

their clients to place onwards with

licensed commercial banks.

Yes

No

Exhibit 2.51: Insurance provisions by sector and peer groups

67%

33%

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Exhibit 2.52: Provision of other financial services

No

. of

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P r

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RSPs MFIs MFBs

0

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7

6

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8

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Other financial products/services offered

No

. of

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Exhibit 2.53: Non-financial services

18

16

11

4

3

4

Services Offered

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4

Other Financial Services

The provision of other financial services is marginally low, with primary suppliers being MFBs. However, some MFIs are now offering clients the facility to repay loan installments through branchless banking agents.

All MFBs in the data set offer one or more other financial service amongst the following categories: debit/credit card, mobile banking services, savings facilitation, remittances services, and micro leasing. As shown in Exhibit 2.52, 10 MFPs offer savings facilitation services and six MFBs offer remittances services to their clients. Three out of nine MFBs offer debit/credit cards and two offer mobile banking services.

Products and Services: Non-Financial

To strengthen livelihoods of vulnerable clients, MFPs offer non-financial services in addition to financial products and services; frequently supplied in partnership with specialized public or private agencies. These services vary according to the capacity and vision of the institution, but the purpose is to develop client’s skills and/or provide basic services that they are unable to attain due to financial limitations. This can take the form of provision of basic services like health and education or business and/or technical skills training. For the purpose of this analysis, such services are grouped into four main categories: enterprise, education, health and women’s empowerment.

MFIs and RSPs are actively providing all four types of non-financial services in the market; especially those committed to a particular social mission (see Exhibit 2.53). While MFIs and RSPs


are offering at least one (in some cases multiple) non-financial service, only one MFB is offering education services to its clients currently. Women’s empowerment services are the most popular non-financial service being offered by MFPs; this is not surprising since the majority of MFPs in Pakistan target women as their priority market, and their fundamental social mission relates to women’s economic uplift. Such services usually include women’s rights education/gender issues training and leadership training. Enterprise services, such as enterprise skills development and business development services are also popular; followed by education services like financial literacy education, child and youth education and basic health/nutrition education; and health services like basic medical and special medical services for women and children.

Tracking Poverty

Client poverty level assessments serve multiple purposes like guide client targeting and selection for MFPs, establish baselines of client poverty for later impact evaluations, appraisal of financial services to better suit needs of clients and overall measurement of the program’s effectiveness.

38 out of 39 reporting MFPs measure client poverty levels. While some MFPs employ one method to measure poverty levels, some use multiple assessment tools. As shown in Exhibit 2.54, the majority of MFIs use at least the Poverty Scorecard provided by Pakistan Poverty Alleviation Fund (PPAF) and designed by The World Bank, whereas the majority of MFBs record per capita household expenditure or per capita household income method to gauge client poverty levels.

RSPs MFIs MFBs

50 10 15 20

No. of Responses

Exhibit 2.54: Poverty assessment tools used by MFPs

USAID PovertyAssessment Tool (PAT)

Food security index

Means test

Housing index

Own proxypoverty index

Participatory WealthRanking (PWR)

Grameen Progress outof Poverty Index (PPI)

Per capitahousehold income

Per capita householdexpenditure

Poverty Scorecardprovided by PPAF

Transparency of Cost

Globally the case of adopting the declining balance method to calculate and display interest rates to clients is widely accepted as the ‘transparent’ way. While Pakistani MFPs accept the importance of employing the declining balance method of calculation and disclose interest rates, the majority of the MFPs in Pakistan are still using the flat methodology, primarily due to the simplicity in calculation and marketing. As per State Bank of Pakistan’s regulations, however, MFBs under its regulatory framework are bound to disclose interest cost using the declining balance method to clients. There is some resistance by MFPs generally in switching from flat to declining balance interest rate disclosures, fearing loss of clientele owing to a lack of level playing field in the absence

of regulations mandating all peer groups to follow a similar methodology.

Out of 39 MFPs, 26 are using the flat interest rate method, 14 are using the declining balance method and two MFPs reported interest rates as not being applicable (n/a), having shifted to Islamic products, as shown in Exhibit 2.55. Out of the 14 MFPs using declining balance interest rate disclosures, it is interesting to note that six of these are non-regulated entities, indicating a positive step towards increased transparency in displaying costs.

However, there is considerable room for improvement to switch to greater pricing transparency to provide clients with a standardized disclosures methodology for easier understanding and comparison across products and MFPs for



Exhibit 2.55: Methods of stating service cost by sector

and peer groups

No

. of

MF

Ps

0

Declining balance

RSPs MFIs MFBs

5

10

15

20

25

30

14

2

26

Flat interest

Declining balance

N/A

Flat interest

8

3

3

N/A

22

21

3

decision-making. Box 1.3 in Section 1 gives findings and regional comparisons from a recent Pricing Transparency Initiative conducted in Pakistan in collaboration with MFTransparency to publish standardized APRs5 of loan products across MFPs in Pakistan.

CONCLUSION

The microfinance industry continued to expand and grow over the last one year. The previous year witnessed the emergence of leading strong institutions which are well positioned to become engine of growth for the industry based on their experience, size and financial strength.

The industry witnessed another year of double digit growth in outreach. GLP reached all time high on the back of continued increase in number of borrowers and increasing loan sizes. MFBs continued to experience success in deposit mobilization. Overall, women borrowers continue to dominate the market and groups lending continues to remain the methodology of choice. Credit life continues to dominate the micro-insurance segment.

Industry continues to remain sustainable with OSS remaining above 100 percent. Yield on portfolio exhibited declining trend with growth in the industry being future the key driver of profitability. Despite exhibiting a declining trend, costs remain high and there remains room for further improvement. Overall, productivity indicators continue to point toward improvement. PAR > 30 days declined further which reflects positively on the quality of the portfolio.

The industry’s primarily social goal remains elimination of poverty. Women borrowers remain its principal clients and low income clients remains its main target market. In addition to microcredit, micro-insurance and saving products are being offered by MFPs and the focus is on holistic financial services at the base of the pyramid. Moreover, the industry took a big leap towards pricing transparency last year when its collaborated with MFT to publish standardized APRs of loan products across the country.

5: APRs for products of 31 MFPs in Pakistan can be accessed on

the MFTransparency website at the following URL: http://www.

mftransparency.org/microfinance-pricing/pakistan/

SECTION 3Way Forward


SECTION 3

THE WAY FORWARD

With mature institutions, a sound regulatory and policy framework Pakistan’s microfinance sector appears to be entering a phase of growth, market segmentation and innovation. Key areas where growth and innovation can be expected in the near future are discussed here.

TOWARDS THE MISSING MIDDLE

SMEs account for more than 30 percent of the country’s GDP and make up 90 percent of all economic establishments in the country . They have the potential to generate employment, increase income and reduce poverty. Due to this, SME lending had been on the agenda of the policy makers for many years. One of the key constraints for SME growth is access to finance, and finding appropriate institutions to serve the SMEs has been a serious challenge for policy makers. There is now a clear view that SMEs need to be broken down into the ‘small’ and ‘medium’ in order to meet their needs effectively, as clubbing them together puts the smaller enterprises at a disadvantage. Stakeholders also seem to agree that it will be difficult to commercial banks to scale down to serve these small enterprises in the foreseeable future. The MFBs, on the other hand, seem well positioned to scale up from their current microfinance client base to also serve the small businesses.

SBP through an amendment in the prudential regulations for MFBs now allows them to lend up to PKR 500,000 for enterprise lending. Several MFBs have started to prepare themselves to enter this market segment, with six MFBs at this time having sought SBP’s approval. That said, MFBs face a number of challenges in rolling out their financing solutions for microenterprises. Foremost are the capacity issues and financing required on-lending. Most of the players are of the view that the current human resources and infrastructure cannot effectively lend to the missing middle. This requires capacity building of staff and separate infrastructure for the enterprise lending. In addition, the loan sizes for these products will be multiple of the current loan size which would require additional funding.

Strengthening of industry infrastructure in recent years through creation of a MF-CIB will be crucial in providing credit history of graduating microfinance borrowers who could qualify for the larger loans. MFBs are also looking at new areas such as agriculture value chain financing and linkages with other sectors (like low cost private schools - discussed separately below) as promising areas. Moreover, considerable support for tapping the missing middle is now available from leading donor like US AID and DFID in form of facilities for refinancing and technical advisory.

The missing middle is a significant new opportunity for the sector but MFBs are moving carefully into this segment, recognizing that although the dynamics of lending to small and microenterprises may be similar to the typical microfinance, it is a different segment with its own risks that they are not completely familiar with.



BRANCHLESS BANKING

The branchless banking sector of Pakistan has witnessed tremendous growth since inception and has become a role model in the global branchless banking landscape. In a period of two years, the two-player market for mobile financial services has expanded to eight players and is now represented by the entire telecom sector, along with a the leading commercial banks in the country.

While the growth and uptake of the branchless banking services are rapid, the focus of the consumer is tilted towards Over-the-Counter (OTC) transactions. This means that the transaction must be facilitated by an agent, rather than by the customer conducting the transaction himself via his mobile phone. By the end of 2013, the share of OTC transactions in terms of volume and value were 80 percent and 50 percent respectively (Exhibit 3.1).

With each year, the branchless banking industry is becoming more competitive and moving a step closer to maturity; however its biggest challenge remains moving beyond money transfer and bill payments, and accelerating the registration and usage of registered m-wallet accounts. Despite an increase in the number of branchless banking players and transactions, the growth in the branchless banking accounts (M-wallet accounts) was dismal in the year under review (Exhibit 3.2).

While OTC transactions were a very good entry level product for branchless banking, there is a need to increase focus on transactions through mobile wallets. With a mobile account, a customer can store and access funds round the clock; he can directly deposit and withdraw money from his account and conduct various transactions from his phone.

In Pakistan an estimated 135 million1 people own a cell phone (75percent penetration rate), whereas, at an average, only 5percent of Pakistani households use mobile money, and only about 0.3percent of households have a registered mobile money account2(Exhibit 3.5). There is a huge market opportunity in this segment which branchless banking deployments can effectively tap by increasing awareness and introducing innovative products to incentivize consumers towards mobile accounts.

Easypaisa has recently introduced two saving products (Khushaal Beema and Khushaal Munafa) to encourage customers to open a mobile account. Under Khushaal Beema, mobile account customers can get free life insurance by saving PKR 2,000 or more in their mobile accounts. On the other hand, Khushaal Munafa provides a return of up to 9 percent upon saving in mobile accounts.

It is important that the success of the branchless banking sector should not restrict the players from losing sight of the broader financial inclusion agenda set forth by the State Bank of Pakistan. Currently, the bulk of activity is

0%

20%

40%

60%

80%

100%

Exhibit 3.1: Share of Branchless Banking Transactions

Agent Transactions (liquidity management) M-Wallets OTC

Volume of Transaction Value of Transaction

80%

14%6%

50%6%

44%

20%

30%

40%

50%

60%

Exhibit 3.2: Quarterly Growth in Branchless Banking Accounts

0%

Q1 2013 Q3 2013Q2 2013 Q4 2013

10%

Exhibit 3.3

One-to-One Model One-to-Many Model Many-to-Many Model

Central Switch


mostly in CNIC-to-CNIC money transfers (35 percent of total transactions). For branchless banking to really take off and bring about financial inclusion, however, providers need to move beyond over-the-counter transactions and promote mobile wallets.

The country comprises of 125,027 branchless banking agents as compared to 13,097 branches3 of commercial banks and microfinance providers combined. The presence and coverage of branchless banking agents coupled with the impressive mobile phone penetrations rate (75 percent ) is a definite key to financial inclusion.

Going forward, with the advent 3G network, we expect to see new developments and growth in the branchless banking sector. Nevertheless, the impact of 3G would be greater in urban areas where more people have access to smart phones and the literacy rate is higher as compared to rural areas. With greater speed, a wider range of financial services and more comprehensive offerings can be offered to mobile account holders. Similarly, internet services would be available in far off areas with weak or no broadband infrastructure; this can facilitate branchless banking agents who can be provided with smart phones with built-in customized applications to enhance their efficiency.

The true potential of the sector is set to unleash once the branchless banking business models evolve from “one-to-one” and “one-to-many” to “many-to-many”. The many-to-many model involves a central transaction switch that provides total interoperability, allowing multiple banks to offer services to the customers of multiple agent networks or MNOs (Exhibit 3.3). Interoperable systems will accelerate financial inclusion by allowing customers to use the infrastructure of multiple service providers to access their accounts.

One m-money user in the household One registered m-money user in the household

Exhibit 3.5: Use of Mobile Accounts

0%

Pakistan

5%

10%

15%

20%

25%

30%

35%

40%

Mo

bile

Mo

ney

Pe

net

rati

on

Uganda Tanzania



MICRO-INSURANCE

Poor and low income populations are often vulnerable and ill equipped to handle losses that catastrophic events inflict upon them. They face a number of risks including illnesses, accidents, disability, deaths, natural disasters – each having the potential to seriously damage any gains in income or assets the poor accumulate over time. Micro-insurance can play a role in providing social and financial protection against such losses by providing financial shock absorbency to low-income households for predictable and unpredictable risks.

Micro-insurance has been a part of the microfinance equation in Pakistan since the take-off of microcredit, mainly in the form of credit-life insurance and health insurance. However, growth and progress in micro-insurance had been hampered by the lack of a clear policy framework. Now with regulations coming into effect through the Microinsurance Rules 2013, it is hoped there will be further growth, especially in standalone insurance products for the poor.

With regulations coming into effect, there is a need to forge partnership among the key stakeholders which include insurance companies, MFPs, donors and branchless banking providers. Technology providers can play an important role as the ticket size is small but the numbers can grow exponentially by harnessing technology. Examples of using technology to deliver micro-insurance products include Trustco Mobile from Zimbabwe which launched life insurance in 2010 and currently has more than two million subscribers. Another cellular operator Tigo in Ghana

launched health insurance in collaboration with MicroEnsure in 2011 and is adding 4,500 clients per day. Pakistan, where there are now eight branchless banking providers operating, can be another market where insurance outreach can be expanded rapidly in short span of time. Donors can play an

Box 3.1: Challenges to Micro-insurance

The micro-insurance sector of Pakistan is still in its nascent stages and promising efforts are being made by various stakeholders for its uplift. Though the sector has undergone decent growth since its take off, it has not achieved the desired momentum the micro segment offers.

The primary challenge faced by the industry is the lack of innovative products by insurance companies. In order to fully utilize the potential of the micro-insurance market mainstream insurance companies need to structure products that would cater to the requirements of the low income segment. Insurance companies are primarily relying on life and health insurance products in the micro-insurance segment which generate high margins.

The lack of innovation in products can be attributed to the fact that insurance companies are not very informed of the dynamics of the low segment market and prefer to position themselves in the higher end of the market. Hence, the insurance industry needs to be encouraged to understand the market potential and should devout its resources towards market analysis.

On the other hand, the reluctance to expand in this market by insurance companies can be attributed to the high illiteracy rate of the target population and the unfamiliarity with insurance concepts, relatively high costs of operation and lack of actuarial data. Insurance companies reinsure their portfolios through reinsurance firms which are largely multinationals. However, most of these multinationals do not have much knowledge of the micro-insurance market and hence are less willing to reinsure products of the insurance companies.

Insurance companies will have to address these challenges in order to gain a footing in the micro-insurance industry. Their primary focus should be on market insight and analytics, whereas, they also need to develop the capacity to design products tailored to meet the requirements of the low income segment. Nevertheless, the absence of innovative product offerings from mainstream insurance companies provides an opportunity for new businesses to operate in this segment.

important role here by stimulating innovation and experimentation through apportionment of their development resources to support programs in health and livelihood initiatives, augmented by micro-insurance.

Key challenges being faced by micro-insurance are highlighted in the Box 3.1.


FINANCING LOW COST PRIVATE SCHOOLS (LCPS) THROUGH MICROFINANCE

A recent initiative taken by several MFPs has been to develop sector-specific credit options for Low Cost Private Schools (LCPS), based on evidence of the increasing financing demands of this rapidly expanding sector. According to a study commissioned by the United Kingdom’s Department for International Development (DFID), the sector’s funding appetite exceeds PKR 77 billion for over 70,000 low cost private schools currently operating in the country. The amount and sources of initial investment for these existing schools are typical of the SME sector, with a substantial number of low cost private schools having initial investments of less than PKR 300. This initial investment amount falls within the revised guidelines for enterprise lending set up by the State Bank of Pakistan (SBP), which allow MFBs to lend up to PKR 500K (previously PKR 150K). Returns on investments are projected to be fairly high given the steady growth in enrolment rates and low-cost strategies employed by the LCPS sector. Moreover, the sector represents a rapidly growing market, with the number of private schools having increased 10 fold in the past decade, primarily in Punjab and Sindh.

In 2013, the Pakistan Poverty Alleviation Fund (PPAF) supported the provision of a microcredit product for low cost private schools through one of its partner organizations - Kashf Foundation. While this pilot was centered in urban areas, the PPAF plans to up-scale the product to more rural areas, particularly in South Punjab, through multiple partner organizations. In Kashf

Foundation, loans are tied to technical support in the form of curriculum development, capacity building workshops for school-owners, teacher trainings and other monitoring support to ensure improvements in overall quality of education provided by these schools. Tameer Microfinance Bank Ltd. (TMFB) also piloted a specific product for LCPS, which includes product parameters for ‘clean’ loans as well as collateral-backed loans of up to PKR 150K for LCPS owners with relevant asset ownership (school property, gold, term deposit certificates etc).

In 2014, several MFPs including Kashf Foundation, First Microfinance Bank Ltd (FMFB) and Khushhali Bank Ltd (KBL) began piloting a LCPS-specific microcredit product based a financial model proposed by the DFID-commissioned study (see above). The model proposes loan amounts to be calculated on the basis of key variables including school fees, student teacher ratio (STR) and status of school building ownership; while other prevalent product features include a loan tenure of 12 to 24 months, a grace period of three months to allow the school to acquire relevant resources (equipment, staff and so on) for expansion and/or improvement, and an effective interest rate (IR) of 27 percent. While the model features comply with existing SBP regulations, they also call for greater investments from MFPs and perhaps flexibility on SBP enterprise definitions vis-à-vis number of employees particularly for experienced enterprise owners with the capacity and willingness to expand.

In terms of the regulatory framework, there have been some important developments, such as the revision of loan amount ceilings, allowing MFBs to be innovative in reaching out to new sectors. At the same time, guarantee schemes have been set up to encourage MFBs for onward lending, particularly to micro- and small-enterprises. The burgeoning LCPS sector in Pakistan holds enormous opportunities in this regard. There is potential for donors to support a market based approach in which school owners are vested in improving the quality and scale of education provision tied to microfinance loans.



FUNDING

The microfinance sector of Pakistan started off with complete reliance on grants and subsidized debt to meet its funding requirements. With the growth of the sector, the funding sources have become diversified and the sector is currently being funded by a combination of commercial debt, subsidized debt, deposits (in case of MFBs) and debt obtained under the guarantee facilities.

However, over the past few years, the sector has witnessed a visible change in the funding landscape; an increasing number of microfinance providers are shifting towards commercial sources of funding rather than relying on subsidized financing from donors or the national apex. On a sector level, the share of commercial debt to total liabilities has been continuously rising and has surpassed the share of subsidized lending (Exhibit 3.4).

Guarantee funds continue to play a vital role in facilitating MFPs to access funds from commercial banks. Recent availability to MFBs of Credit Guarantee Scheme for Small and Marginalized farmers which provides guarantee to lenders up to 50 percent in case of default provides an opportunity to expand credit outreach in rural areas. Similarly access to low cost housing guarantee scheme which covers up to 40 of lender’s exposure allows for MFBs to enter into low cost housing market.

On an institutional level, MFPs are continuously working to improve their credibility among commercial financial institutions by forming strong corporate governance structures, enhancing transparency and strengthening internal controls.

Exhibit 3.4: Comparison of Subsidized Lending and

Commercial Lending

0%

10%

20%

30%

40%

50%

60%

70%

90%

80%

2010 2011 2012 2013

Subsidized Debt-to-Total Debt Commercial Debt-to-Total Debt

One m-money user in the household One registered m-money user in the household

Exhibit 3.5: Use of Mobile Accounts

0%

Pakistan

5%

10%

15%

20%

25%

30%

35%

40%

Mo

bile

Mo

ney

Pe

net

rati

on

Uganda Tanzania


Moving ahead, we expect the funding landscape to further improve as international lenders have started to take interest in Pakistan and are seeing Pakistan as an attractive debt market. In the current year, representatives of BlueOrchard Microfinance Fund and ResponsAbility Global Microfinance Fund explored the Pakistan microfinance sector and showed keen interest in future ventures. Similarly, ECO Trade And Development Bank has successfully invested USD 7.5 million (debt financing) in NRSP Bank and is currently finalizing a similar deal with another leading institution.

The biggest challenge international investors come across while investing in Pakistan is the hedging cost; foreign loans need to be converted into local currency (PKR) and are hence exposed to foreign exchange rate risk. Hedging solutions exist but due to high country risk premium lead to increase the borrowing costs for MFPs.

Deposit mobilization is the main source of financing for microfinance banks and at an average, more than 70percent of MFBs funding requirements are met through deposits. Deposit growth in the current year did not lose pace and hovered around 50percent as depicted in Exhibit 3.5. It is important to note that the increase is deposits is primarily driven by two to three large MFBs which constitute more than 70 percent of the sectors deposit base. The growth in MFB deposits comes at a cost of high interest rates; MFBs pay a higher interest rate on their deposits as compared to commercial banks, whereas, deposit concentration is skewed towards institutional deposits within large firms which demand high returns.

In order to bring down the cost of deposits, MFBs need focus on current and saving accounts (CASA), which in turn would require clearing house memberships, access to ATMs and innovative products relevant to micro-depositors.

Going forward, the sector is expected to see a rise in debt financing with very less or no growth in equity financing. Equity financing has not been successful in the Pakistan microfinance sector, especially among MFI’s who do not fall under any regulatory framework. However, only a handful of MFBs have been subject to equity financing transactions, with the most recent taking place in 2013 - Kashf Microfinance Bank had been acquired by FINCA to form FINCA Microfinance Bank.

Box 3.2: Enterprise and Asset Growth Programme (EAGR)

Department for International Development (DFID) UK has launched an initiative Enterprise and Asset Growth (EAGR) for Pakistan which will help unlock the potential of small entrepreneurs and businesses to drive growth, employment and trade; and address the particular needs of women and young people as entrepreneurs and job seekers.

DFID will provide a grant of up to £75.7 million from 2013/14 to 2023/24 to the Enterprise and Asset Growth Programme (EAGR), through a newly established Special Purpose Vehicle (SPV). EAGR will comprise of two primary components; Recyclable Capital and Capacity Building. The bulk of funding (£40 million) will support a range of financial institutions through ‘recyclable capital’ instruments to finance small and growing businesses (SGBs). This will enable them to grow and, in doing so, create jobs for the poor who then can build their assets.

The remaining funds (£35.7 million) will be used to build the capacity of financial and non-financial service providers; provide funding to commercial and financial intermediaries to develop innovative products, services and delivery channels; and develop a robust mechanist for monitoring, evaluation and impact assessment, as well as, research and knowledge management.

In addition, other international and Pakistani partners are expected to invest approximately £200m in grant and commercial funds. In particular, the Bill and Melinda Gates Foundation (BMGF) will provide US$15m (equivalent £9.3m) to support a Digital Financial Inclusion Centre, bringing the total value of the programme to £85m. Contingent on a successful startup and robust reviews of demand, DFID may consider up scaling its current level of funding from £75.7m to £200m. The additional funding is likely to be on returnable basis to DFID.

Due to the high costs of deposits, MFBs will be exploring other cheaper financing options to fund their portfolio’s which will include debt financing (local and international), issuance of bonds and term finance certificates.

The industry will continue to get donor assistance in obtaining financing from financial institutions similar to previous programs like Financial Inclusion Program (FIP) and IFAD’s PRISM. One such program is being launched is Enterprise and Asset Growth Program (EAGR) which is being funded by DFID (see Box 3.2).



PPAF SPINOFF

The microfinance sector in Pakistan has evolved significantly over the past decade. The early stage growth phase is over and the industry has matured. Expanding financial inclusion requires more sophisticated approaches and strategies than those used in the past, and many microfinance providers (MFPs) now have the operational and managerial strength to achieve this. Given the needs of the Microfinance sector, keeping in mind the evolving nature of the industry, PPAF decided to spin-off the Financial Services Group into a new independent Microfinance Apex entity that will spur a resurgence of high quality growth of the microfinance sector, and substantially increase financial sector penetration for poor households and microenterprises. This decision has been endorsed by many stakeholders including the Donors, GoP and SBP. PPAF’s partner organizations (POs) have also expressed their support and heralded the decision as a necessary step to remove bottlenecks and constraints of the sector while increasing its robustness.

To achieve this, PPAF commissioned a consultancy to guide the management through the process. An international firm of high repute was hired to undertake this assignment. After conducting a rigorous analysis of Pakistan’s microfinance market, the firm has suggested spin-off of PPAF’s microfinance department into an independent for profit entity in order to support the next phase of growth. PPAF is prepared to brave all challenges and ensure the provision of holistic and inclusive financial services to the needful across the nation. Going forward, there is little question that the microfinance wholesaling unit of PPAF will retain its role as the lead sector developer, acting as a guide and driver to the entire industry, propagating growth and strengthening product quality and the governance of MFPs.


2010

Floods

� 60 districts affected

� 20 million people affected, with over 1,980 reported deaths

and nearly 2,946 injured and 1.6 million rendered homeless

� Microfinance portfolio worth PKR 2.6 billion affected

� PKR 34 million worth of microfinance infrastructure damaged

2011

Sindh Rains

� 60 districts affected

� 20 million people affected, with over 1,980 reported deaths

and nearly 2,946 injured and 1.6 million rendered homeless

� Microfinance portfolio worth PKR 2.6 billion affected

� PKR 34 million worth of microfinance infrastructure damaged

2009

IDP Crisis� 5 district s & 2 agencies affected

� PKR 97 billion (US $1.1 billion) in damages

� Microfinance portfolio worth PKR 200 million affected

Earthquake

2005

� Struck AJK and KPK the hardest; 3 districts affected

� 73,000 people killed

� Caused damages amounting to PKR 265 billion (US$5.2

billion)

� Microfinance portfolio worth PKR38 million affected

Exhibit 3.6: Losses due to Natural Disasters

Exhibit 3.7: Meso Level

Disaster Risk Mitigation

Product

Diversification

High

Equity

Geographical

Spread

Disaster

Preparedness

DISASTER RISK MANAGEMENT

Since 2005, Pakistan has faced multiple disasters. These include earthquake in 2005, IDP crisis in 2009 and floods in 2010 & 2011. The impact of these events on the microfinance sector is summarized in the Exhibit 3.6 below.

The hardest hit by these disasters are the lower income strata. This segment of population is the same as the one targeted by microfinance industry resulting in large losses to MFPs. With small capital base, MFPs have little capacity to absorb these losses leading to liquidity issues. Moreover, as microfinance is a double bottom line industry which tries to balance the social and financial bottom lines, pursuing recoveries from calamity stricken borrowers can create political and reputation risk.

In order to mitigate disaster risk effectively, multifaceted efforts are needed. It requires efforts on client, MFP and industry level. Clients can be secured by extending micro-insurance products coupled with micro-saving options. At meso level, MFPs need to diversify geographically and product wise. In addition, there is a need to increase their equity to have cushion to absorb losses. MFPs located in disaster prone areas need to be better prepared for disasters by having necessary contingency plans in place (see Exhibit 3.7).

At sector level, the SBP through its Micro Finance Consultative Group and its sub-committees is already exploring options for the sector. These include setting up a dedicated disaster fund for the sector and amending existing government backed insurance schemes for agriculture and livestock to meet needs of MFPs. However, there is a need to expand the government schemes like Crop Life Insurance Scheme (CLIS) and Livestock Insurance to cover entire sector and just not MFBs. However, issues remain in their implementation. In addition, instead of insuring borrowers these schemes should be targeted towards insuring the portfolios of the MFPs.



ANNEXURES

INFRASTRUCTURE

2008* 2009** 2010** 2011** 2012 2013

Total assets (PKR 000) 33,193,784 30,473,198 35,826,211 48,569,411 61,928,036 81,557,894

Branches (including Head Office) 1,277 1,221 1,405 1,550 1,630 1,606

Total staff 11,499 11,557 12,005 14,202 15,153 17,456

GROWTH RATE

Total assets 45.2% -8.2% 17.6% 35.6% 27.5% 31.7%

Branches (including Head Office) 9.6% -4.4% 15.1% 10.3% 5.2% -1.5%

Total staff 20.7% 0.5% 3.9% 18.3% 6.7% 15.2%

* Includes KF data, ** Without KF data

FINANCING STRUCTURE

2008* 2009** 2010** 2011** 2012 2013

Total assets (PKR 000) 33,193,784 30,473,198 35,826,211 48,569,411 61,928,036 81,557,894

Total equity (PKR 000) 8,018,344 7,297,847 8,359,260 10,314,307 11,679,373 17,049,706

Total debt (PKR 000) 25,175,440 23,175,352 27,466,951 38,255,104 25,876,598 26,913,359

Commercial liabilities (PKR 000) 6,252,075 2,577,741 4,910,265 12,332,456 19,361,179 21,662,200

Deposits (PKR 000)*** 4,111,730 7,161,634 10,132,332 13,908,759 20,840,990 32,925,558

Gross loan portfolio (PKR 000) 20,001,190 16,757,846 20,295,915 24,854,747 33,877,284 46,613,582

RATIOS

Equity-to-asset ratio 24.2% 23.9% 23.3% 21.2% 18.9% 20.9%

Commercial liabilities-to-total debt 24.8% 11.1% 17.9% 32.2% 74.8% 80.5%

Debt-to-equity ratio 3.14 3.18 3.29 3.41 2.22 1.58

Deposits-to-gross loan portfolio 20.6% 42.7% 49.9% 56.0% 61.5% 70.6%

Deposits-to-total assets 12.4% 23.5% 28.3% 28.6% 33.7% 40.4%

Gross loan portfolio-to-total assets

60.3% 55.0% 56.7% 51.2% 54.7% 57.2%

Includes KF data, * Without KF data, ** Only MFB deposits included


ANNEXURE A-1

PERFORMANCE INDICATORSINDUSTRY AGGREGATE (2007-12)

OUTREACH

2008* 2009** 2010** 2011** 2012 2013

Active borrowers 1,695,421 1,409,657 1,567,355 1,661,902 2,040,518 2,392,874

Active women borrowers 803,795 643,392 811,520 917,058 1,275,387 1,442,197

Gross loan portfolio (PKR 000) 20,001,190 16,757,846 20,295,915 24,854,747 33,877,284 46,613,582

Annual per capita income (PKR)*** 81,000 86,000 105,300 107,505 118,085 143,808

Number of loans outstanding 1,791,688 1,409,657 1,547,197 1,661,902 2,040,518 2,401,849

Depositors**** 248,842 463,361 764,271 1,332,705 1,730,823 2,150,675

Number of deposit accounts 248,842 463,361 764,271 1,332,705 1,730,823 2,998,641

Number of women depositors 44,081 78,427 64,159 259,104 334,994 837,144

Deposits outstanding 4,111,730 7,161,634 10,132,332 13,908,759 20,840,990 32,925,559

Proportion of active women borrowers (%)

47.4% 45.6% 51.8% 55.2% 62.5% 60.3%

Average loan balance per active borrower (PKR)

11,797 11,888 12,949 14,956 16,602 19,480

Average loan balance per active borrower/per capita income

13.78% 13.8% 12.3% 13.9% 14.1% 13.5%

Average outstanding loan balance (PKR)

11,163 11,888 13,118 14,956 16,602 19,407

Average outstanding loan balance / per capita income

13.8% 13.8% 12.5% 13.9% 14.1% 13.5%

Proportion of active women depositors (%)

17.7% 16.9% 8.4% 19.4% 19.4% 38.92%

Average saving balance per active depositor (PKR)

16,523 15,456 13,258 10,436 12,041 15,309

Active deposit account balance (PKR)

16,523 15,456 13,258 10,436 12,041 10,980

* Includes KF data ** Without KF data *** Source: http://www.sbp.org.pk/reports/stat_reviews/Bulletin/2012/Feb/EconomicGrowth.pdf **** Only MFB deposits included



FINANCIAL PERFORMANCE

2008* 2009* 2010** 2011** 2012 2013

Income from loan portfolio 4,202,506 4,352,648 6,122,154 7,998,956 10,040,720 13,542,893

Income from investments 831,602 1,087,106 870,809 1,203,306 1,774,610 1,742,975

Income from other sources 80,552 975,335 528,457 899,713 816,461 2,093,035

Total revenue 5,114,660 6,415,089 7,521,420 10,101,975 12,631,792 17,378,903

Less : financial expense 1,556,375 1,820,037 2,016,795 2,905,049 3,974,467 4,767,589

Gross financial margin 3,558,285 4,595,052 5,504,624 7,196,926 8,657,325 12,611,314

Less: loan loss provision expense

1,440,324 408,684 745,660 623,988 643,991 658,812

Net financial margin 2,117,962 4,186,368 4,758,964 6,572,938 8,013,334 11,952,503

Personnel expense 1,828,726 2,186,177 2,819,891 3,345,284 3,784,676 5,032,342

Admin expense 1,507,667 1,719,283 1,961,816 2,446,750 2,886,025 3,880,920

Other expense 3,336,393 3,905,460 4,781,707 5,792,035 1,342,633 8,913,262

Less: operating expense 257,651 380,993

Net income before tax (1,218,432) 280,908 (22,742) 780,903 1,084,982 2,658,248

Provision for tax (1,001) 5,353 (7,047) 116,314 152,380 503,118

Net income/(loss) (1,217,431) 275,555 (15,696) 664,589 932,602 2,155,130

Adjusted Financial Expense on Borrowings

242,377 87,767 - 372,524 205,943 181,422

Inflation Adjustment Expense 669,689 1,318,219 - (3,073) 870 1,152

Adjusted Loan Loss Provision Expense

11,699 - - 357,688 49,456 18,743

Adjusted Operating Expense 923,765 1,405,987 - 727,138 256,270 201,317

Total Adjustment Expense (2,141,195) (1,889,736) (15,696) (62,549) 676,332 1,953,814

Net Income/(Loss) After Adjustments

27,996,183 29,363,269 30,399,088 42,282,393 57,182,714 70,192,281

Average total assets 7,177,338 7,006,506 7,854,713 8,719,204 11,594,943 14,513,187

Average total equity 6,115,580 7,177,338 7,006,506 7,854,713 8,719,204 11,206,319

RATIOS

Adjusted return-on-assets (7.6%+) (3.3%) (0.1%) (0.1%) 1.2% 2.8%

Adjusted return-on-equity (29.8%) (14%) (0.2%) (0.7%) 5.8% 13.5%

Operational self sufficiency (OSS) 80.8% 104.6% 99.7% 108.4% 109.4% 118.1%

Financial self sufficiency (FSS) 70.5% 86.8% 81.7% 100.5% 107.0% 116.5%

* Includes KF data, ** Without KF data


OPERATING INCOME

2008* 2009** 2010** 2011** 2012 2013

Revenue from loan portfolio 4,202,506 4,352,648 6,122,154 7,998,956 10,040,720 13,542,893

Total revenue 5,114,660 5,804,616 7,521,420 10,101,975 12,631,792 17,378,903

Adjusted net operating income / (loss)

(2,113,788) (887,558) (22,742) 5,252 828,712 2,456,931


Gross loan portfolio (opening balance)

12,698,918 16,780,162 16,948,466 20,576,342 25,743,757 34,668,730

Gross loan portfolio (closing balance)

20,001,190 16,757,846 20,295,915 24,854,747 33,877,284 46,105,712

Average gross loan portfolio 16,350,054 16,769,004 18,622,190 22,715,544 29,810,520 40,387,221

Inflation rate *** 12.0% 20.8% 15.0% 11.2% 10.4% 9.2%

Total revenue ratio (total revenue-to-average total assets)

18.3% 19.8% 24.7% 23.9% 22.3% 24.8%

Adjusted profit margin (adjusted profit/(loss)-to-total revenue)

(41.3%) (24.6%) (0.3%) 0.1% 7.0% 14.1%

Yield on gross portfolio (nominal) 25.7% 26.0% 32.9% 35.2% 34.2% 33.5%

Yield on gross portfolio (real) 12.2% 4.3% 15.5% 21.6% 21.6% 22.3%

* Includes KF data

** Without KF data

*** Source: http://www.sbp.org.pk/reports/stat_reviews/Bulletin/2012/Feb/IND.pdf



OPERATING EXPENSE

2008* 2009* 2010** 2011** 2012 2013

Adjusted total expense 7,228,448 7,454,381 7,544,162 10,096,723 11,803,080 14,540,979

Adjusted financial expense 2,440,032 3,140,237 2,016,795 3,304,504 4,181,281 4,950,162

Adjusted loan loss provision expense

1,452,023 408,684 745,660 1,000,184 693,447 677,555

Adjusted operating expense 3,336,393 3,905,460 4,781,707 5,792,035 6,928,352 8,913,262

Adjustment expense 895,356 1,320,200 - 775,651 256,270 201,317


RATIOS

Adjusted total expense-to-average total assets

25.8% 25.4% 24.8% 23.9% 20.6% 20.7%

Adjusted financial expense-to-average total assets

8.7% 10.7% 6.6% 7.8% 7.3% 7.1%

Adjusted loan loss provision expense-to-average total assets

5.2% 1.4% 2.5% 2.4% 1.2% 1.0%

Adjusted operating expense-to-average total assets

11.9% 13.3% 15.7% 13.7% 12.1% 12.7%

Adjusted personnel expense 6.5% 6.5% 9.3% 7.9% 6.6% 7.2%

Adjusted admin expense 5.4% 5.8% 6.5% 5.8% 5.0% 5.5%

Adjustment expense-to-average total assets

3.2% 4.5% 0.0% 1.8% 0.4% 0.3%

* Includes KF data

** Without KF data


OPERATING EFFICIENCY

2008* 2009** 2010** 2011** 2012 2013

Adjusted operating expense (PKR 000)

3,336,393 3,905,460 4,781,707 5,792,035 6,928,352 8,913,262

Adjusted personnel expense (PKR 000)

1,828,726 2,186,177 2,819,891 3,345,284 3,784,676 5,032,342

Average gross loan portfolio (PKR 000)

16,350,054 16,769,004 18,622,190 22,715,544 29,810,520 40,387,221

Average number of active borrowers

1,685,382 1,387,670 1,567,355 1,661,902 2,040,518 2,350,650

Average number of active loans 1,635,342 1,423,467 1,567,355 1,661,902 2,040,518 2,359,625

Adjusted operating expense-to-average gross loan portfolio

20.4% 23.3% 25.7% 25.5% 23.2% 22.1%

Adjusted personnel expense-to-average gross loan portfolio

11.2% 13.0% 15.1% 14.7% 12.7% 12.5%

Average salary/gross domestic product per capita

2.0 2.20 2.23 2.19 2.12 2.0

Adjusted cost per borrower (PKR) 2,000 2,814 3,051 3,485 3,395 3,792

Adjusted cost per loan (PKR) 2,000 2,744 3,051 3,485 3,395 3,777

* Includes KF data

** Without KF data



Figures in PKR ‘000

PRODUCTIVITY

2008* 2009* 2010** 2011** 2012 2013

Number of active borrowers 1,695,421 1,399,239 1,567,355 1,661,902 2,040,518 2,255,126

Number of active loans 1,791,688 1,399,239 1,567,355 1,661,902 2,040,518 2,263,432

Number of active depositors 248,842 463,361 764,271 1,332,705 1,730,823 1,897,872

Number of deposit accounts 248,842 463,361 764,271 1,332,705 1,730,823 2,707,872

Total staff 11,499 11,441 12,005 14,202 15,153 15,673

Total loan officers 6,916 6,619 5,148 7,165 7,541 6,892

Borrowers per staff 147 122 131 117 135 144

Loans per staff 156 122 131 117 135 144

Borrowers per loan officer 245 211 304 232 271 327

Loans per loan officer 259 211 304 232 271 328

Depositors per staff 22 41 64 94 114 121

Deposit accounts per staff 22 41 64 94 114 173

Personnel allocation ratio 60.1% 57.9% 42.9% 50.5% 49.8% 44.0%

* Includes KF data

** Without KF data


RISK

2008* 2009* 2010** 2011** 2012 2013

Portfolio at risk > 30 days 426,693 578,032 829,314 793,966 1,232,842 1,157,297

Portfolio at risk > 90 days 190,350 318,824 577,972 516,623 1,020,316 932,166

Adjusted loan loss reserve 1,680,846 477,785 733,338 623,988 759,621 708,355

Loan written off during year 299,986 602,421 335,463 592,429 675,835 615,293

Gross loan portfolio 20,001,190 16,757,846 20,295,915 24,854,747 33,877,284 46,105,712

Average gross loan portfolio 16,350,054 16,769,004 18,622,190 22,715,544 29,810,520 40,387,221

Portfolio at risk (>30)-to-gross loan portfolio

2.1% 3.4% 4.1% 3.2% 3.6% 2.5%

Portfolio at risk(>90)-to-gross loan portfolio

1.0% 1.9% 2.8% 2.1% 3.0% 2.0%

Write off-to-average gross loan portfolio

1.8% 3.6% 1.8% 2.6% 2.3% 1.5%

Risk coverage ratio (adjusted loan loss reserve-to-portfolio at risk >30days)

393.9% 82.7% 88.4% 78.6% 61.6% 61.2%

* Includes KF data

** Without KF data




ANNEXURE A-2

PERFORMANCE INDICATORSINDUSTRY AGGREGATE (2008-13)

INFRASTRUCTURE

KBL TMFB POMFB FMFB NRSP-B FINCA AMFB U-Bank Sub

MFB

Age 12 12 12 12 12 6 9 1

Total assets (PKR 000)

13,289,657 15,190,699 879,096 9,514,042 9,804,015 3,978,864 1,313,383 1,381,510 55,351,266

Total equity (PKR 000)

2,752,488 2,209,425 818,771 1,102,062 1,390,741 1,104,539 517,041 1,038,817 10,933,884

Total liabilities (PKR 000)

10,537,169 12,981,274 60,325 8,411,980 8,413,274 2,874,325 796,341 342,693 44,417,381

Branches (including Head Office)

110 49 16 87 54 34 11 17 378

Personnel 2,293 2,198 182 1,122 1,247 797 209 250 8,298

OPP

KASH

F

SAFC

O

DAM

EN

CSC

GBTI

FFO

ASA

-P

BRA

C-P

JWS

Sung

i

OR

IX

RCD

S

MFICo

ntin

ued

in n

ext

tabl

e...

Age 29

17

19

17

13

18

10 5

6

22

14

21

19


684

,583

4,5

80,5

27

547

,480

1,0

52,1

78

599

,456

342

,579

220

,108

1,9

65,7

26

1,3

44,3

10

530

,418

95,

835

256

,247

760

,569


394

,805

100

,994

146

,083

204

,809

182

,746

303

,419

16,

972

810

,308

(26,

256)

216

,596

70,

215

43,

285

210

,624


289

,778

4,4

79,5

33

401

,397

847

,369

416

,710

39,

160

203

,135

1,1

55,4

19

1,3

70,5

66

313

,823

25,

620

212

,962

549

,945

Branches (including Head Office) 21

174

22

20

16

10

15

150

86

15 5

8

22

Personnel 97

1,85

8

254

193

155

72

118

918

996

168

51

55

248



INFRASTRUCTURE

Aga

he

AM

RD

O

MO

Moj

az

Nay

met

NR

DP

OPD

SDS

SRD

O

SVD

P

VD

O

Sub

MFI

Age 10 7

5

6

9

22

22

10

13

13

10

Total assets (PKR 000) 83,

904

178

,651

85,

281

223

,038

10,

707

158

,494

105

,576

61,

748

70,

213

130

,834

61,

539

13,

465,

419

Total equity (PKR 000) 20,

127

42,

424

23,

543

54,

346

9,3

47

39,

101

14,

304

8,8

56

7,1

67

35,

270

981

2,5

35,2

61

Total liabilities (PKR 000) 63,

777

136

,227

61,

738

168

,691

1,3

60

119

,394

91,

273

52,

891

63,

046

95,

564

60,

558

10,

930,

15

Branches (including Head Office) 4

12 2

9

6

10 4

4

2

3

3

602

Personnel 25

79

19

139

18

107

38

24

18

40

20

5,6

13NRSP PRSP SRSP TRDP SRSO Sub

RSP

Age 20 15 22 16 10

Total assets (PKR 000) 7,326,662 2,834,223 45,445 1,312,215 1,222,664 12,741,209

Total equity (PKR 000) 1,972,609 1,112,572 28,445 253,571 213,363 3,580,560

Total liabilities (PKR 000) 5,354,053 1,721,651 17,000 1,058,644 1,009,301 9,160,649


470 19 6 80 51 626

Personnel 2,202 617 19 389 318 3,545


INFRASTRUCTURE

MFB Sub MFI Sub RSP Sub Total

Age


55,351,266 13,465,419 12,741,209 81,557,894


10,933,884 2,535,261 3,580,560 17,049,706


44,417,381 10,930,158 9,160,649 64,508,189


378 602 626 1,606

Personnel 8,298 5,613 3,545 17,456


Age

Total assets (PKR 000) 55,351,266 13,465,419 12,741,209 81,557,894

Total equity (PKR 000) 10,933,884 2,535,261 3,580,560 17,049,706

Total liabilities (PKR 000) 44,417,381 10,930,158 9,160,649 64,508,189


378 602 626 1,606

Personnel 8,298 5,613 3,545 17,456



Figures in PKR ‘000

FINANCING STRUCTUREK

BL

TMFB

PO

MFB

FMFB

NR

SP-B

FIN

CAA

MFB

U-B

ank

Sub

MFB

Tota

l ass

ets

13,

289,

657

15

,190

,699

8

79,0

96

9,5

14,0

42

9,8

04,0

15

3,9

78,8

64

1,3

13,3

83

1,3

81,5

10

55,

351,

266

Tota

l equ

ity

2,7

52,4

88

2,2

09,4

25

818

,771

1

,102

,062

1

,390

,741

1

,104

,539

5

17,0

41

1,0

38,8

17

10,

933,

884

Tota

l deb

t 2

,746

,106

1

,491

,036

-

296

,042

4

,457

,250

-

-

-

8

,990

,434

-

Subs

idis

ed d

ebt*

2,5

46,1

06

- -

- -

-

-

-

2,5

46,1

06

-

Com

mer

cial

deb

t 2

00,0

00

1,4

91,0

36

- 2

96,0

42

4,4

57,2

50

-

-

-

6,4

44,3

28

Tota

l dep

osits

7,1

32,9

19

10

,627

,546

2

8,73

0 7

,814

,981

3

,618

,714

2

,735

,464

7

62,0

26

205

,178

3

2,92

5,55

8

Tota

l lia

bilit

ies

10,

537,

169

12

,981

,274

6

0,32

5 8

,411

,980

8

,413

,274

2

,874

,325

7

96,3

41

342

,693

4

4,41

7,38

1

Gros

s lo

an p

ortf

olio

8

,859

,405

8

,331

,554

1

17,9

31

3,4

99,3

17

4,8

45,0

00

2,0

36,0

69

341

,838

4

1,38

1 2

8,07

2,49

5

Wei

ghte

d Av

g.

Equi

ty-t

o-as

set

ratio

20

.7%

14.5

%93

.1%

11.6

%14

.2%

27.8

%39

.4%

75.2

%19

.8%

Com

mer

cial

liab

ilitie

s-to

-tot

al d

ebt

7.3%

100.

0%0.

0%10

0.0%

100.

0%0.

0%0.

0%0.

0%71

.7%

Deb

t-to

-equ

ity ra

tio1.

00.

70.

00.

33.

20.

00.

00.

00.

8

Dep

osits

-to-

gros

s lo

an p

ortf

olio

80.5

%12

7.6%

24.4

%22

3.3%

74.7

%13

4.4%

222.

9%49

5.8%

117.

3%

Dep

osits

-to-

tota

l ass

ets

53.7

%70

.0%

3.3%

82.1

%36

.9%

68.7

%58

.0%

14.9

%59

.5%

Cost

of

fund

s6.

2%8.

5%1.

2%6.

4%7.

6%7.

8%6.

9%0.

6%7.

3%

Gros

s lo

an p

ortf

olio

-to-

tota

l ass

ets

66.7

%54

.8%

13.4

%36

.8%

49.4

%51

.2%

26.0

%3.

0%50

.7%

*Bel

ow m

arke

t ra

te


FINANCING STRUCTURE

OP

P

KA

SHF

SAFC

O

DA

MEN

CSC

GB

TI

FFO

ASA

-P

BR

AC-

P

JWS

Sung

i

OR

IX

RCD

S

MFI

Total assets 6

84,5

83

4,5

80,5

27

547

,480

1,0

52,1

78

599

,456

342

,579

220

,108

1,9

65,7

26

1,3

44,3

10

530

,418

95,

835

256

,247

760

,569

Cont

inue

d in

nex

t ta

ble.

..

Total equity

394

,805

100

,994

146

,083

204

,809

182

,746

303

,419

16,

972

810

,308

(26,

256)

216

,596

70,

215

43,

285

210

,624

Total debt

254

,949

4,20

3,06

2

379

,601

842

,891

400

,733

27,

288

191

,292

1,

042,

143

933

,418

305

,661

18,

000

210

,663

518

,662

- Subsidised debt*

91,

600

33,

921

379

,601

-

328

,545

27,

288

98,

893

141

,315

58,

392

265

,225

-

210

,663

365

,208

- Commercial debt

163

,349

4,1

69,1

41 -

842

,891

72,

188 -

92,

399

900

,828

875

,026

40,

436

18,

000 -

153

,454

Total deposits - - - - - - - - - - - - -

Total liabilities

289

,778

4,

479,

533

401

,397

847

,369

416

,710

39,

160

203

,135

1,

155,

419

1,37

0,56

6

313

,823

25,

620

212

,962

549

,945

Gross loan portfolio

507

,870

3,5

43,1

55

413

,875

750

,530

293

,493

50,

763

125

,333

1,8

96,8

01

884

,295

319

,169

89,

582

233

,715

444

,610

Wei

ghte

d Av

g.

Equity-to-asset ratio

57.7

%

2.2%

26.7

%

19.5

%

30.5

%

88.6

%

7.7%

41.2

%

-2.0

%

40.8

%

73.3

%

16.9

%

27.7

%

Commercial liabilities-to-total debt

64.1

%

99.2

%

0.0%

100.

0%

18.0

%

0.0%

48.3

%

86.4

%

93.7

%

13.2

%

100.

0%

0.0%

29.6

%

Debt-to-equity ratio 0.6

41.6 2.6

4.1

2.2

0.1

11.3 1.3

-35.

6

1.4

0.3

4.9

2.5

Deposits-to-gross loan portfolio -

-

-

-

-

-

-

-

-

-

-

-

-

Deposits-to-total assets -

-

-

-

-

-

-

-

-

-

-

-

-

Cost of funds 8.1%

11.3

%

9.5%

10.9

%

7.2%

5.6%

6.0%

5.3%

7.1%

9.3%

11.9

%

7.3%

9.2%


74.2

%

77.4

%

75.6

%

71.3

%

49.0

%

14.8

%

56.9

%

96.5

%

65.8

%

60.2

%

93.5

%

91.2

%

58.5

%



FINANCING STRUCTURE

Aga

he

AM

RD

O

MO

Moj

az

Nay

met

NR

DP

OP

D

SDS

SRD

O

SVD

P

VD

O

Sub

MFI

Total assets 83,

904

178

,651

85,

281

223

,038

10,

707

158

,494

105

,576

61,

748

70,

213

130

,834

61,

539

13,4

65,4

19

Total equity 20,

127

42,

424

23,

543

54,

346

9,3

47

39,

101

14,

304

8,8

56

7,1

67

35,

270

981

2,53

5,26

1

Total debt 61,

533

120

,272

58,

949

146

,781

-

112

,891

86,

128

44,

041

59,

419

88,

725

50,

145

9,9

02,2

97

- Subsidised debt*

-

120

,272

-

130

,160

- -

86,

128

34,

793

47,

625

88,

725 -

2,4

16,7

53

- Commercial debt

61,

533 -

58,

949

16,

621 -

112

,891

-

9,2

48

11,

794 -

50,

145

7,4

85,5

45

Total deposits - - - - - - - - - - - -

Total liabilities

63,

777

136

,227

61,

738

168

,691

1,3

60

119

,394

91,

273

52,

891

63,

046

95,

564

60,

558

10,

930,

158


43,

725

78,

150

64,

083

78,

601

9,5

11

80,

606

53,

404

22,

907

45,

264

74,

448

49,

194

10,

153,

084

Wei

ghte

d Av

g.

Equity-to-asset ratio

24.0

%

23.7

%

27.6

%

24.4

%

87.3

%

24.7

%

13.5

%

14.3

%

10.2

%

27.0

%

1.6%

18.8

%

Commercial liabilities-to-total debt

100.

0%

0.0%

100.

0%

11.3

%

0.0%

100.

0%

0.0%

21.0

%

19.8

%

0.0%

100.

0%

75.6

%

Debt-to-equity ratio 3.1

2.8

2.5

2.7

0.0

2.9

6.0

5.0

8.3

2.5

51.1

3.91

Deposits-to-gross loan portfolio - - - - - - - - - - - -

Deposits-to-total assets - - - - - - - - - - - -

Cost of funds 9.6%

6.9%

7.3%

4.0%

0.0%

7.5%

10.2

%

4.4%

5.8%

5.3%

8.1%

9.2%


52.1

%

43.7

%

75.1

%

35.2

%

88.8

%

50.9

%

50.6

%

37.1

%

64.5

%

56.9

%

79.9

%

75.4

%

*Below market rate


FINANCING STRUCTURE

NRSP PRSP SRSP TRDP SRSO Sub

RSP

Total assets 7,326,662 2,834,223 45,445 1,312,215 1,222,664 12,741,209

Total equity 1,972,609 1,112,572 28,445 253,571 213,363 3,580,560

Total debt 5,017,919 1,023,375 15,000 976,033 988,300 8,020,628

- Subsidised debt* - - - - 288,300 288,300

- Commercial debt 5,017,919 1,023,375 15,000 976,033 700,000 7,732,328

Total deposits - - - - - -

Total liabilities 5,696,084 1,338,216 10,096 522,172 969,263 9,160,649

Gross loan portfolio 5,584,405 903,664 32,174 789,789 1,077,973 8,388,003

Weighted Avg.

Equity-to-asset ratio 26.9% 39.3% 62.6% 19.3% 17.5% 28.1%

Commercial liabilities-to-total debt 100.0% 100.0% 100.0% 100.0% 70.8% 96.4%

Debt-to-equity ratio 2.5 0.9 0.5 3.8 4.6 2.24

Deposits-to-gross loan portfolio - - - - - -

Deposits-to-total assets - - - - - -

Cost of funds 10.6% 7.1% 14.0% 11.2% 11.1% 10.0%

Gross loan portfolio-to-total assets 76.2% 31.9% 70.8% 60.2% 88.2% 65.8%

*Below market rate


Total assets 55,351,266 13,465,419 12,741,209 81,557,894

Total equity 10,933,884 2,535,261 3,580,560 17,049,706

Total debt 8,990,434 9,902,297 8,020,628 26,913,359

- Subsidised debt* 2,546,106 2,416,753 288,300 5,251,159

- Commercial debt 6,444,328 7,485,545 7,732,328 21,662,200

Total deposits 32,925,558 - - 32,925,558

Total liabilities 44,417,381 10,930,158 9,160,649 64,508,189

Gross loan portfolio 28,072,495 10,153,084 8,388,003 46,613,582

Weighted Avg. Weighted Avg. Weighted Avg. Weighted Avg.

Equity-to-asset ratio 19.8% 18.8% 28.1% 20.9%

Commercial liabilities-to-total debt 71.7% 75.6% 96.4% 80.5%

Debt-to-equity ratio 0.8 3.91 2.24 1.58

Deposits-to-gross loan portfolio 117.3% - - 70.6%

Deposits-to-total assets 59.5% - - 40.4%

Cost of funds 7.3% 9.2% 10.0% 8.0%

Gross loan portfolio-to-total assets 50.7% 75.4% 65.8% 57.2%



OUTREACH

KBL TMFB POMFB FMFB

MFB

Active borrowers 409,230 197,811 4,803 130,397

Cont

inue

d in

nex

t ta

ble.

.

Active women borrowers 110,492 67,729 1,174 44,521

Gross loan portfolio (PKR 000) 8,859,405 8,331,554 117,931 3,499,317

Annual per capita income (PKR)* 143,808 143,808 143,808 143,808

Number of loans outstanding 409,230 197,811 4,803 130,397

Depositors 674,061 833,313 18,735 263,437

Number of deposit accounts 674,061 1,643,313 18,735 263,437

Number of women depositors 166,787 568,429 5,103 72,672

Deposits outstanding 7,132,919 10,627,547 28,730 7,814,981

Weighted Avg.

Proportion of active women borrowers (%) 27.0% 34.2% 24.4% 34.1%

Average loan balance per active borrower (PKR) 21,649 42,119 24,554 26,836


15.1% 29.3% 17.1% 18.7%

Average outstanding loan balance (PKR) 21,649 42,119 24,554 26,836

Average outstanding loan balance / per capita income 15.1% 29.3% 17.1% 18.7%

Proportion of active women depositors (%) 24.7% 68.2% 27.2% 27.6%

Average saving balance per active depositor (PKR) 10,582 12,753 1,533 29,665

Active deposit account balance (PKR) 10,582 6,467 1,533 29,665

* http://www.sbp.org.pk/reports/stat_reviews/Bulletin/2012/Feb/EconomicGrowth.pdf


OUTREACH

NRSP-B FINCA AMFB U-Bank Sub

MFB

Active borrowers 171,718 39,078 8,606 1,220 962,863

Active women borrowers 23,291 1,922 2,941 80 252,150

Gross loan portfolio (PKR 000) 4,845,000 2,036,069 341,838 41,381 28,072,495

Annual per capita income (PKR)* 143,808 143,808 143,808 143,808 143,808

Number of loans outstanding 171,718 39,692 8,606 1,220 963,477

Depositors 108,326 200,489 31,812 20,502 2,150,675

Number of deposit accounts 108,326 238,345 31,812 20,612 2,998,641

Number of women depositors 11,767 10,648 1,738 - 837,144

Deposits outstanding 3,618,714 2,735,464 762,026 205,178 32,925,559

Weighted Avg.

Proportion of active women borrowers (%) 13.6% 4.9% 34.2% 6.6% 26.2%

Average loan balance per active borrower (PKR) 28,215 52,103 39,721 33,919 29,155


19.6% 36.2% 27.6% 23.6% 20.3%

Average outstanding loan balance (PKR) 28,215 51,297 39,721 33,919 29,137

Average outstanding loan balance / per capita income 19.6% 35.7% 27.6% 23.6% 20.3%

Proportion of active women depositors (%) 10.9% 5.3% 5.5% 0.0% 38.9%

Average saving balance per active depositor (PKR) 33,406 13,644 23,954 10,008 15,309

Active deposit account balance (PKR) 33,406 11,477 23,954 9,954 10,980




OUTREACH

OP

P

KA

SHF

SAFC

O

DA

MEN

CSC

GB

TI

FFO

ASA

-P

BR

AC-

P

JWS

Sung

i

OR

IX

RCD

S

MFI

Active borrowers 4

2,22

4

312

,182

38,

762

35,

185

18,

578

4,8

37

10,

753

179

,588

56,

359

21,

323

10,

670

16,

322

31,

715

Cont

inue

d in

nex

t ta

ble.

..

Active women borrowers

10,

556

312

,182

18,

606

35,

185

18,

578

4,4

89

10,

619

178

,121

54,

497

20,

686

10,

670

15,

546

29,

101

Gross loan portfolio (PKR 000)

507

,870

3,5

43,1

55

413

,875

750

,530

293

,493

50,

763

125

,333

1,8

96,8

01

884

,295

319

,169

89,

582

233

,715

444

,610

Annual per capita income (PKR)*

143

,808

143

,808

143

,808

143

,808

143

,808

143

,808

143

,808

143

,808

143

,808

143

,808

143

,808

143

,808

143

,808

Number of loans outstanding

42,

224

312

,182

38,

762

35,

185

18,

578

13,

143

10,

753

179

,588

56,

359

21,

323

10,

670

16,

322

31,

715

Depositors - - - - - - - - - - - - -

Number of deposit accounts - - - - - - - - - - - - -

Number of women depositors - - - - - - - - - - - - -

Deposits outstanding - - - - - - - - - - - - -

Wei

ghte

d Av

g.


25.0

%

100.

0%

48.0

%

100.

0%

100.

0%

92.8

%

98.8

%

99.2

%

96.7

%

97.0

%

100.

0%

95.2

%

91.8

%


12,0

28

11,3

50

10,6

77

21,3

31

15,7

98

10,4

95

11,6

56

10,5

62

15,6

90

14,9

68

8,39

6

14,3

19

14,0

19


8.4%

7.9%

7.4%

14.8

%

11.0

%

7.3%

8.1%

7.3%

10.9

%

10.4

%

5.8%

10.0

%

9.7%


12,0

28

11,3

50

10,6

77

21,3

31

15,7

98

3,86

2

11,6

56

10,5

62

15,6

90

14,9

68

8,39

6

14,3

19

14,0

19

Average outstanding loan balance / per capita income

8.4%

7.9%

7.4%

14.8

%

11.0

%

2.7%

8.1%

7.3%

10.9

%

10.4

%

5.8%

10.0

%

9.7%

Proportion of active women depositors (%) - - - - - - - - - - - - -

Average saving balance per active depositor (PKR)

- - - - - - - - - - - - -

Active deposit account balance (PKR) - - - - - - - - - - - - -



OUTREACH

Aga

he

AM

RD

O

MO

Moj

az

Nay

met

NR

DP

OP

D

SDS

SRD

O

SVD

P

VD

O

Sub

MFI

Active borrowers 3,8

28

9,8

21

3,5

58

4,6

06

2,5

00

4,7

99

4,3

12

3,6

11

2,0

00

3,5

52

4,0

33

825

,118

Active women borrowers 3,7

62

4,8

06

1,6

17

2,6

20

1,3

00

2,7

91

2,8

32

1,5

62

629

1,3

18

2,1

08

744,

181

Gross loan portfolio (PKR 000) 43,

725

78,

150

64,

083

78,

601

9,5

11

80,

606

53,

404

22,

907

45,

264

74,

448

49,

194

10,

153,

084

Annual per capita income (PKR)*

143

,808

143

,808

143

,808

143

,808

143

,808

143

,808

143

,808

143

,808

143

,808

143

,808

143

,808

143

,808

Number of loans outstanding 3,8

28

9,8

21

3,5

58

4,6

06

2,5

00

4,8

09

4,3

12

3,6

11

2,0

45

3,5

52

4,0

33

833

,479

Depositors - - - - - - - - - - - -

Number of deposit accounts - - - - - - - - - - - -

Number of women depositors - - - - - - - - - - - - Deposits outstanding - - - - - - - - - - - -

Wei

ghte

d Av

g.


98.3

%

48.9

%

45.4

%

56.9

%

52.0

%

58.2

%

65.7

%

43.3

%

31.5

%

37.1

%

52.3

%

90.2

%


11,4

23

7,95

7

18,0

11

17,0

65

3,80

4

16,7

97

12,3

85

6,34

4

22,6

32

20,9

59

12,1

98

12,3

05

Average loan balance per active borrower/per capita income 7.

9%

5.5%

12.5

%

11.9

%

2.6%

11.7

%

8.6%

4.4%

15.7

%

14.6

%

8.5% 9%


11,4

23

7,95

7

18,0

11

17,0

65

3,80

4

16,7

62

12,3

85

6,34

4

22,1

34

20,9

59

12,1

98

12,1

82

Average outstanding loan balance / per capita income 7.9%

5.5%

12.5

%

11.9

%

2.6%

11.7

%

8.6%

4.4%

15.4

%

14.6

%

8.5%

8.5%

Proportion of active women depositors (%) - - - - - - - - - - - -

Average saving balance per active depositor (PKR) - - - - - - - - - - - -

Active deposit account balance (PKR) - - - - - - - - - - - -




OUTREACH


RSP

Activeborrowers 390,995 72,631 3,838 71,114 66,315 604,893

Activewomenborrowers 307,681 34,816 3,406 42,666 57,297 445,866

Grossloanportfolio(PKR000) 5,584,405 903,664 32,174 789,789 1,077,973 8,388,003

Annualpercapitaincome(PKR)* 143,808 143,808 143,808 143,808 143,808 143,808

Numberofloansoutstanding 390,995 72,631 3,838 71,114 66,315 604,893

Depositors - - - - - -

Numberofdepositaccounts - - - - - -

Numberofwomendepositors - - - - - -

Depositsoutstanding - - - - - -

Weighted Avg.

Proportionofactivewomenborrowers(%) 78.7% 47.9% 88.7% 60.0% 86.4% 73.7%

Averageloanbalanceperactiveborrower(PKR) 14,283 12,442 8,383 11,106 16,255 13,867

Averageloanbalanceperactiveborrower/percapitaincome

10% 9% 6% 8% 11% 10%

Averageoutstandingloanbalance(PKR) 14,283 12,442 8,383 11,106 16,255 13,867

Averageoutstandingloanbalance/percapitaincome 9.9% 8.7% 6% 8% 11.3% 9.6%

Proportionofactivewomendepositors(%) - - - - - -

Averagesavingbalanceperactivedepositor(PKR) - - - - - -

Activedepositaccountbalance(PKR) - - - - - -



OUTREACH

MFB Sub MFI Sub RSPSub Total

Active borrowers 962,863 825,118 604,893 2,392,874

Active women borrowers 252,150 744,181 445,866 1,442,197

Gross loan portfolio (PKR 000) 28,072,495 10,153,084 8,388,003 46,613,582

Annual per capita income (PKR)* 143,808 143,808 143,808 143,808

Number of loans outstanding 963,477 833,479 604,893 2,401,849

Depositors 2,150,675 - - 2,150,675

Number of deposit accounts 2,998,641 - - 2,998,641

Number of women depositors 837,144 - - 837,144

Deposits outstanding 32,925,559 - - 32,925,559


Proportion of active women borrowers (%) 26.2% 90.2% 73.7% 60.3%

Average loan balance per active borrower (PKR) 29,155 12,305 13,867 19,480


20.3% 9% 10% 13.5%

Average outstanding loan balance (PKR) 29,137 12,182 13,867 19,407

Average outstanding loan balance / per capita income 20.3% 8.5% 9.6% 13.5%

Proportion of active women depositors (%) 38.9% - - 38.92%

Average saving balance per active depositor (PKR) 15,309 - - 15,309

Active deposit account balance (PKR) 10,980 - - 10,980





KBL TMFB POMFB FMFB NRSP-B

MFB

Income from loan portfolio 2,455,172 2,308,861 36,415 1,116,445 1,517,624

Cont

inue

d in

nex

t ta

ble.

.

Income from investments 139,485 352,037 66,078 331,189 190,609

Income from other sources 267,508 804,483 4,986 58,510 69,755

Total revenue 2,862,166 3,465,381 107,479 1,506,144 1,777,989

Less : financial expense 615,348 1,035,159 332 518,283 617,778

Gross financial margin 2,246,818 2,430,222 107,148 987,861 1,160,211

Less: loan loss provision expense 169,123 11,390 20,986 124,759 65,522

Net financial margin 2,077,695 2,418,832 86,162 863,102 1,094,690

Personnel expense 859,682 906,836 74,977 430,869 360,870

Admin expense 663,152 851,700 45,709 407,229 396,149

Less: operating expense 1,522,834 1,758,536 120,686 838,098 757,019

Other Non operating expense 16,910 44,864 9,987 - -

Net income before tax 537,951 615,432 (44,511) 25,004 337,671

Provision for tax 174,754 233,677 (16,023) (31,322) 93,423

Net income/(loss) 363,197 381,755 (28,489) 56,326 244,248

Adjusted Financial Expense on Borrowings 90,036 - - 23,585 -

Inflation Adjustment Expense 205 139 63 78 95

Adjusted Loan Loss Provision Expense - - - - -

Total Adjustment Expense 90,241 139 63 23,663 95

Net Income/(Loss) After Adjustments 272,956 381,616 (28,552) 32,663 244,153

Average total assets 11,621,636 14,270,282 812,947 6,287,955 8,068,764

Average total equity 2,612,782 2,024,341 759,513 551,511 1,289,133

Weighted Avg.

Adjusted return-on-assets 2.3% 2.7% -3.5% 0.5% 3.0%

Adjusted return-on-equity 10.4% 18.9% -3.8% 5.9% 18.9%

Financial expense ratio 8.4% 13.8% 0.3% 15.8% 15.6%

Operational self sufficiency (OSS) 123.1% 121.6% 70.7% 101.7% 123.4%

Financial self sufficiency (FSS) 118.5% 121.6% 70.7% 100.1% 123.4%



FINCA AMFB U-Bank Sub

MFB

Income from loan portfolio 649,723 89,994 3,452 8,177,686

Income from investments 93,085 54,561 28,411 1,255,456

Income from other sources 70,580 10,847 85,405 1,372,075

Total revenue 813,388 155,401 117,268 10,805,217

Less : financial expense 212,456 52,355 1,306 3,053,016

Gross financial margin 600,932 103,047 115,963 7,752,201

Less: loan loss provision expense 16,260 30,607 363 439,008

Net financial margin 584,672 72,440 115,600 7,313,192

Personnel expense 311,737 64,830 119,265 3,129,066

Admin expense 278,066 59,730 99,123 2,800,858

Less: operating expense 589,803 124,560 218,388 5,929,924

Other Non operating expense - - - 71,761

Net income before tax (5,131) (52,120) (102,789) 1,311,507

Provision for tax (6,511) 1,201 (57,727) 391,472

Net income/(loss) 1,380 (53,321) (45,062) 920,035

Adjusted Financial Expense on Borrowings - - - 113,621

Inflation Adjustment Expense - 24 205 809

Adjusted Loan Loss Provision Expense - - - -

Total Adjustment Expense - 24 205 114,430

Net Income/(Loss) After Adjustments 1,380 (53,345) (45,267) 805,605

Average total assets 2,566,064 1,064,100 1,247,296 45,939,046

Average total equity 552,412 413,240 1,061,348 9,264,281

Weighted Avg.

Adjusted return-on-assets 0.1% -5.0% -3.6% 1.8%

Adjusted return-on-equity 0.2% -12.9% -4.3% 8.7%

Financial expense ratio 13.3% 22.4% 6.2% 12.7%

Operational self sufficiency (OSS) 99.4% 74.9% 53.3% 113.8%

Financial self sufficiency (FSS) 99.4% 74.9% 53.2% 112.5%




OPP KASHF SAFCO DAMEN CSC GBTI FFO

MFI

Income from loan portfolio 60,052 1,072,131 115,549 259,611 115,908 13,282 31,494

Cont

inue

d in

nex

t ta

ble.

.

Income from investments 12,888 88,295 6,160 28,854 10,711 26,560 1,124

Income from other sources 4,667 63,370 14,548 4,125 1,482 39,722 19,584

Total revenue 77,607 1,223,797 136,257 292,590 128,101 79,564 52,202

Less : financial expense 20,682 474,183 35,964 91,522 28,887 1,539 11,542

Gross financial margin 56,926 749,614 100,293 201,068 99,214 78,026 40,660

Less: loan loss provision expense 8,085 3,858 8,379 35,521 4,870 139 3,612

Net financial margin 48,840 745,756 91,914 165,547 94,344 77,887 37,048

Personnel expense 17,289 440,869 50,634 61,054 45,139 14,517 24,251

Admin expense 12,299 136,194 41,776 39,962 41,267 9,651 18,793

Less: operating expense 29,589 577,063 92,411 101,015 86,406 24,168 43,044

Other Non operating expense 2,040 56,991 - - 12 41,262 4,906

Net income before tax 17,212 111,703 (497) 64,532 7,926 12,457 (10,902)

Provision for tax - - - - - - -

Net income/(loss) 17,212 111,703 (497) 64,532 7,926 12,457 (10,902)

Adjusted Financial Expense on Borrowings 321 - 1,622 - 6,109 375 3,839

Inflation Adjustment Expense 31 (31) 12 14 4 27 -

Adjusted Loan Loss Provision Expense 48,865 - 18,743 - - - -

Total Adjustment Expense 49,217 (31) 20,377 14 6,113 402 3,839

Net Income/(Loss) After Adjustments (32,005) 111,734 (20,874) 64,518 1,813 12,055 (14,741)

Average total assets 761,869 4,207,499 562,146 980,172 479,524 324,314 173,076

Average total equity 373,015 13,827 146,331 186,543 122,784 297,191 9,443

Adjusted return-on-assets -4.2% 2.7% -3.7% 6.6% 0.4% 3.7% -8.5%

Adjusted return-on-equity 8.6% 808.1% -14.3% 34.6% 1.5% 4.1% -156.1%

Financial expense ratio 0.1% 14.6% 9.5% 12.9% 11.5% 3.5% 0.7%

Operational self sufficiency (OSS) 128.5% 110.0% 99.6% 128.3% 106.6% 118.6% 82.7%

Financial self sufficiency (FSS) 70.8% 110.0% 86.7% 128.3% 101.4% 117.9% 78.0%



ASA-P BRAC-P JWS Sungi ORIX RCDS Agahe

MFI

Income from loan portfolio 710,791 363,217 109,461 29,385 63,911 157,556 11,670

Cont

inue

d in

nex

t ta

ble.

.

Income from investments 6,048 120 6,610 821 - 20,859 -

Income from other sources 10,208 270,717 14,355 50 2,284 2,301 3,006

Total revenue 727,046 634,054 130,426 30,256 66,195 180,717 14,676

Less : financial expense 54,834 65,822 28,516 2,140 15,360 47,879 5,933


Less: loan loss provision expense 31,013 55,311 8,232 418 14,619 3,251 -



Admin expense 74,194 263,273 30,410 9,431 18,033 25,713 3,026


Other Non operating expense 74,878 - - - - 3,211 -

Net income before tax 316,947 5,113 16,574 13,206 545 56,342 797

Provision for tax 108,624 2,716 - - - - -

Net income/(loss) 208,323 2,397 16,574 13,206 545 56,342 797

Adjusted Financial Expense on Borrowings - 20,231 2,982 - 9,479 - -

Inflation Adjustment Expense 57 (15) 8 2 4 14 -

Adjusted Loan Loss Provision Expense - - - - - - -

Total Adjustment Expense 57 20,216 2,990 2 9,483 14 -

Net Income/(Loss) After Adjustments 208,266 (17,819) 13,584 13,204 (8,938) 56,328 797

Average total assets 1,770,292 1,233,658 501,331 86,160 295,513 685,542 58,801

Average total equity 719,384 (80,852) 158,308 45,643 44,960 191,204 12,828

Adjusted return-on-assets 11.8% -1.4% 2.7% 15.3% -3.0% 8.2% 1.4%

Adjusted return-on-equity 29.0% -22.0% 8.6% -28.9% -19.9% 29.5% 6.2%







AMRDO MO Mojaz Naymet NRDP OPD SDS

MFI

Income from loan portfolio 22,948 10,389 25,140 1,676 26,925 18,184 7,857

Cont

inue

d in

nex

t ta

ble.

.

Income from investments - - - - - 1,443 -

Income from other sources 7,815 3,831 121,699 6,522 3,414 5,189 969

Total revenue 30,763 14,220 146,839 8,198 30,339 24,815 8,826

Less : financial expense 8,323 4,291 5,798 - 8,445 8,749 1,952


Less: loan loss provision expense 2,554 636 2,605 346 1,485 664 865



Admin expense 6,642 3,689 7,091 4,280 9,119 6,367 2,454


Other Non operating expense - - 120,966 - - - -

Net income before tax 1,044 337 2,115 619 6,047 1,370 1,673

Provision for tax - - - - - 306 -

Net income/(loss) 1,044 337 2,115 619 6,047 1,065 1,673

Adjusted Financial Expense on Borrowings 1,003 236 4,091 - - - 2,857

Inflation Adjustment Expense 2 - 1 1 (2) (3) -

Adjusted Loan Loss Provision Expense - - - - - - -

Total Adjustment Expense 1,005 236 4,092 1 (2) (3) 2,857

Net Income/(Loss) After Adjustments 39 101 (1,977) 618 6,049 1,067 (1,184)

Average total assets 139,731 70,455 155,396 10,724 106,477 79,936 65,564

Average total equity 29,402 14,938 40,789 9,038 24,400 5,702 8,543

Adjusted return-on-assets 0.0% 0.1% -1.3% 5.8% 5.7% 1.3% -1.8%

Adjusted return-on-equity 0.1% 0.7% -4.8% 6.8% 24.8% 18.7% -13.9%






SRDO SVDP VDO Sub

MFI

Income from loan portfolio 5,732 17,070 7,420 3,197,307

Income from investments - - - 197,605

Income from other sources 4,100 8,130 4,251 611,672

Total revenue 9,832 25,200 11,671 4,006,584

Less : financial expense 3,456 4,707 4,055 913,898

Gross financial margin 6,376 20,493 7,615 3,092,686

Less: loan loss provision expense 2,264 1,829 3,165 185,636

Net financial margin 4,112 18,664 4,450 2,907,050

Personnel expense 2,370 8,089 3,390 1,232,133

Admin expense 3,117 9,995 2,997 767,477

Less: operating expense 5,488 18,084 6,387 1,999,610

Other Non operating expense - - - 302,226

Net income before tax (1,376) 580 (1,937) 605,214

Provision for tax - - - 111,645

Net income/(loss) (1,376) 580 (1,937) 493,569

Adjusted Financial Expense on Borrowings 1,128 1,837 90 55,879

Inflation Adjustment Expense - 1 - 96

Adjusted Loan Loss Provision Expense - - - 18,743

Total Adjustment Expense 1,128 1,838 90 74,718

Net Income/(Loss) After Adjustments (2,504) (1,258) (2,027) 418,851

Average total assets 55,706 92,110 53,404 12,187,529

Average total equity 6,603 22,481 1,950 2,031,439

Weighted Avg.

Adjusted return-on-assets -4.5% -1.4% -3.8% 3.4%

Adjusted return-on-equity -37.9% -5.6% -104.0% 20.6%








MFB

Income from loan portfolio 1,561,271 158,137 4,989 224,420 219,084 2,167,900

Income from investments 204,115 65,800 - - 20,000 289,914

Income from other sources 22,617 23,553 19,356 34,436 9,326 109,288

Total revenue 1,788,002 247,490 24,345 258,856 248,410 2,567,102

Less : financial expense 532,231 72,164 2,107 84,632 109,540 800,674

Gross financial margin 1,255,771 175,326 22,238 174,224 138,870 1,766,428

Less: loan loss provision expense 17,678 9,648 - 6,841 - 34,167

Net financial margin 1,238,093 165,678 22,238 167,383 138,870 1,732,261

Personnel expense 504,654 34,152 6,519 50,237 75,582 671,143

Admin expense 212,199 20,887 5,686 29,126 44,687 312,585

Less: operating expense 716,854 55,038 12,205 79,363 120,269 983,728

Other Non operating expense - - - 7,006 - 7,006

Net income before tax 521,239 110,639 10,033 81,015 18,601 741,527

Provision for tax - - - - - -

Net income/(loss) 521,239 110,639 10,033 81,015 18,601 741,527

Adjusted Financial Expense on Borrowings - - - - 11,922 11,922

Inflation Adjustment Expense 133 81 2 15 16 247

Adjusted Loan Loss Provision Expense - - - - - -

Total Adjustment Expense 133 81 2 15 11,938 12,169

Net Income/(Loss) After Adjustments 521,106 110,558 10,031 81,000 6,663 729,358

Average total assets 7,235,057 2,595,295 40,981 1,004,172 1,190,201 12,065,706

Average total equity 1,709,989 1,065,362 27,433 213,764 200,919 3,217,467

Weighted Avg.

Adjusted return-on-assets 7.2% 4.3% 24.5% 8.1% 0.6% 6.0%

Adjusted return-on-equity 30.5% 10.4% 36.6% 37.9% 3.3% 22.7%

Financial expense ratio 10.6% 8.6% 7.6% 12.7% 10.8% 10.6%

Operational self sufficiency (OSS) 141.1% 180.8% 170.1% 145.6% 108.1% 140.6%

Financial self sufficiency (FSS) 141.1% 180.7% 170.1% 145.5% 102.8% 139.7%



MFB Sub MFI Sub RSPSub Total

Income from loan portfolio 8,177,686 3,197,307 2,167,900 13,542,893

Income from investments 1,255,456 197,605 289,914 1,742,975

Income from other sources 1,372,075 611,672 109,288 2,093,035

Total revenue 10,805,217 4,006,584 2,567,102 17,378,903

Less : financial expense 3,053,016 913,898 800,674 4,767,589

Gross financial margin 7,752,201 3,092,686 1,766,428 12,611,314

Less: loan loss provision expense 439,008 185,636 34,167 658,812

Net financial margin 7,313,192 2,907,050 1,732,261 11,952,503

Personnel expense 3,129,066 1,232,133 671,143 5,032,342

Admin expense 2,800,858 767,477 312,585 3,880,920

Less: operating expense 5,929,924 1,999,610 983,728 8,913,262

Other Non operating expense 71,761 302,226 7,006 380,993

Net income before tax 1,311,507 605,214 741,527 2,658,248

Provision for tax 391,472 111,645 - 503,118

Net income/(loss) 920,035 493,569 741,527 2,155,130

Adjusted Financial Expense on Borrowings 113,621 55,879 11,922 181,422

Inflation Adjustment Expense 809 96 247 1,152

Adjusted Loan Loss Provision Expense - 18,743 - 18,743

Total Adjustment Expense 114,430 74,718 12,169 201,317

Net Income/(Loss) After Adjustments 805,605 418,851 729,358 1,953,814


Average total equity 9,264,281 2,031,439 3,217,467 14,513,187

Weighted Avg.

Weighted Avg.

Weighted Avg.

Weighted Avg.

Adjusted return-on-assets 1.8% 3.4% 6.0% 2.8%

Adjusted return-on-equity 8.7% 20.6% 22.7% 13.5%






OPERATING INCOME

KBL TMFB POMFB FMFB NRSP-B

MFB

Revenue from loan portfolio 2,455,172 2,308,861 36,415 1,116,445 1,517,624

Cont

inue

d in

nex

t ta

ble.

.

Total revenue 2,862,166 3,465,381 107,479 1,506,144 1,777,989

Adjusted net operating income / (loss) 447,710 615,293 (44,574) 1,341 337,576

Average total assets 11,621,636 14,270,282 812,947 6,287,955 8,068,764

Gross loan portfolio (opening balance) 5,805,576 6,700,230 119,165 3,056,662 3,057,045

Gross loan portfolio (closing balance) 8,859,405 8,331,554 117,931 3,499,317 4,845,000

Average gross loan portfolio 7,332,490 7,515,892 118,548 3,277,990 3,951,023

Inflation rate * 9% 9% 9% 9% 9%


24.6% 24.3% 13.2% 24.0% 22.0%


15.6% 17.8% -41.5% 0.1% 19.0%

Yield on gross portfolio (nominal) 33.5% 30.7% 30.7% 34.1% 38.4%

Yield on gross portfolio (real) 22.2% 19.7% 19.7% 22.8% 26.7%

FINCA AMFB U-Bank Total

MFB

Revenue from loan portfolio 649,723 89,994 3,452 8,177,686

Total revenue 813,388 155,401 117,268 10,805,217

Adjusted net operating income / (loss) (5,131) (52,144) (102,994) 1,197,077


Gross loan portfolio (opening balance) 1,152,299 125,859 763 20,017,598

Gross loan portfolio (closing balance) 2,036,069 341,838 41,381 28,072,495

Average gross loan portfolio 1,594,184 233,848 21,072 24,045,047

Inflation rate * 9% 9% 9% 9%

Weighted Avg.


31.7% 14.6% 9.4% 23.5%


-0.6% -33.6% -87.8% 11.1%

Yield on gross portfolio (nominal) 40.8% 38.5% 16.4% 34.0%

Yield on gross portfolio (real) 28.9% 26.8% 6.6% 22.7%

* http://www.sbp.org.pk/reports/stat_reviews/Bulletin/2013/May/IND.pdf


OPERATING INCOME

OPP KASHF SAFCO DAMEN CSC GBTI

MFI

Revenue from loan portfolio 60,052 1,072,131 115,549 259,611 115,908 13,282

Cont

inue

d in

nex

t ta

ble.

.

Total revenue 77,607 1,223,797 136,257 292,590 128,101 79,564

Adjusted net operating income / (loss) (32,005) 111,734 (20,874) 64,518 1,813 12,055

Average total assets 761,869 4,207,499 562,146 980,172 479,524 324,314

Gross loan portfolio (opening balance) 470,392 2,948,994 345,010 664,281 207,964 36,978

Gross loan portfolio (closing balance) 507,870 3,543,155 413,875 750,530 293,493 50,763

Average gross loan portfolio 489,131 3,246,075 379,442 707,405 250,728 43,871

Inflation rate * 9% 9% 9% 9% 9% 9%


10.2% 29.1% 24.2% 29.9% 26.7% 24.5%


-41.2% 9.1% -15.3% 22.1% 1.4% 15.2%



FFO ASA-P BRAC-P JWS Sungi ORIX

MFI

Revenue from loan portfolio 31,494 710,791 363,217 109,461 29,385 63,911

Cont

inue

d in

nex

t ta

ble.

.

Total revenue 52,202 727,046 634,054 130,426 30,256 66,195

Adjusted net operating income / (loss) (14,741) 316,890 (15,103) 13,584 13,204 (8,938)

Average total assets 173,076 1,770,292 1,233,658 501,331 86,160 295,513

Gross loan portfolio (opening balance) 86,927 1,501,810 820,199 305,451 71,161 190,705

Gross loan portfolio (closing balance) 125,333 1,896,801 884,295 319,169 89,582 233,715

Average gross loan portfolio 106,130 1,699,305 852,247 312,310 80,371 212,210

Inflation rate * 9% 9% 9% 9% 9% 9%


30.2% 41.1% 51.4% 26.0% 35.1% 22.4%


-28.2% 43.6% -2.4% 10.4% 43.6% -4.7%






OPERATING INCOME

RCDS Agahe AMRDO MO Mojaz Naymet

MFI

Revenue from loan portfolio 157,556 11,670 22,948 10,389 25,140 1,676

Cont

inue

d in

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t ta

ble.

.

Total revenue 180,717 14,676 30,763 14,220 146,839 8,198

Adjusted net operating income / (loss) 56,328 797 39 101 (1,977) 618

Average total assets 685,542 58,801 139,731 70,455 155,396 10,724

Gross loan portfolio (opening balance) 336,300 27,779 55,767 51,356 44,159 9,807

Gross loan portfolio (closing balance) 444,610 43,725 78,150 64,083 78,601 9,511

Average gross loan portfolio 390,455 35,752 66,959 57,720 61,380 9,659

Inflation rate * 9% 9% 9% 9% 9% 9%


26.4% 25.0% 22.0% 20.2% 94.5% 76.4%


16.7% 2.9% 0.1% 0.2% -4.5% 6.3%



NRDP OPD SDS SRDO SVDP VDO Total

MFB

Revenue from loan portfolio 26,925 18,184 7,857 5,732 17,070 7,420 3,197,307

Total revenue 30,339 24,815 8,826 9,832 25,200 11,671 4,006,584

Adjusted net operating income / (loss) 6,049 1,373 (1,184) (2,504) (1,258) (2,027) 530,497

Average total assets 106,477 79,936 65,564 55,706 92,110 53,404 12,187,529

Gross loan portfolio (opening balance) 27,911 37,193 32,255 32,246 41,373 30,260 7,905,886

Gross loan portfolio (closing balance) 80,606 53,404 22,907 45,264 74,448 49,194 9,645,214

Average gross loan portfolio 54,259 45,298 27,581 38,755 57,910 39,727 8,775,550

Inflation rate * 9% 9% 9% 9% 9% 9% 9%

Weighted Avg.


28.5% 31.0% 13.5% 17.7% 27.4% 21.9% 32.9%


21.7% 3.7% -3.7% -7.8% -3.0% -6.7% 13.2%

Yield on gross portfolio (nominal) 49.6% 40.1% 28.5% 14.8% 29.5% 18.7% 36.4%

Yield on gross portfolio (real) 37.0% 28.3% 17.7% 5.1% 18.6% 8.7% 24.9%



OPERATING INCOME


RSP

Revenue from loan portfolio 1,561,271 158,137 4,989 224,420 219,084 2,167,900

Total revenue 1,788,002 247,490 24,345 258,856 248,410 2,567,102

Adjusted net operating income / (loss) 521,106 110,558 10,031 81,000 6,663 729,358


Gross loan portfolio (opening balance) 4,446,827 780,600 22,928 547,420 947,472 6,745,246

Gross loan portfolio (closing balance) 5,584,405 903,664 32,174 789,789 1,077,973 8,388,003

Average gross loan portfolio 5,015,616 842,132 27,551 668,604 1,012,723 7,566,625

Inflation rate * 9% 9% 9% 9% 9% 9%

Weighted Avg.


24.7% 9.5% 59.4% 25.8% 20.9% 21.3%


29.1% 44.7% 41.2% 31.3% 2.7% 28.4%




Revenue from loan portfolio 8,177,686 3,197,307 2,167,900 13,542,893

Total revenue 10,805,217 4,006,584 2,567,102 17,378,903

Adjusted net operating income / (loss) 1,197,077 530,497 729,358 2,456,931


Gross loan portfolio (opening balance) 20,017,598 7,905,886 6,745,246 34,668,730

Gross loan portfolio (closing balance) 28,072,495 9,645,214 8,388,003 46,105,712

Average gross loan portfolio 24,045,047 8,775,550 7,566,625 40,387,221

Inflation rate * 9% 9% 9% 9%

Weighted Avg.

Weighted Avg.

Weighted Avg.

Weighted Avg.


23.5% 32.9% 21.3% 24.8%


11.1% 13.2% 28.4% 14.1%

Yield on gross portfolio (nominal) 34.0% 36.4% 28.7% 33.5%

Yield on gross portfolio (real) 22.7% 24.9% 17.8% 22.3%




OPERATING EXPENSE


MFB

Adjusted total expense 2,397,546 2,805,224 142,067 1,504,803 1,440,413 818,519 207,545 220,262 9,536,378

Adjusted financial expense 705,589 1,035,298 395 541,946 617,873 212,456 52,379 1,511 3,167,446


169,123 11,390 20,986 124,759 65,522 16,260 30,607 363 439,008

Operating expense 1,522,834 1,758,536 120,686 838,098 757,019 589,803 124,560 218,388 5,929,924

Adjustment expense 90,241 139 63 23,663 95 - 24 205 114,430

Average total assets 11,621,636 14,270,282 812,947 6,287,955 8,068,764 2,566,064 1,064,100 1,247,296 45,939,046

Weighted Avg.


20.6% 19.7% 17.5% 23.9% 17.9% 31.9% 19.5% 17.7% 20.8%


6.1% 7.3% 0.0% 8.6% 7.7% 8.3% 4.9% 0.1% 6.9%


1.5% 0.1% 2.6% 2.0% 0.8% 0.6% 2.9% 0.0% 1.0%


13.1% 12.3% 14.8% 13.3% 9.4% 23.0% 11.7% 17.5% 12.9%

Adjusted personnel expense 7.4% 6.4% 9.2% 6.9% 4.5% 12.1% 6.1% 9.6% 6.8%

Adjusted admin expense 5.7% 6.0% 5.6% 6.5% 4.9% 10.8% 5.6% 7.9% 6.1%


0.8% 0.0% 0.0% 0.4% 0.0% 0.0% 0.0% 0.0% 0.2%

OPP KASHF SAFCO DAMEN CSC GBTI FFO ASA-P

MFI

Adjusted total expense 107,573 1,055,072 157,131 228,073 126,276 26,247 62,038 335,278

Cont

inue

d in

nex

t ta

ble.

.

Adjusted financial expense 21,034 474,152 37,598 91,536 35,000 1,941 15,381 54,891


56,950 3,858 27,122 35,521 4,870 139 3,612 31,013

Operating expense 29,589 577,063 92,411 101,015 86,406 24,168 43,044 249,375

Adjustment expense 49,217 (31) 20,377 14 6,113 402 3,839 57

Average total assets 761,869 4,207,499 562,146 980,172 479,524 324,314 173,076 1,770,292


14.1% 25.1% 28.0% 23.3% 26.3% 8.1% 35.8% 18.9%


2.8% 11.3% 6.7% 9.3% 7.3% 0.6% 8.9% 3.1%


7.5% 0.1% 4.8% 3.6% 1.0% 0.0% 2.1% 1.8%


3.9% 13.7% 16.4% 10.3% 18.0% 7.5% 24.9% 14.1%

Adjusted personnel expense 2.3% 10.5% 9.0% 6.2% 9.4% 4.5% 14.0% 9.9%

Adjusted admin expense 1.6% 3.2% 7.4% 4.1% 8.6% 3.0% 10.9% 4.2%


6.5% 0.0% 3.6% 0.0% 1.3% 0.1% 2.2% 0.0%


OPERATING EXPENSE

BRAC-P JWS Sungi ORIX RCDS Agahe AMRDO MO

MFI

Adjusted total expense 649,158 116,841 17,051 75,132 121,177 13,879 30,723 14,120

Cont

inue

d in

nex

t ta

ble.

.

Adjusted financial expense 86,038 31,506 2,142 24,843 47,893 5,933 9,328 4,527


55,311 8,232 418 14,619 3,251 - 2,554 636

Operating expense 507,809 77,103 14,491 35,670 70,033 7,946 18,842 8,956

Adjustment expense 20,216 2,990 2 9,483 14 - 1,005 236

Average total assets 1,233,658 501,331 86,160 295,513 685,542 58,801 139,731 70,455


52.6% 23.3% 19.8% 25.4% 17.7% 23.6% 22.0% 20.0%


7.0% 6.3% 2.5% 8.4% 7.0% 10.1% 6.7% 6.4%


4.5% 1.6% 0.5% 4.9% 0.5% 0.0% 1.8% 0.9%


41.2% 15.4% 17% 12.1% 10.2% 13.5% 13.5% 12.7%

Adjusted personnel expense 19.8% 9.3% 5.9% 6.0% 6.5% 8.4% 8.7% 7.5%

Adjusted admin expense 21.3% 6.1% 10.9% 6.1% 3.8% 5.1% 4.8% 5.2%


1.6% 0.6% 0.0% 3.2% 0.0% 0.0% 0.7% 0.3%

Mojaz Naymet NRDP OPD SDS SRDO SVDP VDO Sub

MFB

Adjusted total expense 27,850 7,580 24,290 23,442 10,011 12,336 26,458 13,698 3,173,862

Adjusted financial expense 9,890 1 8,442 8,746 4,809 4,584 6,545 4,145 969,873


2,605 346 1,485 664 865 2,264 1,829 3,165 204,379

Operating expense 15,355 7,233 14,363 14,032 4,337 5,488 18,084 6,387 1,999,610

Adjustment expense 4,092 1 (2) (3) 2,857 1,128 1,838 90 74,718

Average total assets 155,396 10,724 106,477 79,936 65,564 55,706 92,110 53,404 12,187,529

Weighted Avg.


17.9% 70.7% 22.8% 29.3% 15.3% 22.1% 28.7% 25.7% 26.0%


6.4% 0.0% 7.9% 10.9% 7.3% 8.2% 7.1% 7.8% 8.0%


1.7% 3.2% 1.4% 0.8% 1.3% 4.1% 2.0% 5.9% 1.7%


9.9% 67.4% 13.5% 17.6% 6.6% 9.9% 19.6% 12.0% 16.4%

Adjusted personnel expense 5.3% 27.5% 4.9% 9.6% 2.9% 4.3% 8.8% 6.3% 10.1%

Adjusted admin expense 4.6% 39.9% 8.6% 8.0% 3.7% 5.6% 10.9% 5.6% 6.3%


2.6% 0.0% 0.0% 0.0% 4.4% 2.0% 2.0% 0.2% 0.6%



OPERATING EXPENSE


RSP

Adjusted total expense 1,266,896 136,932 14,314 170,850 241,747 1,830,739

Adjusted financial expense 532,364 72,245 2,109 84,647 121,478 812,843

Adjusted loan loss provision expense 17,678 9,648 - 6,841 - 34,167

Operating expense 716,854 55,038 12,205 79,363 120,269 983,728

Adjustment expense 133 81 2 15 11,938 12,169


Weighted Avg.


17.5% 5.3% 34.9% 17.0% 20.3% 15.2%


7.4% 2.8% 5.1% 8.4% 10.2% 6.7%


0.2% 0.4% 0.0% 0.7% 0.0% 0.3%


9.9% 2.1% 29.8% 7.9% 10.1% 8.2%

Adjusted personnel expense 7.0% 1.3% 15.9% 5.0% 6.4% 5.6%

Adjusted admin expense 2.9% 0.8% 13.9% 2.9% 3.8% 2.6%

Adjustment expense-to-average total assets 0.0% 0.0% 0.0% 0.0% 1.0% 0.1%


Adjusted total expense 9,536,378 3,173,862 1,830,739 14,540,979

Adjusted financial expense 3,167,446 969,873 812,843 4,950,162

Adjusted loan loss provision expense 439,008 204,379 34,167 677,555

Operating expense 5,929,924 1,999,610 983,728 8,913,262

Adjustment expense 114,430 74,718 12,169 201,317


Weighted Avg.


20.8% 26.0% 15.2% 20.7%


6.9% 8.0% 6.7% 7.1%


1.0% 1.7% 0.3% 1.0%


12.9% 16.4% 8.2% 12.7%

Adjusted personnel expense 6.8% 10.1% 5.6% 7.2%

Adjusted admin expense 6.1% 6.3% 2.6% 5.5%

Adjustment expense-to-average total assets 0.2% 0.6% 0.1% 0.3%




MFB

Operating expense (PKR 000)

1,522,834 1,758,536 120,686 838,098 757,019 589,803 124,560 218,388 5,929,924

Personnel expense (PKR 000)

859,682 906,836 74,977 430,869 360,870 311,737 64,830 119,265 3,129,066


7,332,490 7,515,892 118,548 3,277,990 3,951,023 1,594,184 233,848 21,072 24,045,047


409,230 197,811 4,803 130,397 171,718 39,078 8,606 1,220 962,863

Average number of active loans

409,230 197,811 4,803 130,397 171,718 39,692 8,606 1,220 963,477

Weighted Avg.


20.77% 23.4% 101.8% 25.6% 19.2% 37.0% 53.3% 1036.4% 24.7%


11.72% 12.1% 63.2% 13.1% 9.1% 19.6% 27.7% 566.0% 13.0%

Average salary/gross domestic product per capita

2.6 2.9 2.9 2.7 2.0 2.7 2.2 3.3 2.6

Adjusted cost per borrower (PKR)

3,721 8,890 25,127 6,427 4,409 15,093 14,474 179,007 6,159

Adjusted cost per loan (PKR)

3,721 8,890 25,127 6,427 4,409 14,859 14,474 179,007 6,155




OP

P

KA

SHF

SAFC

O

DA

MEN

CSC

GB

TI

FFO

ASA

-P

BR

AC-

P

JWS

Sung

i

OR

IX

RCD

S

MFI

Operating expense (PKR 000) 2

9,58

9

577

,063

92,

411

101

,015

86,

406

24,

168

43,

044

249

,375

507

,809

77,

103

14,

491

35,

670

70,

033

Cont

inue

d in

nex

t ta

ble.

Personnel expense (PKR 000) 17,

289

440

,869

50,

634

61,

054

45,

139

14,

517

24,

251

175

,181

244

,536

46,

693

5,0

60

17,

637

44,

320


489

,131

3,

246,

075

379

,442

707

,405

250

,728

43,

871

106

,130

1,

699,

305

852

,247

312

,310

80,

371

212

,210

390

,455


42,

224

312

,182

38,

762

35,

185

18,

578

4,8

37

10,

753

179

,588

56,

359

21,

323

10,

670

16,

322

31,

715

Average number of active loans

42,

224

312

,182

38,

762

35,

185

18,

578

13,

143

10,

753

179

,588

56,

359

21,

323

10,

670

16,

322

31,

715

Adjusted operating expense-to-average gross loan portfolio 6.

0%

17.8

%

24.4

%

14.3

%

34.5

%

55.1

%

40.6

%

14.7

%

59.6

%

24.7

%

18.0

%

16.8

%

17.9

%

Adjusted personnel expense-to-average gross loan portfolio 3.

5%

13.6

%

13.3

%

8.6%

18.0

%

33.1

%

22.8

%

10.3

%

28.7

%

15.0

%

6.3%

8.3%

11.4

%

Average salary/gross domestic product per capita 1.2

1.6

1.4

2.2

2.0

1.4

1.4

1.3

1.7

1.9

0.7

2.2

1.2

Adjusted cost per borrower (PKR) 701

1,84

8

2,38

4

2,87

1

4,65

1

4,99

6

4,00

3

1,38

9

9,01

0

3,61

6

1,35

8

2,18

5

2,20

8

Adjusted cost per loan (PKR) 701

1,84

8

2,38

4

2,87

1

4,65

1

1,83

9

4,00

3

1,38

9

9,01

0

3,61

6

1,35

8

2,18

5

2,20

8



Aga

he

AM

RD

O

MO

Moj

az

Nay

met

NR

DP

OP

D

SDS

SRD

O

SVD

P

VD

O Sub

MFI

Operating expense (PKR 000) 7,9

46

18,

842

8,9

56

15,

355

7,2

33

14,

363

14,

032

4,3

37

5,4

88

18,

084

6,3

87

1,9

99,6

10

Personnel expense (PKR 000) 4,9

20

12,

200

5,2

67

8,2

64

2,9

52

5,2

44

7,6

64

1,8

83

2,3

70

8,0

89

3,3

90

1,2

32,1

33


35,

752

66,

959

57,

720

61,

380

9,6

59

54,

259

45,

298

27,

581

38,

755

57,

910

39,

727

8,77

5,55

0

Average number of active borrowers 3,8

28

9,8

21

3,5

58

4,6

06

2,5

00

4,7

99

4,3

12

3,6

11

2,0

00

3,5

52

4,0

33

782

,894

Average number of active loans 3,8

28

9,8

21

3,5

58

4,6

06

2,5

00

4,8

09

4,3

12

3,6

11

2,0

45

3,5

52

4,0

33

791

,255

W

eigh

ted

Avg.

Adjusted operating expense-to-average gross loan portfolio 22

.2%

28.1

%

15.5

%

25.0

%

74.9

%

26.5

%

31.0

%

15.7

%

14.2

%

31.2

%

16.1

%

22.8

%

Adjusted personnel expense-to-average gross loan portfolio 13

.8%

18.2

%

9.1%

13.5

%

30.6

%

9.7%

16.9

%

6.8%

6.1%

14.0

%

8.5%

14.0

%

Average salary/gross domestic product per capita 1.4

1.1

1.9

0.4

1.1

0.3

1.4

0.5

0.9

1.4

1.2

1.5

Adjusted cost per borrower (PKR) 2,07

6

1,91

8

2,51

7

3,33

4

2,89

3

2,99

3

3,25

4

1,20

1

2,74

4

5,09

1

1,58

4

2,55

4

Adjusted cost per loan (PKR)

2,07

6

1,91

8

2,51

7

3,33

4

2,89

3

2,98

7

3,25

4

1,20

1

2,68

4

5,09

1

1,58

4

2,52

7





Operating expense (PKR 000) 716,854 55,038 12,205 79,363 120,269 983,728

Personnel expense (PKR 000) 504,654 34,152 6,519 50,237 75,582 671,143

Average gross loan portfolio (PKR 000) 5,015,616 842,132 27,551 668,604 1,012,723 7,566,625

Average number of active borrowers 390,995 72,631 3,838 71,114 66,315 604,893

Average number of active loans 390,995 72,631 3,838 71,114 66,315 604,893

Weighted Avg.


14.3% 6.5% 44.3% 11.9% 11.9% 13.0%


10.1% 4.1% 23.7% 7.5% 7.5% 8.9%

Average salary/gross domestic product per capita 1.6 0.4 2.4 0.9 1.7 1.3

Adjusted cost per borrower (PKR) 1,833 758 3,180 1,116 1,814 1,626

Adjusted cost per loan (PKR) 1,833 758 3,180 1,116 1,814 1,626

MFB Sub Total MFI Sub Total RSP Sub Total Total

Operating expense (PKR 000) 5,929,924 1,999,610 983,728 8,913,262

Personnel expense (PKR 000) 3,129,066 1,232,133 671,143 5,032,342

Average gross loan portfolio (PKR 000) 24,045,047 8,775,550 7,566,625 40,387,221

Average number of active borrowers 962,863 782,894 604,893 2,350,650

Average number of active loans 963,477 791,255 604,893 2,359,625



24.7% 22.8% 13.0% 22.1%


13.0% 14.0% 8.9% 12.5%

Average salary/gross domestic product per capita 2.6 1.5 1.3 2.0

Adjusted cost per borrower (PKR) 6,159 2,554 1,626 3,792

Adjusted cost per loan (PKR) 6,155 2,527 1,626 3,777


PRODUCTIVITY


MFB

Number of active borrowers 409,230 197,811 4,803 130,397 171,718 39,078 8,606 1,220 913,959

Number of active loans 409,230 197,811 4,803 130,397 171,718 39,692 8,606 1,220 913,959

Number of active depositors 674,061 833,313 18,735 263,437 108,326 200,489 31,812 20,502 1,897,872

Number of deposit accounts 674,061 1,643,313 18,735 263,437 108,326 238,345 31,812 20,612 2,707,872

Total staff 2,293 2,198 182 1,122 1,247 797 209 250 7,042

Total loan officers 480 596 62 535 624 274 87 31 2,297

Weighted Avg.

Borrowers per staff 178 90 26 116 138 49 41 5 130

Loans per staff 178 90 26 116 138 50 41 5 130

Borrowers per loan officer 853 332 77 244 275 143 99 39 398

Loans per loan officer 853 332 77 244 275 145 99 39 398

Depositors per staff 294 379 103 235 87 252 152 82 270

Deposit accounts per staff 294 748 103 235 87 299 152 82 385

Personnel allocation ratio 20.9% 27.1% 34.1% 47.7% 50.0% 34.4% 41.6% 12.4% 32.6%



PRODUCTIVITY

OP

P

KA

SHF

SAFC

O

DA

MEN

CSC

GB

TI

FFO

ASA

-P

BR

AC

JWS

AK

HU

WAT

OR

IX

RCD

S

MFI

Number of active borrowers 4

2,22

4

312

,182

38,

762

35,

185

18,

578

4,8

37

10,

753

179

,588

56,

359

21,

323

10,

670

16,

322

31,

715

Cont

inue

d in

nex

t ta

ble

Number of active loans

42,

224

312,

182

38,

762

35,

185

18,

578

13,

143

10,

753

179,

588

56,

359

21,

323

10,

670

16,

322

31,

715

Number of active depositors - - - - - - - - - - - - -

Number of deposit accounts - - - - - - - - - - - - -

Total staff 97

1,85

8

254

193

155

72

118

918

996

168

51

55

248

Total loan officers 26

935

123

80

55

26

40

563

319

74

37

31

140

Borrowers per staff 435

168

153

182

120 67 91 196 57 127

209

297

128

Loans per staff 435

168

153

182

120

183 91 196 57 127

209

297

128

Borrowers per loan officer

1,62

4

334

315

440

338

186

269

319

177

288

288

527

227

Loans per loan officer

1,62

4

334

315

440

338

506

269

319

177

288

288

527

227

Depositors per staff 0 0 0 0 0 0 0 0 0 0 0 0 0

Deposit accounts per staff 0 0 0 0 0 0 0 0 0 0 0 0 0


26.8

%

50.3

%

48.4

%

41.5

%

35.5

%

36.1

%

33.9

%

61.3

%

32.0

%

44.0

%

72.5

%

56.4

%

56.5

%


PRODUCTIVITY

Aga

he

AM

RD

O

MO

Moj

az

Nay

met

NR

DP

OP

D

SDS

SRD

O

SVD

P

VD

O

Sub

MFI

Number of active borrowers 3,8

28

9,8

21

3,5

58

4,6

06

2,5

00

4,7

99

4,3

12

3,6

11

2,0

00

3,5

52

4,0

33

736

,274

Number of active loans 3,8

28

9,8

21

3,5

58

4,6

06

2,5

00

4,8

09

4,3

12

3,6

11

2,0

45

3,5

52

4,0

33

744,

580

Number of active depositors - - - - - - - - - - - -

Number of deposit accounts - - - - - - - - - - - -

Total staff 25

79

19

139

18

107

38

24

18

40

20

5,08

6

Total loan officers 12

32 8

15 4

11

17

10 6

15 8

2,4

23

Wei

ghte

d Av

g.

Borrowers per staff 153

124

187 33 139 45 113

150

111 89 202

145

Loans per staff 153

124

187 33 139 45 113

150

114 89 202

146

Borrowers per loan officer 319

307

445

307

625

436

254

361

333

237

504

304

Loans per loan officer 319

307

445

307

625

437

254

361

341

237

504

307

Depositors per staff 0 0 0 0 0 0 0 0 0 0 0 -

Deposit accounts per staff 0 0 0 0 0 0 0 0 0 0 0 -


48.0

%

40.5

%

42.1

%

10.8

%

22.2

%

10.3

%

44.7

%

41.7

%

33.3

%

37.5

%

40.0

%

47.6

%



PRODUCTIVITY


RSP

Number of active borrowers 390,995 72,631 3,838 71,114 66,315 604,893

Number of active loans 390,995 72,631 3,838 71,114 66,315 604,893

Number of active depositors - - - - - -

Number of deposit accounts - - - - - -

Total staff 2,202 617 19 389 318 3,545

Total loan officers 1,842 64 6 230 30 2,172

Weighted Avg.

Borrowers per staff 178 118 202 183 209 171

Loans per staff 178 118 202 183 209 171

Borrowers per loan officer 212 1,135 640 309 2,211 278

Loans per loan officer 212 1,135 640 309 2,211 278

Depositors per staff - - - - - -

Deposit accounts per staff - - - - - -

Personnel allocation ratio 83.7% 10.4% 31.6% 59.1% 9.4% 61.3%


Number of active borrowers 913,959 736,274 604,893 2,255,126

Number of active loans 913,959 744,580 604,893 2,263,432

Number of active depositors 1,897,872 - - 1,897,872

Number of deposit accounts 2,707,872 - - 2,707,872

Total staff 7,042 5,086 3,545 15,673

Total loan officers 2,297 2,423 2,172 6,892


Borrowers per staff 130 145 171 144

Loans per staff 130 146 171 144

Borrowers per loan officer 398 304 278 327

Loans per loan officer 398 307 278 328

Depositors per staff 270 - - 121

Deposit accounts per staff 385 - - 173

Personnel allocation ratio 32.6% 47.6% 61.3% 44.0%


RISK


MFB

Portfolio at risk > 30 days 69,651 49,489 5,587 31,361 15,149 13,200 94,687 22 279,146

Portfolio at risk > 90 days 24,883 3,602 2,149 10,716 13,046 1,195 27,286 22 82,900

Adjusted loan loss reserve 102,510 20,426 2,801 48,899 54,644 16,260 22,821 342 268,703

Loan Portfolio written off during year

155,157 22,466 20,805 160,792 46,868 10,739 11,857 341 429,025

Gross loan portfolio 8,859,405 8,331,554 117,931 3,499,317 4,845,000 2,036,069 341,838 41,381 28,072,495

Average gross loan portfolio 7,332,490 7,515,892 118,548 3,277,990 3,951,023 1,594,184 233,848 21,072 24,045,047

Weighted Avg.


0.8% 0.6% 4.7% 0.9% 0.3% 0.6% 27.7% 0.1% 1.0%


0.3% 0.0% 1.8% 0.3% 0.3% 0.1% 8.0% 0.1% 0.3%

Write off-to-average gross loan portfolio

2.1% 0.30% 17.5% 4.9% 1.2% 0.7% 5.1% 1.6% 1.8%


147.2% 41.3% 50.1% 155.9% 360.7% 123.2% 24.1% 1552.6% 96.3%



RISK

OP

P

KA

SHF

SAFC

O

DA

MEN

CSC

GB

TI

FFO

ASA

-P

BR

AC-

P

JWS

Sung

i

OR

IX

RCD

S

MFI

Portfolio at risk > 30 days 8

9,21

0 61

9,55

6

13,

586

11,

913

1,4

37 -

1,0

24

8,9

25

48,

798

930

-

16,

787

1,5

45

Cont

inue

d in

nex

t ta

ble

Portfolio at risk > 90 days

79,

599

615,

057

13,

260

7,4

42

43 -

509

7,5

29

42,

101

911

-

16,

240

856

Adjusted loan loss reserve

14,

777

53,

141

11,

717

37,

526

14,

695 -

6,2

56

23,

630

24,

144

16,

310

1,3

44

434

16,

101


- 19

,297

- 17

,215

839

-

423

48

,474

60

,195

528

141

9,5

37

2,1

72


507

,870

3,

543,

155

413

,875

750

,530

293

,493

50,

763

125

,333

1,

896,

801

884

,295

319

,169

89,

582

233

,715

444

,610

Average gross loan portfolio

489

,131

3,

246,

075

379

,442

707

,405

250

,728

43,

871

106

,130

1,

699,

305

852

,247

312

,310

80,

371

212

,210

390

,455


17.6

%

17.5

%

3.3%

1.6%

0.5%

0.0%

0.8%

0.5%

5.5%

0.3%

0.0%

7.2%

0.3%


15.7

%

17.4

%

3.2%

1.0%

0.0%

0.0%

0.4%

0.4%

4.8%

0.3%

0.0%

6.9%

0.2%

Write off-to-average gross loan portfolio 0.0%

0.6%

0.0%

2.4%

0.3%

0.0%

0.4%

2.9%

7.1%

0.2%

0.2%

4.5%

0.6%


16.6

%

8.6%

86.2

%

315.

0%

1022

.6%

0.0%

611.

2%

264.

8%

49.5

%

1753

.0%

100.

0%

2.6%

1042

.5%


RISK

Aga

he

AM

RD

O

MO

Moj

az

Nay

met

NR

DP

OP

D

SDS

SRD

O

SVD

P

VD

O

Sub

MFI

Portfolio at risk > 30 days 1

9

6,7

29 - - -

265

1,8

38

1,5

19

1,0

24

1,0

71

2,9

55

739,

920

Portfolio at risk > 90 days

-

4,9

85 - - -

263

1,6

62

868

1,0

32

993

1,3

66

715,

118

Adjusted loan loss reserve 2,1

86

4,0

39

3,2

04

3,9

30

346

2,6

52

1,0

03

1,0

37

2,2

55

3,4

07

2,3

56

231

,713


-

1,1

01 - - - -

1,5

52

108

171

200

1,3

80

163

,336


43,

725

78,

150

64,

083

78,

601

9,5

11

80,

606

53,

404

22,

907

45,

264

74,

448

49,

194

9,64

5,21

4

Average gross loan portfolio

35,

752

66,

959

57,

720

61,

380

9,6

59

54,

259

45,

298

27,

581

38,

755

57,

910

39,

727

8,77

5,55

0 W

eigh

ted

Avg.

Portfolio at risk (>30)-to-gross loan portfolio 0.0%

8.6%

0.0%

0.0%

0.0%

0.3%

3.4%

6.6%

2.3%

1.4%

6.0%

7.7%

Portfolio at risk(>90)-to-gross loan portfolio 0.0%

6.4%

0.0%

0.0%

0.0%

0.3%

3.1%

3.8%

2.3%

1.3%

2.8%

7.4%

Write off-to-average gross loan portfolio 0.0%

1.6%

0.0%

0.0%

0.0%

0.0%

3.4%

0.4%

0.4%

0.3%

3.5%

1.9%


1150

5.3%

60.0

%

100%

100.

0%

100.

0%

1001

.9%

54.6

%

68.3

%

220.

3%

318.

2%

79.7

%

31.3

%



RISK


RSP

Portfolio at risk > 30 days 83,262 1,624 - 19,718 33,627 138,230.67

Portfolio at risk > 90 days 81,018 1,405 - 19,374 32,350 134,148.12

Adjusted loan loss reserve 75,255 79,814 - 629 52,241 207,939

Loan Portfolio written off during year 20,983 - 20 - 1,930 22,932.28

Gross loan portfolio 5,584,405 903,664 32,174 789,789 1,077,973 8,388,003

Average gross loan portfolio 5,015,616 842,132 27,551 668,604 1,012,723 7,566,625

Weighted Avg.

Portfolio at risk (>30)-to-gross loan portfolio 1.5% 0.2% 0.0% 2.5% 3.1% 1.6%

Portfolio at risk(>90)-to-gross loan portfolio 1.5% 0.2% 0.0% 2.5% 3.0% 1.6%

Write off-to-average gross loan portfolio 0.4% 0.0% 0.1% 0.0% 0.2% 0.3%


90.4% 4915.0% 0.0% 3.2% 155.4% 150.4%


Portfolio at risk > 30 days 279,146 739,920 138,230.67 1,157,297

Portfolio at risk > 90 days 82,900 715,118 134,148.12 932,166

Adjusted loan loss reserve 268,703 231,713 207,939 708,355

Loan Portfolio written off during year 429,025 163,336 22,932.28 615,293

Gross loan portfolio 28,072,495 9,645,214 8,388,003 46,105,712

Average gross loan portfolio 24,045,047 8,775,550 7,566,625 40,387,221


Portfolio at risk (>30)-to-gross loan portfolio 1.0% 7.7% 1.6% 2.5%

Portfolio at risk(>90)-to-gross loan portfolio 0.3% 7.4% 1.6% 2.0%

Write off-to-average gross loan portfolio 1.8% 1.9% 0.3% 1.5%


96.3% 31.3% 150.4% 61.2%


ANNEXURE C

SOURCES OF DATA (2013)

MICROFINANCE BANKS (MFBS)

APNA Microfinance Bank Ltd (AMFB)

» AMFB provided PMN with its audited accounts. The numbers reported in the PMR match these reports. Riaz Ahmad and Co. audited the annual accounts of AMFB for the year ending at 31st December 2013.

» The financial statements have been presented as per the requirements of the State Bank of Pakistan.

» All necessary adjustments to FMFBL data have been made in order to remove subsidies. Adjustments were not made for loan loss provisioning expense, since FMFBL is aggressive in its policies, as required by the SBP.

» The related party transactions have been properly disclosed in notes to the financial statements.

» The grant income has been properly disclosed in financial statements as well as there is a proper disclosure on grants in notes to the financial statements.

» The following numbers have been taken from AMFB’s MIS: i). rural-urban clients; ii). male-female clients; iii). Number of staff; iv). Number of credit officers; and v). Number of branches (also available in audited accounts).

» As per the CGAP requirements, portfolio quality, sustainability/profitability and asset/liability management ratios should be presented to represent the true and fair picture to stakeholders.

FINCA Microfinance Bank Ltd (FINCA) (Formerly Kashf Microfinance Bank Ltd)

» FINCA provided PMN with its audited accounts. The numbers reported in the PMR match these reports. M. Yossuf Adil Saleem and Co. audited the annual accounts of FINCA for the year ending at 31st December 2013.


» Adjustments were not made for loan loss provisioning expense, since FINCA is aggressive in its policies as required by the SBP. Adjustment for cost of borrowing was not made since it was entirely commercial borrowing. FINCA prepares accounts on historical cost basis using the accrual system of accounting.



» The following numbers have been taken from FINCA’s MIS: i). rural-urban clients; ii). male-female clients; iii). Number of staff; iv). Number of credit officers; and v). Number of branches (also available in audited accounts).


Khushhali Bank Ltd (KBL)

» KBL provided PMN with its audited accounts. The numbers reported in the PMR match these reports. A.F. Ferguson audited the annual accounts of KBL for the year ending at 31st December 2013.


» All necessary adjustments to the KBL data have been made in order to remove subsidies. Adjustments were not made for loan loss provisioning expense, since KBL is aggressive in its policies, as required by the SBP.

» KBL prepares its accounts on historical cost basis using the accrual system of accounting.



» The following numbers have been taken from KBL’s MIS: i). rural-urban clients; ii). male-female clients; iii). Portfolio aging; iv). Number of staff; v). Number of credit officers; and vi). Number of branches (also available in audited accounts).




The First Microfinance Bank Ltd (FMFBL)

» FMFB provided PMN with its audited accounts. The numbers reported in the PMR match these reports. KPMG audited the annual accounts of FMFBL for the year ending at 31st December 2013.


» All necessary adjustments to FMFBL data have been made in order to remove subsidies. Adjustments were not made for loan loss provisioning expense, since FMFBL is aggressive in its policies, as required by the SBP.

» FMFBL prepares accounts on historical cost basis using the accrual system of accounting.


» The grant income has been properly disclosed in financial statements and there is proper disclosure on grants in notes to the financial statements.

» There is a proper disclosure regarding the loan portfolio and write-offs.

» The following numbers have been taken from FMFB’s MIS: i). rural-urban clients; ii). male-female clients; iii). Portfolio Aging and Write-offs (verified from audited accounts); iv). Number of staff; v). Number of credit officers; and vi). Number of branches (also available in audited accounts).

» As per the CGAP requirements, portfolio quality, sustainability/profitability and asset/liability management ratios should be presented to represent the true and fair picture to stake holders.

National Rural Support Programme Microfinance Bank (NRSP-B)

» NRSP-B provided PMN with its audited accounts. The numbers reported in the PMR match these reports. M. Yossuf Adil Saleem and Co. audited the annual accounts of NRSP-B for the year ending at 31st December 2013.


» Adjustments were not made for loan loss provisioning expense, since NRSP-B is aggressive in its policies as required by the SBP. Adjustment for cost of borrowing was not made since it was entirely commercial borrowing. NRSP-B prepares accounts on historical cost basis using the accrual system of accounting.


» The grant income has been properly disclosed in

financial statements as well as there is a proper disclosure on grants in notes to the financial statements.

» The following numbers have been taken from NRSP-B’s MIS: i). rural-urban clients; ii). male-female clients; iii). Number of staff; iv). Number of credit officers; and v). Number of branches (also available in audited accounts).


Pak Oman Microfinance Bank Ltd (POMFB)

» POMFB reported its audited accounts in newspapers, from whence the accounts were obtained. The numbers reported in the PMR match these reports. M. Yossuf Adil Saleem and Co. audited the annual accounts of POMFB for the year ending at 31st December 2013.


» All necessary adjustments to the POMFB data have been made in order to remove subsidies. No adjustments were made to financial cost since POMFB was not using any concessional or commercial borrowing during the reported period. POMFB is aggressive in its policies, as required by the SBP.

» POMFB prepares accounts on historical cost basis using the accrual system of accounting.



» The following numbers have been taken from POMFB’s MIS: i). rural-urban clients; ii). male-female clients; iii). Portfolio Aging and Write-Offs (verified from audited accounts); iv). Number of staff; v). Number of credit officers; and vi). Number of branches (also available in audited accounts).

» As per the CGAP requirements portfolio quality, sustainability/profitability and asset/liability management ratios should be presented to represent the true and fair picture to stakeholders.


Tameer Microfinance Bank Ltd (TMFB)

» TMFB provided PMN with its audited accounts. The numbers reported in the PMR match these reports. Ernst and Young Ford Rhodes Sidat Hyder and Co. audited the annual accounts of TMFB for the year ending at 31st December 2013.


» All necessary adjustments to TMFB data have been made in order to remove subsidies. Adjustment for cost of borrowing was not made since it was entirely commercial borrowing. TMFB prepares accounts on historical cost basis using the accrual system of accounting.



» The following numbers have been taken from TMFB’s MIS: i). rural-urban clients; ii). male-female clients; iii). Number of staff; iv). Number of credit officers; and v). Number of branches (also available in audited accounts).


U Microfinance Bank Ltd (U-bank)

» FINCA provided PMN with its audited accounts. The numbers reported in the PMR match these reports. A.F. Ferguson. audited the annual accounts of FINCA for the year ending at 31st December 2013.


» Adjustments were not made for loan loss provisioning expense, since FINCA is aggressive in its policies as required by the SBP. Adjustment for cost of borrowing was not made since it was entirely commercial borrowing. FINCA prepares accounts on historical cost basis using the accrual system of accounting.



» The following numbers have been taken from FINCA’s MIS: i). rural-urban clients; ii). male-female clients; iii). Number of staff; iv). Number of credit officers; and v). Number of branches (also available in audited accounts).


MICROFINANCE INSTITUTION (MFI)

ASA Pakistan limited

» ASA provided PMN with its audited accounts. The numbers reported in the PMR match these reports. Ernst and Young Ford Rhodes Sidat Hyder and Co has audited the annual accounts of ASA-P for the year ending at 31st December 2013.

» ASA prepares its financial statements under the historical cost convention and in conformity with accepted accounting practices.

» Adjustments were not made to loan loss provisioning expense as ASA is aggressive in its policies.

» The following numbers have been taken from the organization’s MIS: i). rural-urban clients; and ii). male-female clients;

» There is proper disclosure on the balance sheet of loan portfolio, and loan loss provision; expense

charged during the year is disclosed on the income statement.



Agahe

» Agahe provided PMN with its audited accounts. The numbers reported in the PMR match these reports. Uzair Hammad Faisal & Co. has audited the annual accounts of Agahe for the year ending at 31st December 2013.

» Agahe prepares its financial statements under



the historical cost convention, in conformity with accepted accounting practices.

» All necessary adjustments to Agahe data have been made in order to remove subsidies. No adjustment was made to loan loss provisioning expense as Agahe is aggressive in its policies.


» The grant income has been properly disclosed in financial statements. Additionally, there is proper disclosure on grants in notes to the financial statements.


Al-Mehran Rural Development Organization (AMRDO)

» AMRDO provided PMN with its audited accounts. The numbers reported in the PMR match these reports. Hafizullah & Co. has audited the annual accounts of AMRDO for the year ending at 30th June 2013.

» AMRDO prepares its financial statements under the historical cost convention, in conformity with accepted accounting practices.

» All necessary adjustments to data have been made in order to remove subsidies. No adjustment was made to loan loss provisioning expense as the institute is aggressive in its policies.




BRAC-Pakistan

» BRAC-Pakistan provided PMN with its audited accounts. The numbers reported in the PMR match these reports. KPMG (Taseer Hadi and Co) has audited the annual accounts of BRAC-Pakistan for the year ending at 31st December 2013.

» BRAC prepares its financial statements under the historical cost convention and in conformity with accepted accounting policies.

» BRAC is an integrated program and, therefore, prepares separate financial accounts for all its programs. The audit is done and a consolidated audit report is prepared with clear differentiations of both revenue and costs for each program in light of accounting standards.

Community Support Concern (CSC)

» CSC provided PMN with its audited accounts. The numbers reported in the PMR match these reports. Riaz Ahmad & Co. audited the annual accounts of CSC for the year ending at 30th June 2013.

» All necessary adjustments to CSC data have been made in order to remove subsidies. No adjustment was made to loan loss provisioning expense as CSC is aggressive in its policies.

» CSC prepares its financial statements under the historical cost convention and in conformity with accepted accounting practices.

» The following numbers have been taken from the organization’s MIS: i). rural-urban clients; ii). male-female clients; iii). Aging on number of loans and value of portfolio (verifiable from audited accounts); iv). Number of staff; v). Number of credit officers; and vi). Number of offices.

» The grant income has been properly disclosed in financial statements and there is proper disclosure on grants in notes to the financial statements.


Farmers Friend Organization (FFO)

» FFO provided PMN with its audited accounts. The numbers reported in the PMR match these reports. Tariq Abdul Ghani Maqbool & Co audited the annual accounts for FFO for the year ending at 30th June 2013.

» All necessary adjustments to FFO data have been made in order to remove subsidies. There is no adjustment on loan loss provisioning expense as FFO is aggressive in its policies.

» FFO prepares its financial statements under the historical cost convention and in conformity with accepted accounting practices.

» The following numbers have been taken from the organization’s MIS: i). rural-urban clients; ii). male-female clients; iii). Aging on number of loans and value of portfolio iv). Number of staff; v). Number of


credit officers; and vi). Number of offices.



Development Action for Mobilization and Emancipation (DAMEN)

» DAMEN provided PMN with its audited accounts. The numbers reported in the PMR match these reports. Grant Thornton (Anjum Asim Shahid Rehman) audited the annual accounts for DAMEN for the year ending at 31st December 2013.

» As DAMEN is a multi-dimensional development organization accounts for its microfinance function are kept separate.

» There is no adjustment on cost of borrowing since DAMEN’s actual cost is higher than the adjusted cost. Similarly, no adjustment was made to loan loss provisioning expense; DAMEN is aggressive in its policies.

» DAMEN prepares its financial statements under the historical cost convention and in conformity with accepted accounting practices.


» The following numbers have been taken from the organization’s MIS: i). rural-urban clients; ii). male-female clients; iii). Aging on number of loans and value of portfolio (verifiable from audited accounts); iv). Breakup for the number of loans doubtful; v). Number of staff; vi). Number of credit officers


Kashf Foundation (KF)

» KF provided PMN with its audited accounts. The numbers reported in the PMR match these reports. KPMG (Taseer Hadi and Co) audited the annual accounts for KF for the year ending at 30th June 2013.


» All necessary adjustments to KF data have been made in order to remove subsidies. Adjustments were not made for loan loss provisioning expense, since KF is aggressive in its policies as required by the SBP. Adjustment for cost of borrowing was not made since it was entirely commercial borrowing. KF prepares accounts on historical cost basis using the accrual system of accounting.



» The following numbers have been taken from KF’s MIS: i). rural-urban clients; ii). male-female clients; iii). Number of staff; iv). Number of credit officers; and v). Number of branches (also available in audited accounts).


Ghazi Barotha Taraqiati Idara (GBTI)

» GBTI provided PMN with its audited accounts. The numbers reported in the PMR match these reports. KPMG (Taseer Hadi and Co) audited the annual accounts for GBTI for the year ending at 30th June 2013.

» GBTI prepares its financial statements under the historical cost convention and in conformity with accepted accounting practices. Revenue is recognized on receipt basis.

» GBTI prepares its financial statements under the historical cost convention and in conformity with accepted accounting practices.

» The following numbers have been taken from the organization’s MIS: i). rural-urban clients; ii). male-female clients; iii). Aging on number of loans and value of portfolio (not verifiable from audited accounts); iv). Number of staff; v). Number of credit officers; and vi). Number of offices.

» There is proper disclosure on the balance sheet of loan portfolio, and loan loss provision; expense charged during the year is disclosed on the income statement.




» The related party transactions should be presented in notes to the financial statements.


Jinnah Welfare Society (JWS)

» JWS provided PMN with its audited accounts. The numbers reported in the PMR match these reports. Tariq Abdul Ghani Maqbool & Co. audited the annual accounts for JWS for the year ending at 30th June 2013.

» JWS prepares its financial statements under the historical cost convention and in conformity with accepted accounting practices. Revenue is recognized on receipt basis.

» The following numbers have been taken from the organization’s MIS: i). rural-urban clients; ii). male-female clients; iii). Aging on number of loans and value of portfolio (verified from audited accounts); iv). Number of staff; v). Number of credit officers; and vi). Number of branches (also available in audited accounts).

» The related party transactions have been properly disclosed in notes to financial statements.

» As per the CGAP requirements, portfolio quality, sustainability/profitability and asset/liability management ratios should be presented to represent the true and fair picture to stake holders.

Micro Options (MO)

» MO provided PMN with its audited accounts. The numbers reported in the PMR match these reports. Baker Tilly Mehmood Idrees Qamar has audited the annual accounts of MO for the year ending at 31st December 2013.

» MO prepares its financial statements under the historical cost convention, in conformity with accepted accounting practices.




» As per the CGAP requirements, portfolio quality, sustainability/profitability and asset/liability management ratios should be presented to represent

the true and fair picture to stakeholders.

Mojaz Foundation (Mojaz)

» Mojaz provided PMN with its audited accounts. The numbers reported in the PMR match these reports. Ibmhim, Shaikh & Co has audited the annual accounts of Mojaz for the year ending at 30th June 2013.

» Mojaz prepares its financial statements under the historical cost convention, in conformity with accepted accounting practices.




» • As per the CGAP requirements, portfolio quality, sustainability/profitability and asset/liability management ratios should be presented to represent the true and fair picture to stakeholders.

Naymet Trust (Naymet)

» Naymet provided PMN with its audited accounts. The numbers reported in the PMR match these reports. Izhar & Co has audited the annual accounts of Naymet for the year ending at 30th June 2013.

» Naymet prepares its financial statements under the historical cost convention, in conformity with accepted accounting practices.






National Rural Development Program (NRDP)

» NRDP provided PMN with its audited accounts. The numbers reported in the PMR match these reports. Izhar & Co has audited the annual accounts of NRDP for the year ending at 30th June 2013.

» NRDP prepares its financial statements under the historical cost convention, in conformity with accepted accounting practices.





Organization for Participatory Development (OPD)

» OPD provided PMN with its audited accounts. The numbers reported in the PMR match these reports. Izhar & Co has audited the annual accounts of OPD for the year ending at 30th June 2013.

» OPD prepares its financial statements under the historical cost convention, in conformity with accepted accounting practices.





Orangi Charitable Trust (OCT)

» OCT provided PMN with its audited accounts. The numbers reported in the PMR match these reports. Tanzeem & Co. has audited the annual accounts of OCT for the year ending at 30th June 2013.

» OCT prepares its financial statements under the historical cost convention, in conformity with accepted accounting practices.





Orix Leasing Pakistan Ltd. (OLP)

» OLP has provided its audited accounts for the reporting period to PMN.

» However, given that OLP’s audited accounts do not disclose figures related to its Microfinance Division (MFD), the data reported in the PMR is not verifiable with audited accounts.

» OLP has separate staff and offices for microfinance. OLP’s MFD has provided data specific to its microfinance operations.

» OLP prepares its financial statements under the historical cost convention in using accrual system of accounting.

» Adjustments to the data have been made as per the PMN’s adjustment policies. These adjustments are in line with international practices being followed by The MIX.

Rural Community Development Society (RCDS)

» RCDS provided PMN with its audited accounts. The numbers reported in the PMR match these reports. Ijaz Tabassum & Co. audited the annual accounts for RCDS for the year ending at 30th June 2013.

» RCDS prepares its financial statements under the historical cost convention and in conformity with accepted accounting practices. Revenue is recognized on receipt basis.



» The following numbers have been taken from the organization’s MIS: i). rural-urban clients; ii). male-female clients; iii). Aging on number of loans and value of portfolio (verified from audited accounts); iv). Number of staff; v). Number of credit officers; and vi). Number of branches (also available in audited accounts).

» There should be proper disclosure on movement in portfolio, loan loss provisioning, and write-offs.



SAFCO Support Fund (SAFCO)

» SAFCO provided PMN with its audited accounts. The numbers reported in the PMR match these reports. Grant Thornton (Anjum Asim Shahid Rehman) audited the annual accounts for SAFCO for the year ending at 30th June 2013.

» Income and expense are booked on an accrual basis.

» All necessary adjustments to SAFCO data have been made in order to remove subsidies.

» SAFCO prepares its financial statements under the historical cost convention and in conformity with accepted accounting practices using the principles of fund accounting.

» The following numbers have been taken from the organization’s MIS: i). rural-urban clients; ii). male-female clients; iii). Aging on number of loans and value of portfolio (not verifiable from audited accounts); iv). Number of staff; and v). Number of credit officers.



Saath Development Society (SDS)

» SDS provided PMN with its audited accounts. The numbers reported in the PMR match these reports. Tanwir Arif & Co. has audited the annual accounts of OCT for the year ending at 30th June 2013.

» SDS prepares its financial statements under the historical cost convention, in conformity with accepted accounting practices.





Shadab Rural Development Organization (SRDO)

» SRDO provided PMN with its audited accounts. The numbers reported in the PMR match these reports. Tanwir Arif & Co. has audited the annual accounts of SRDO for the year ending at 30th June 2013.

» SRDO prepares its financial statements under the historical cost convention, in conformity with accepted accounting practices.





Soon Valley Development Program (SVDP)

» SVDP provided PMN with its audited accounts. The numbers reported in the PMR match these reports. Zahid Jamil & Co. has audited the annual accounts of SVDP for the year ending at 30th June 2013.

» SVDP prepares its financial statements under the historical cost convention, in conformity with accepted accounting practices.






Villagers Development Organization (VDO)

» VDO provided PMN with its audited accounts. The numbers reported in the PMR match these reports. Tanwir Arif & Co. has audited the annual accounts of VDO for the year ending at 30th June 2013.

» VDO prepares its financial statements under the historical cost convention, in conformity with accepted accounting practices.





RURAL SUPPORT PROGRAMME (RSP)

National Rural Support Programme (NRSP)

» NRSP has provided its audited accounts for the reporting period to PMN and the figures tally with the reported data. Ernst & Young Ford Rhodes Sidat Hyder and Co. audited the annual accounts for NRSP for the year ending at 30th June 2013.

» All necessary adjustments to NRSP data have been made in order to remove subsidies. Adjustment for cost of borrowing was not made since it was entirely commercial borrowing. Similarly, there is no adjustment on loan loss provisioning expense, since NRSP is aggressive in its policies and all loans > 90 days past due are 100% provisioned for.

» NRSP prepares its financial statements under the historical cost convention, in conformity with accepted accounting practices.

» Data on distribution of clients in terms of the urban-rural mix is not provided in the disclosures. However, given that NRSP has a separate program for urban areas and rural areas and their information is available separately, the disaggregation can be made quite accurately. The data on gender segregation was taken from the MIS and is not available in notes to the accounts.

» Data on the number of total staff, loan officers and branches has been drawn from audited accounts.


» As per the CGAP requirements, portfolio quality,

sustainability/profitability and asset/liability management ratios are presented in the notes to financial statements.

Punjab Rural Support Programme (PRSP)

» PRSP has provided its audited accounts for the reporting period to PMN. Ernst & Young Ford Rhodes Sidat Hyder and Co. audited the annual accounts for PRSP for the year ending at 30th June 2013.

» Since PRSP is an integrated programme, the following resource allocation process was followed:

i) The identified accounts for credit and non-credit functions were directly transferred to the respective programs.

ii) All other accounts that were common to the institution were transferred in the ratio of 60% to credit and 40% to non-credit functions.

iii) 60% of PRSP’s investment income was credited to its credit operations

» All necessary adjustments to PRSP data have been made in order to remove subsidies. Adjustment for cost of borrowing was not made since it was entirely commercial borrowing. Similarly, there is no adjustment on loan loss provisioning expense, since PRSP is aggressive in its provisioning policies.

» PRSP prepares its financial statements under the historical cost convention, in conformity with accepted accounting practices.



» Data on distribution of clients in terms of the urban-rural mix is not provided in the disclosures. However, given that PRSP only works in rural Punjab the information can be accurately deduced. The data on gender segregation was taken from the MIS and is not available in notes to the accounts.

» Data on number of staff for PRSP as a whole is available. These numbers have been allocated between credit and non-credit functions of PRSP on the basis mentioned above. Data for credit officers has been obtained from the organization’s MIS.



» As per the CGAP requirements, portfolio quality, sustainability / profitability and asset/liability management ratios should be presented to represent the true and fair picture to stakeholders.

Sarhad Rural Support Programme (SRSP)

» SRSP has provided its audited accounts for the reporting period to PMN. KPMG (Taseer Hadi and Co) audited the annual accounts for SRSP for the year ending at 30th June 2013.

» SRSP is a multi-dimensional development organization. It has provided its integrated audited accounts for the reporting period to PMN and has also extracted accounts for its microfinance operations from the consolidated audited statements.

» All necessary adjustments to SRSP data have been made in order to remove subsidies. There is no adjustment on loan loss provisioning expense, since SRSP is aggressive in its policies and all loans > 90 days past due are 100% provisioned for.

» SRSP prepares its financial statements under the historical cost convention in conformity with accepted accounting practices.

» The ageing of portfolio in rupee value is not verifiable from audited accounts. Both ageing on number of loans and value of portfolio was obtained from the MIS. However, there is proper disclosure on the movement in portfolio and write-offs. It will be valuable if SRSP could provide separate disclosure on movement in provisioning of portfolio as suggested previously.

» Data on the number of total staff, loan officers and branches has been drawn from audited accounts.

Thardeep Rural Development Programme (TRDP)

» TRDP has provided its audited accounts for the microfinance program (inclusive of credit and non-credit functions). Grant Thornton (Anjum Asim Shahid Rehman) audited the annual accounts for TRDP for the year ending at 30th June 2013.

» All necessary adjustments to TRDP data have been made in order to remove subsidies.

» TRDP prepares its financial statements under the historical cost convention in conformity with accepted accounting practices.

» The following numbers have been taken from the organization’s MIS: i). rural-urban clients; ii). male-female clients; iii). Number of staff; and iv). Number of credit officers.

» The ageing of portfolio (in rupee value and number of loans) is taken from audited accounts.

Sindh Rural Support Organization (SRSO)

» SRSO has provided its audited accounts for the microfinance program (inclusive of credit and non-credit functions). Ernst & Young Ford Rhodes Sidat Hyder and Co. audited the annual accounts for SRSO for the year ending at 30th June 2013.

» All necessary adjustments to PRSP data have been made in order to remove subsidies. There is no adjustment on loan loss provisioning expense, since PRSP is aggressive in its provisioning policies.

» SRSO prepares its financial statements under the historical cost convention in conformity with accepted accounting practices.

» The following numbers have been taken from the organization’s MIS: i). rural-urban clients; ii). male-female clients; iii). Number of staff; and iv). Number of credit officers.

» The ageing of portfolio (in rupee value and number of loans) is taken from audited accounts.


ANNEXURE D

ADJUSTMENTS TO FINANCIAL DATA

RATIONALE

Adjustments to financial statements are made when doing benchmark analysis. Adjustments are made for two primary reasons:

» To give an institution a more accurate picture of its financial position, by accounting for factors unique to an MFP including the predominance of below-market-rate funding sources. Such factors distort an MFP’s on-going performance.

» To make the data of various MFPs comparable. Thus, adjustments are made in order to bring organizations operating under varying conditions and with varying levels of subsidy onto a level playing field.

The following adjustments are made to data used for the PMR:

A. Inflation adjustment

Inflation adjustment adjusts for the effect of inflation on an MFP’s equity and non-monetary assets i.e., fixed assets. Inflation decreases the real value of an MFP’s equity. Fixed assets are capable of tracking the increase in price levels; their monetary value is increased. The net loss (or gain) is considered to be a cost of funds, and results in a decrease (or increase) in net operating income.

Calculation of inflation adjustment

Inflation adjustment revenue

Multiply the prior year’s Net Fixed Assets by the current year’s average annual inflation rate (Average Core CPI for current financial year)

Formula:

NET FIXED ASSETS (PRIOR YEAR) X AVERAGE ANNUAL INFLATION RATE (CURRENT FINANCIAL YEAR)

Inflation adjustment expense

Multiply the prior year’s Equity by the current year’s average annual inflation rate, (Average Core CPI for current year)

Formula:

EQUITY (PRIOR YEAR) X AVERAGE ANNUAL INFLATION RATE (CURRENT YEAR)

Net inflation adjustment expense

Subtract the Inflation Adjustment Revenue from the Inflation Adjustment Expense

Formula:

INFLATION ADJUSTED REVENUE – INFLATION ADJUSTED EXPENSE

B. Subsidies adjustment

Adjustments for three types of subsidies are made: » A cost-of-funds subsidy from loans at below-market

rates

» Current year cash donations to fund portfolio and cover expenses

» In-kind subsidies, such as rent-free office space or the services of personnel not paid by the MFP and thus not reflected on its income statement.

Additionally, for multipurpose MFPs, an attempt to isolate the performance of the financial services program is made by removing the effect of any cross-subsidization. Cash donations flowing through the income statement are accounted for by reclassifying them below net operating income on the income statement. Thus, adjustments for cash donations are not made since these are handled through a direct reclassification on the income statement. This year no MFP has disclosed receipt of in-kind subsidy.

B.1 Cost-of-funds subsidy

The cost-of-funds adjustment reflects the impact of soft loans on the financial performance of an MFP. The analyst needs to calculate the difference between what an MFP actually paid in interest on its subsidized liabilities and a shadow market rate for each country. This difference represents the value of the subsidy, considered an additional financial expense. Only funds received as loans need to be adjusted. Client deposits are not adjusted. Only loans that have a finite (1-5 years) term length are adjusted. Subordinated debt and other quasi-equity accounts are reclassified as ‘other equity’ on the balance sheet.

The analyst must be careful in the choice of an appropriate shadow rate thus, PMN has used the KIBOR rate on outstanding loans as reported by the State Bank of Pakistan on its website (12.5%) to make this adjustment.



Calculation of cost-of-funds subsidy

1. Calculate average balance for all borrowings. Borrowings do not include deposits or “other liabilities”. If an MFI has given an average balance, see if this is more appropriate to use; if not, calculate average from last year’s ending balance.

2. Multiply the average balance by the shadow market rate

3. Compare with the amount actually paid in interest and fees. If less “market” rate, impute the difference (market price minus Financial Expense paid on Borrowings) to the Subsidized Cost of Funds Adjustment Expense

B.2 Cash donations

Funds donated to cover operational costs constitute a direct subsidy to an MFP. The value of the subsidy is therefore, equal to the amount donated to cover expenses incurred in the period reported. Some donations are provided to cover operating shortfall over a period greater than one year. Only the amount spent in the year is recorded on the income statement as revenue. Any amount still to be used in subsequent years appears as a liability on the balance sheet (deferred revenue). This occurs because theoretically, if an MFP stopped operations in the middle of a multi-year operating grant, it would have to return the unused portion of the grant to the donor. The unused amount is therefore, considered as a liability.

Funds donated to pay for operations should be reported on the income statement separately from the revenue generated by lending and investment activities. This practice is meant for accurately reporting the earned revenue of an MFP. Donated funds are deducted from revenue or net income prior to any financial performance analysis because they do not represent revenue earned from operations.

Note: Costs incurred to obtain donor funds (fundraising costs) should also be separated from operating expenses, because the benefit of receiving the funds is not included.

B.3 In-kind subsidy

Imputed cost (book value) of donated/loaned-out vehicles, machinery and buildings need to be included in operating expenses. Expatriate staff salaries paid by donor or parent company, or other technical assistance, need to be accounted for. Here, imputed salaries are used instead of salaries actually received by them i.e., the salary range that a local hire would get for the same level of work-load/position is used.

Note: The analyst must use his/her judgment in deciding whether or not the in-kind donation represents a key input to the on-going operations of the MFP. An appropriate basis for valuation is important. This could include selecting a percentage of the total cost and attributing it to program expense. The percentage may be selected on the basis of sales proportion, management input, etc.

Calculation of in-kind subsidy

Sum of in-kind subsidies by operating expense account, added to unadjusted numbers for each account.

C. Loan loss provisioning

PMN standardizes loan loss provisioning for MFPs to a minimum threshold or risk. MFPs vary tremendously in accounting for loan delinquency. Some count the entire loan balance as overdue the day a payment is missed. Others do not consider a loan delinquent until its full term has expired. Some MFPs write off bad debt within one year of the initial delinquency, while others never write off bad loans, thus carrying forward a default that they have little chance of ever recovering.

The analyst applies a standard loan loss provisioning to all MFPs and adjusts, where necessary, to bring them to the minimum threshold. In some cases, these adjustments may not be precise. Portfolio aging information may only be available on different aging scales.

Calculation of loan loss provisioning

Step 1:

Multiply the PAR age categories by the following reserve factors:PAR up to 89 days no provisioningPAR 91 – 180 x 0.50PAR 181 – 360 x 1.00Renegotiated loans x 0.50

Step 2:

Sum above reserve calculations. If sum is more than current reserves make calculated reserve new Loan Loss Reserve. If not, keep current reserves.

Step 3:

Add the Unadjusted Loan Loss Provision Expense to the difference between the Adjusted Net Loan Portfolio and the Unadjusted Net Loan Portfolio. This is the Adjusted Loan Loss Provision Expense.


ANNEXURE E

TERMS AND DEFINITIONS

AgeNumber of years an organization has been functioning as a microfinance provider (MFP).

Active Saving Account BalanceIt is the average balance of savings per account (not per depositor).

Adjustment ExpenseTotal adjustment cost related to inflation, subsidized cost of borrowing, loan loss provisioning and in-kind subsidies.

Adjusted Financial Expense RatioIt is calculated by using standardized ageing-of-portfolio technique. The principle of conservatism is used which is why loan loss provision in audited accounts is greater than the amount computed by the analyst.

Adjusted Loan Loss Reserve

Formula:

Adjusted Financial ExpenseAdjusted Average Total Assets

Adjusted Operating ExpenseAlso included in operating expense:

» Imputed cost (book value) of donated/loaned vehicles, machinery and buildings

» Expatriate staff salaries paid by donor or parent company

» Other technical assistance paid for with donations

NOTE: Imputed salaries should be used instead of salaries actually received by such persons. For imputation, the salary range that a local hire would get for the same level of work-load/position should be used. Judgment is used to decide whether or not the in-kind donation represents a key input to the on-going operations of the MFP

Formula:

Personnel Expense + Administrative ExpenseAdjusted Operating Expense Ratio

Formula:

Adjusted Operating ExpenseAdjusted Average Total Assets

Adjusted Portfolio at Risk > (30, 60, 90 Days)Indicates the credit risk of a borrower above the specified number of days (30, 60, 90) past his/her due date for installment payment.

Formula:

Outstanding balance, loans overdue > (30 or 60 or 90) Days

Adjusted Gross Loan Portfolio

Adjusted Cost per BorrowerIn case of loan size differentials, generally operating expense ratio is lower (more efficient) for institutions with higher loan sizes, ceteris paribus. This indicator discounts the effect of loan size on efficient management of loan portfolio.

Formula:

Adjusted Operating ExpenseAverage Number of Active Borrowers

Adjusted Cost per Loan

Formula:

Adjusted Operating Expense

Average Number of Active Loans

Adjustment Expense Ratio

Formula:

Net inflation, in kind, loan loss provision and subsidized cost-of-funds adjustment expense

Adjusted Average Total Assets

Adjusted Financial ExpenseIt includes actual cost of borrowing and shadow cost of subsidized funding.

Adjusted Financial Expense on BorrowingThe cost-of-funds adjustment reflects the impact of soft loans on the financial performance of the institution. The analyst calculates the difference between what the MFP actually paid in interest on its subsidized liabilities and what it would have paid at a shadow market rate for each country. This difference represents the value of the subsidy, considered an additional financial expense.



Adjusted Loan Loss Provision Expense Ratio

Formula:

Adjusted Net Loan Loss Provision ExpenseAdjusted Average Total Assets

Adjusted Loan Loss Provision ExpenseLoan loss provision expense calculated with standardized ageing-of-portfolio technique. It is however ensured that if the actual loan loss provision expense is higher than the adjusted then the conservatism principle is followed.

Adjusted Operating ExpenseIt includes actual operational expenses and in-kind subsidy adjustments.

Adjusted Operating Expense RatioIt indicates efficiency of an MFP’s loan portfolio.

Formula:

Adjusted Operating ExpenseAverage Gross Loan Portfolio

Adjusted Personnel ExpenseIncludes actual personnel expenses (salaries and benefits), and in-kind subsidy adjustments.

Adjusted Personnel Expense Ratio

Formula:

Adjusted Personnel ExpenseAverage Gross Loan Portfolio

Adjusted Profit Margin

Formula:

Adjusted Net Operating IncomeAdjusted Financial Revenue

Adjusted Return on Assets

Formula:

Adjusted Net Operating Income, net of taxesAverage Total Assets

Adjusted Return on Equity

Formula:

Adjusted Net Operating Income, net of taxesAverage Total Equity

Adjusted Total ExpenseIncludes all actual and adjusted expenses related to operations, cost of borrowings, loan losses and inflation adjustment.

Adjusted Total Expense Ratio

Formula:

Adjusted (Financial Expense + Net Loan Loss Provision Expense + Operating Expense) Cost

Average Total Assets

Average Gross Loan PortfolioAverage of opening and closing balance of Gross Loan Portfolio (GLP).

Average Loan Balance per Active BorrowerIndicates average loan balance outstanding.

Average Loan Balance per Active Borrower to Per Capita IncomeUsed to measure depth of outreach. The lower the ratio the more poverty-focused the MFP.

Average Number of Active BorrowersIt is average of opening and closing balance of active borrowers.

Formula:

[Active Borrowers (Opening Balance) + Active Borrowers (Closing Balance)]

2

Average Number of Active LoansAverage of opening and closing balance of active loans

Average Outstanding BalanceIt indicates the average balance of loans outstanding.

Formula:

Adjusted Gross Loan PortfolioAdjusted Number of Loans Outstanding


Average Outstanding Balance to Per Capita IncomeIt measure of depth of outreach. The lower the ratio the more poverty-focused the MFP.

Formula:

Average Outstanding BalancePer Capita Income

Average Saving Balance per SaverIt indicates average amount of saving balance per saver.

Average Total AssetsIt is average of opening and closing balance of total assets.

Average Total EquityIt is average of opening and closing balance of total equity.

Borrowers per Loan OfficerIt measure of loan officer productivity. It indicates the number of borrowers managed by a loan officer.

Formula:

Number of Active BorrowersNumber of Loan Officers

Borrowers per StaffIt measure of staff productivity. It indicates the number of borrowers managed by the staff on average.

Formula:

Number of Active BorrowersNumber of Total Personnel

Commercial LiabilitiesIt is principal balance of all borrowings, including overdraft accounts, for which the organization pays a nominal rate of interest that may be greater than or equal to the local commercial interest rate.

Commercial Liabilities-to-Gross Loan Portfolio RatioIt indicates efficiency of an MFP’s loan portfolio.

Formula:

All liabilities with “market” priceGross Loan Portfolio

Deposits Demand deposits from the general public and members (clients) held with the institution. These deposits are not conditional to accessing a current or future loan from the MFP and include certificates of deposit or other fixed term deposits.

Deposit-to-Gross Loan Portfolio RatioIt is inverse of the advance-to-deposit ratio.

Formula:

DepositsGross Loan Portfolio

Deposit-to-Total Asset RatioIndicates the percentage of assets financed through deposits.

Formula:

DepositsTotal Assets

Equity-to-Asset RatioThis is a simple version of the capital adequacy ratio as it does not take in to account risk weighted assets. This ratio indicates the proportion of a company’s equity that is accounted for by assets.

Formula:

Total EquityTotal Assets

Financial ExpenseIt is total of financial expense on liabilities and deposits.

Financial RevenueIt is total of revenue from loan portfolio and other financial assets, as well as other financial revenue from financial services.

Financial Revenue from Other Financial AssetsIt is net gains on other financial assets.

Financial Revenue from Loan PortfolioIt is total interest, fees and commission on loan portfolio.

Financial Revenue RatioIndicates the efficiency with which an MFP is utilizing its assets to earn income from them.

Formula:

Financial RevenueAverage Total Assets

Financial Self-Sufficiency

Formula:

Financial RevenueAdjusted (Financial Expense + Net Loan Loss Provision Expense + Operating Expense + Inflation Adjustment)



Gross Loan PortfolioIt is the outstanding principal for all outstanding client loans, including current, delinquent and restructured loans. It does not include:

» Loans that have been written-off

» Interest receivable

» Employee loans

For accounting purposes GLP is categorized as an asset.

Gross Loan Portfolio-to-Total Asset RatioIndicates the efficiency of assets deployed in high yield instruments/core business of an MFP.

Formula:

Gross Loan PortfolioTotal Assets

Inflation Adjustment Expense Inflation decreases the real value of an MFP’s equity. Fixed assets are considered to track the increase in price levels, and their value is considered increased. The net loss (or gain) is treated as a cost of funds, is disclosed on the income statement, and decreases net operating income.

Inflation RateLatest annualized consumer price index (CPI) as reported by the State Bank of Pakistan.

Liabilities-to-Equity Ratio (debt-equity ratio)

Formula:

Total LiabilitiesTotal Equity

Loan Loss Provision ExpenseIt is the sum of loan loss provision expense and recovery on loan loss provision.

Loans per Loan Officer

Formula:

Number of Active LoansNumber of Loan Officers

Loans per Staff

Formula:

Number of Active LoansNumber of Personnel

Net Adjusted Loan Loss Provision Expense It is the sum of loan loss provision expense and recovery on loan loss provision. MFPs vary tremendously in accounting for loan delinquency. Some count the entire loan balance as overdue the day a payment is missed. Others do not consider a loan delinquent until its full term has expired. Some MFPs write off bad debt within one year of the initial delinquency, while others never write off bad loans, thus carrying forward a defaulting loan that they have little chance of ever recovering.

Number of Active BorrowersNumber of borrowers with loan amount outstanding.

Number of Active LoansThe number of loans that have been neither fully repaid nor written off, and thus that are part of the MFP’s gross loan portfolio.

Number of Active Women BorrowersNumber of women borrowers with loan amount outstanding.

Number of Active Women Borrowers to total Active BorrowersIt indicates percentage of women borrower to total active borrowers.

Number of Loans OutstandingIt is the number of loans outstanding at the end of the reporting period. Depending upon the policy of an MFP one borrower can have two loans outstanding; hence, the number of loans could be more than the number of borrowers.

Number of SaversIt is the number of depositors maintaining voluntary demand deposit and time deposit accounts with an MFP.

Number of Saving AccountsOne depositor can have more than two deposit accounts. Hence, the number of deposit accounts could be more than the number of depositors.

Number of Women SaversIt is the number of women savers with voluntary demand deposit and time deposit accounts.

OfficesThe total number of staffed points of service (POS) and administrative sites (including head office) used to deliver or support the delivery of financial services to microfinance clients.


Operating ExpenseIt is total of Personnel Expense and Administrative Expense.

Operational Self-Sufficiency

Formula:

Financial Revenue(Financial Expense + Net Loan Loss Provision Expense +

Operating Expense)

Per Capita IncomeIt is average income per person.

Percentage of Women Savers to Total SaversIt indicates the percentage of women in the total saving portfolio.

PersonnelIt is the number of individuals actively employed by an MFP. This number includes contract employees and advisors who dedicate the majority of their time to the organization, even if they are not on the MFP’s roster of employees. This number is expressed as a full-time equivalent, such that an advisor who spends 2/3 of his/her time with the MFP is accounted for as 2/3 of a full-time employee.

Personnel Allocation RatioThe higher the indicator the more lean the head office structure of the organization. This indictor is used to measure organizational efficiency.

Formula:

Loan OfficersTotal Staff

Risk Coverage RatioIndicates the provision created by an MFP against its credit risk.

Formula:

Adjusted Loan Loss ReservePAR > 30 Days

Saving OutstandingTotal value of demand deposit and time deposit accounts.

Savers per Staff

Formula:

Number of SaversNumber of Personnel

Loan Loss Provision ExpenseIt is the sum of loan loss provision expense and recovery on loan loss provision.

Loans per Loan Officer

Formula:

Adjusted Loan Loss ReservePAR > 30 Days

Total AssetsTotal net asset accounts i.e., all asset accounts net of any allowance. The one exception to this is the separate disclosure of the gross loan portfolio and loan loss reserve.

Total EquityEquity represents the worth of an organization net of what it owes (liabilities). Equity accounts are presented net of distributions, such as dividends.

Formula:

Total Assets – Total Liabilities

Total LiabilitiesLiabilities represent the borrowings of an organization i.e., the amount owed. Examples of liabilities include loans, and deposits. This number includes both interest and non-interest bearing liabilities of an MFP.

Total Number of Loan OfficersThe number of staff members who dedicate the majority of their time to direct client contact. Front office staff include more than those typically qualified as credit or loan officers. They may also include tellers, personnel who open and maintain accounts—such as savings accounts—for clients, delinquent loan recovery officers, and others whose primary responsibilities bring them in direct contact with microfinance clients.

Loan Written Off during YearIt is the value of loans written off during the year.



Write-Off Rate

Formula:

Loans written off during the yearAverage Gross Loan Portfolio

Yield on Gross Portfolio (Nominal)Indicates the yield on an MFPs loan portfolio and is usually used as a proxy to look at MFPs (realized) effective interest rate.

Formula:

Financial Revenue from Loan PortfolioAverage Gross Loan Portfolio

Yield on Gross Portfolio (Real)It is the number of depositors maintaining voluntary demand deposit and time deposit accounts with an MFP.

Formula:

(Yield on Gross Portfolio (nominal) - Inflation Rate)(1 + Inflation Rate)


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2Develop

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3Develop

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ng8 H

ousing

1.0 2.0

Indicat

ors

Social P

erforma

nce Ind

icators

BEDF

RCDS

SSFSDF

WASIL

AGAHE

OPDMIC

RO-OPT

IONS

MOJAZ

FOUND

ATION

SVDP

AMRDO

NAYMET

TRUST

NRDP

Target

Market

Develop

ment Go

als

AKHU

ASA-P

ASASAH

BRAC

CSCDAM

ENJWS

OLPFFO

GBTI

KFOCT


Micro

finan

ce In

stitut

ions

AKHU

ASA-P

ASAS

AHBR

ACCS

CDA

MEN

FFO

GBTI

JWS

KFOC

TOL

PRC

DSSS

FSD

FWA

SILAG

AHE

OPD

MICR

O-OP

TION

SMO

JAZ

FOUN

DATI

ONSV

DPAM

RDO

NAYM

ET TR

UST

NRDP

BEDF

Very

poor

clien

tsVe

ry po

or cli

ents

Poor

clien

tsVe

ry po

or cli

ents

Very

poor

clien

tsPo

or cli

ents

Poor

clien

tsVe

ry po

or cli

ents

Very

poor

clien

tsLo

w inc

ome c

lients

Low

incom

e clie

ntsLo

w inc

ome c

lients

Poor

clien

tsPo

or cli

ents

Poor

clien

tsPo

or cli

ents

Poor

clien

tsPo

or cli

ents

Low

incom

e clie

ntsPo

or cli

ents

Poor

clien

tsVe

ry po

or cli

ents

Poor

clien

tsLo

w inc

ome c

lients

Poor

Clien

tsVe

ry Po

or Cli

ents

Poor

clien

tsPo

or cli

ents

Low

incom

e clie

ntsPo

or cli

ents

Poor

clien

tsLo

w inc

ome c

lients

Poor

clien

tsPo

or cli

ents

Low

incom

e clie

ntsLo

w inc

ome c

lients

Low

incom

e clie

ntsLo

w inc

ome c

lients

Low

incom

e clie

ntsLo

w inc

ome c

lients

Low

incom

e clie

ntsPo

or cli

ents

Low

incom

e clie

ntsLo

w Inc

ome C

lients

Poor

Clien

tsLo

w inc

ome c

lients

Low

incom

e clie

ntsLo

w inc

ome c

lients

Low

incom

e clie

ntsLo

w inc

ome c

lients

Low

Incom

e Clie

ntsNo

speci

fic po

verty

targe

t

Micro

credit

loan

s for

micro

enter

prises

Micro

credit

loan

s for

micro

enter

prises

Micro

credit

loan

s for

micro

enter

prises

Othe

r: Isla

mic p

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crocre

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croen

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Micro

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Micro

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E loa

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crocre

dit fo

r othe

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useh

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need

s/con

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tion

Loan

s for a

gricu

lture

Micro

credit

for o

ther

hous

ehold

ne

eds/c

onsu

mptio

nLo

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r agri

cultu

reLo

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cultu

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reLo

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Loan

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Loan

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SME l

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Loan

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gricu

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SME l

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Othe

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supp

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vil

lage b

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throu

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credit

lines

Othe

r: Loa

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stock

Loan

s for e

ducat

ionLo

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cultu

reOt

her: L

oans

for li

vesto

ckLo

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r edu

cation

Othe

r: Loa

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stock

Loan

s for a

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Loan

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gricu

lture

Loan

s for e

ducat

ionLo

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cultu

reOt

her: L

oans

for li

vesto

ckOt

her: L

oans

for li

vesto

ckLo

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r edu

cation

Othe

r: Loa

ns fo

r live

stock

Othe

r: Loa

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ndicr

afts

Loan

s for e

ducat

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Loan

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ducat

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using

loan

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ans

Othe

r: Loa

ns fo

r sola

r en

ergy

Othe

r

Yes

NoNo

NoNo

NoNo

NoNo

NoNo

NoNo

NoNo

NoNo

NoNo

NoNo

NoNo

NoNo

NoNo Ch

ecking

acco

unts

Volun

tary s

aving

s acc

ounts

Co

mpuls

ory sa

vings

accou

nts (c

ash co

llater

al)

Fixe

d term

depo

sits

Speci

al pu

rpose

saving

s acc

ounts

Ot

her

Yes

NoNo

Yes

NoYe

sYe

sYe

sYe

sYe

sYe

sNo

Yes

Yes

NoYe

sNo

Yes

NoNo

Yes

Yes

NoYe

sNo

NoNo Cre

dit lif

e ins

uranc

eCre

dit lif

e ins

uranc

eCre

dit lif

e ins

uranc

eCre

dit lif

e ins

uranc

eCre

dit lif

e ins

uranc

eOt

her: H

ealth

insu

rance

Credit

life i

nsura

nce

Credit

life i

nsura

nce

Credit

life i

nsura

nce

Credit

life i

nsura

nce

Credit

life i

nsura

nce

Credit

life i

nsura

nce

Credit

life i

nsura

nce

Agric

ultura

l insu

rance

Credit

life i

nsura

nce

Agric

ultura

l insu

rance

Khus

hhal

beem

a in

partn

ership

with

Telen

or Ot

her: H

ealth

insu

rance

Othe

r: Clie

nt de

ath

cove

rage

Othe

r: Live

stock

value

-ad

ded i

nsura

nce

Othe

r

Debit

/Cred

it Card

None

offer

edNo

ne of

fered

Othe

r: Rep

ayme

nts

throu

gh br

anch

less

bank

ing

None

offer

edNo

ne of

fered

None

offer

ed Sa

vings

facilit

ation

ser

vices

None

offer

edNo

ne of

fered

Othe

r: Rep

ayme

nts

throu

gh br

anch

less

bank

ing

None

offer

ed M

icrole

asing

Ot

her: R

epay

ments

thr

ough

bran

chles

s ba

nking

No

ne of

fered

None

offer

edNo

ne of

fered

None

offer

edNo

ne of

fered

None

offer

edNo

ne of

fered

None

offer

edNo

ne of

fered

None

offer

edNo

ne of

fered

None

offer

ed

Mob

ile ba

nking

servi

ces

Savin

gs fac

ilitati

on

servic

es Re

mitta

nce s

ervice

s M

icrole

asing

Ot

her

Enter

prise

servic

esHe

alth s

ervice

sNo

ne of

fered

None

offer

edEn

terpri

se ser

vices

Enter

prise

servic

esEn

terpri

se ser

vices

Enter

prise

servic

esEn

terpri

se ser

vices

Enter

prise

servic

esEn

terpri

se ser

vices

Enter

prise

servic

esNo

ne of

fered

Enter

prise

servic

esNo

ne of

fered

Enter

prise

servic

esEn

terpri

se ser

vices

Enter

prise

servic

esNo

ne of

fered

Wom

en em

powe

rmen

t ser

vices

Enter

prise

servic

esNo

ne of

fered

Educ

ation

servi

cesEn

terpri

se ser

vices

Enter

prise

servic

esEn

terpri

se ser

vices

Educ

ation

servi

ces W

omen

empo

werm

ent

servic

es Ed

ucati

on se

rvices

Educ

ation

servi

cesEd

ucati

on se

rvices

Wom

en em

powe

rmen

t ser

vices

Educ

ation

servi

cesHe

alth s

ervice

sEd

ucati

on se

rvices

Wom

en em

powe

rmen

t ser

vices

Educ

ation

servi

cesEd

ucati

on se

rvices

Educ

ation

servi

cesEd

ucati

on se

rvices

Educ

ation

servi

ces W

omen

empo

werm

ent

servic

es Ed

ucati

on se

rvices

Educ

ation

servi

cesEd

ucati

on se

rvices

Healt

h serv

ices

Healt

h serv

ices

Healt

h serv

ices

Healt

h serv

ices

Healt

h serv

ices

Wom

en em

powe

rmen

t ser

vices

Healt

h serv

ices

Healt

h serv

ices

Healt

h serv

ices

Wom

en em

powe

rmen

t ser

vices

Wom

en em

powe

rmen

t ser

vices

Healt

h serv

ices

Healt

h serv

ices

Wom

en em

powe

rmen

t ser

vices

Wom

en em

powe

rmen

t ser

vices

Wom

en em

powe

rmen

t ser

vices

Wom

en em

powe

rmen

t ser

vices

Wom

en em

powe

rmen

t ser

vices

Wom

en em

powe

rmen

t ser

vices

Wom

en em

powe

rmen

t ser

vices

Wom

en em

powe

rmen

t ser

vices

Wom

en em

powe

rmen

t ser

vices

Wom

en em

powe

rmen

t ser

vices

Wom

en em

powe

rmen

t ser

vices

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes

No Gram

een P

rogres

s out

of Po

verty

Inde

x (PP

I) Gr

amee

n Prog

ress o

ut of

Pove

rty In

dex (

PPI)

Pove

rty Sc

orecar

d pro

vided

by Pa

kistan

Po

verty

Allev

iation

Fund

(PP

AF)

Gram

een P

rogres

s out

of Po

verty

Inde

x (PP

I) Pe

r cap

ita ho

useh

old

expe

nditu

re

Pove

rty Sc

orecar

d pro

vided

by Pa

kistan

Po

verty

Allev

iation

Fund

(PP

AF)

Pove

rty Sc

orecar

d pro

vided

by Pa

kistan

Po

verty

Allev

iation

Fund

(PP

AF)

Pove

rty Sc

orecar

d pro

vided

by Pa

kistan

Po

verty

Allev

iation

Fund

(PP

AF)

Pove

rty Sc

orecar

d pro

vided

by Pa

kistan

Po

verty

Allev

iation

Fund

(PP

AF)

Pove

rty Sc

orecar

d pro

vided

by Pa

kistan

Po

verty

Allev

iation

Fund

(PP

AF)

Per c

apita

hous

ehold

ex

pend

iture

Gram

een P

rogres

s out

of Po

verty

Inde

x (PP

I) Ow

n prox

y pov

erty i

ndex

Gr

amee

n Prog

ress o

ut of

Pove

rty In

dex (

PPI)

Pove

rty Sc

orecar

d pro

vided

by Pa

kistan

Po

verty

Allev

iation

Fund

(PP

AF)

Gram

een P

rogres

s out

of Po

verty

Inde

x (PP

I) Pe

r cap

ita ho

useh

old

incom

e

Pove

rty Sc

orecar

d pro

vided

by Pa

kistan

Po

verty

Allev

iation

Fund

(PP

AF)

Per c

apita

hous

ehold

ex

pend

iture

Pove

rty Sc

orecar

d pro

vided

by Pa

kistan

Po

verty

Allev

iation

Fund

(PP

AF)

Pove

rty Sc

orecar

d pro

vided

by Pa

kistan

Po

verty

Allev

iation

Fund

(PP

AF)

Gram

een P

rogres

s out

of Po

verty

Inde

x (PP

I) Ho

using

inde

x Gr

amee

n Prog

ress o

ut of

Pove

rty In

dex (

PPI)

Pove

rty Sc

orecar

d pro

vided

by Pa

kistan

Po

verty

Allev

iation

Fund

(PP

AF)

Pove

rty Sc

orecar

d pro

vided

by Pa

kistan

Po

verty

Allev

iation

Fund

(PP

AF)

USAID

Pove

rty

Asses

smen

t Too

l (PAT

) Pe

r cap

ita ho

useh

old

expe

nditu

re Pe

r cap

ita ho

useh

old

incom

e Pe

r cap

ita ho

useh

old

incom

e Pa

rticip

atory

Wealt

h Ra

nking

(PWR

) Pa

rticip

atory

Wealt

h Ra

nking

(PWR

) Pe

r cap

ita ho

useh

old

incom

e Pe

r cap

ita ho

useh

old

expe

nditu

re

Pove

rty Sc

orecar

d pro

vided

by Pa

kistan

Po

verty

Allev

iation

Fund

(PP

AF)

Per c

apita

hous

ehold

ex

pend

iture

Parti

cipato

ry We

alth

Rank

ing (P

WR)

Pove

rty Sc

orecar

d pro

vided

by Pa

kistan

Po

verty

Allev

iation

Fund

(PP

AF)

Hous

ing in

dex

Pove

rty Sc

orecar

d pro

vided

by Pa

kistan

Po

verty

Allev

iation

Fund

(PP

AF)

Per c

apita

hous

ehold

inc

ome

Own p

roxy p

overt

y ind

ex

Parti

cipato

ry We

alth

Rank

ing (P

WR)

Hous

ing in

dex

Food

secu

rity i

ndex

M

eans

test

Own p

roxy p

overt

y ind

ex

Pove

rty Sc

orecar

d pro

vided

by Pa

kistan

Po

verty

Allev

iation

Fund

(PP

AF)

Decli

ning b

alanc

e inte

rest

N/A

Flat in

terest

N/A

Flat in

terest

Flat in

terest

Decli

ning b

alanc

e inte

rest

Flat in

terest

Decli

ning b

alanc

e inte

rest

Flat in

terest

Flat in

terest

Flat in

terest

Flat in

terest

Flat in

terest

Flat in

terest

Flat in

terest

Flat in

terest

Flat in

terest

Flat in

terest

Flat in

terest

Flat in

terest

Decli

ning b

alanc

e inte

rest

Flat in

terest

Flat in

terest

Flat in

terest

Flat in

terest

Flat in

terest

Flat in

terest

Socia

l Per

forma

nce I

ndica

tors

9.0 9.1 ###

Non-f

inanc

ial

serv

ices o

ffere

d

6.1 7.0 8.03.0 4.0 5.0 5.1 6.0

Pove

rty ta

rget

Cred

it pr

oduc

ts/se

rvice

s off

ered

If MFP

take

s sav

ings

Tran

spar

ency

of

cost

of se

rvice

s to

Othe

r fina

ncial

se

rvice

s offe

red

Does

MFP

mea

sure

po

verty

If yes

, savin

gs pr

oduc

ts off

eredInd

icator

s

Comp

ulsor

y ins

uran

ce

If yes

, type

of

comp

ulsor

y ins

uran

ce re

quire

d

If yes

, pov

erty

meas

urem

ent to

ol



Rank

ing

Type

of c

lient

sRa

nkin

gTy

pe o

f clie

nts

Rank

ing

Type

of c

lient

sR

anki

ngTy

pe o

f clie

nts

Ran

king

Type

of c

lient

s

1

C

lient

s liv

ing

in ru

ral

area

s 1

Clie

nts l

ivin

g in

rura

l ar

eas

1

W

omen

1

C

lient

s liv

ing

in ru

ral

area

s 1

Wom

en

2

O

ther

: Mem

bers

of

com

mun

ity

orga

niza

tions

2

Wom

en2

Clie

nts l

ivin

g in

rura

l ar

eas

2

W

omen

2

C

lient

s liv

ing

in

urba

n ar

eas

3

W

omen

3

C

lient

s liv

ing

in

urba

n ar

eas

3

C

lient

s liv

ing

in

urba

n ar

eas

3

C

lient

s liv

ing

in ru

ral

area

s

4

C

lient

s liv

ing

in

urba

n ar

eas

Rank

ing

Goal

sRa

nkin

gGo

als

Rank

ing

Goal

sR

anki

ngGo

als

Ran

king

Goal

s1

Pove

rty

redu

ctio

n1

Pove

rty

redu

ctio

n1

Pove

rty

redu

ctio

n1

Pove

rty

redu

ctio

n1

Pove

rty

redu

ctio

n

2Em

ploy

men

t ge

nera

tion

2Ge

nder

equ

ality

and

w

omen

's

empo

wer

men

t2

Incr

ease

d ac

cess

to

finan

cial

serv

ices

2Gr

owth

of e

xist

ing

busi

ness

es1

Empl

oym

ent

gene

ratio

n

3In

crea

sed

acce

ss to

fin

anci

al se

rvic

es3

Empl

oym

ent

gene

ratio

n3

Gend

er e

qual

ity a

nd

wom

en's

em

pow

erm

ent

3De

velo

pmen

t of s

tart

-up

ent

erpr

ises

1De

velo

pmen

t of s

tart

-up

ent

erpr

ises

3Gr

owth

of e

xist

ing

busi

ness

es4

Grow

th o

f exi

stin

g bu

sine

sses

4De

velo

pmen

t of s

tart

-up

ent

erpr

ises

4In

crea

sed

acce

ss to

fin

anci

al se

rvic

es1

Grow

th o

f exi

stin

g bu

sine

sses

3Im

prov

emen

t of

adul

t edu

catio

n5

Incr

ease

d ac

cess

to

finan

cial

serv

ices

5Gr

owth

of e

xist

ing

busi

ness

es5

Empl

oym

ent

gene

ratio

n1

Gend

er e

qual

ity a

nd

wom

en's

em

pow

erm

ent

3Yo

uth

oppo

rtun

ities

6Ch

ildre

n's s

choo

ling

6Ge

nder

equ

ality

and

w

omen

's

empo

wer

men

t2

Incr

ease

d ac

cess

to

finan

cial

serv

ices

3Ch

ildre

n's s

choo

ling

7H

ealth

impr

ovem

ent

7H

ousi

ng2

Yout

h op

port

uniti

es

3H

ealth

impr

ovem

ent

8Im

prov

emen

t of

adul

t edu

catio

n8

Hea

lth im

prov

emen

t3

Child

ren'

s sch

oolin

g

3Ge

nder

equ

ality

and

w

omen

's

empo

wer

men

t9

Wat

er a

nd sa

nita

tion

3H

ealth

impr

ovem

ent

3W

ater

and

sani

tatio

n3

Wat

er a

nd sa

nita

tion

3Ot

her:

Com

mun

ity

prod

uctiv

e ph

ysic

al

infr

astr

uctu

re4

Hou

sing

1.0

Indi

cato

rs

Rura

l Sup

port

Pro

gram

mes

Soci

al P

erfo

rman

ce In

dica

tors

2.0

Targ

et M

arke

t

Dev

elop

men

t Goa

ls

NRS

PPR

SPSR

SPTR

DP

SRSO


NRS

PPR

SPSR

SPTR

DP

SRSO

Very

poo

r clie

nts

Poor

clie

nts

No

spec

ific p

over

ty ta

rget

Very

poo

r clie

nts

Low

inco

me

clie

nts

Poor

clie

nts

Poor

clie

nts

Low

inco

me

clie

nts

Poor

clie

nts

Low

inco

me

clie

nts

Low

inco

me

clie

nts

Low

inco

me

clie

nts

No

spec

ific p

over

ty ta

rget

Mic

rocr

edit

loan

s for

m

icro

ente

rpri

ses

Mic

rocr

edit

loan

s for

m

icro

ente

rpri

ses

Mic

rocr

edit

loan

s for

m

icro

ente

rpri

ses

Mic

rocr

edit

loan

s for

m

icro

ente

rpri

ses

Mic

rocr

edit

loan

s for

m

icro

ente

rpri

ses

Mic

rocr

edit

loan

s for

m

icro

ente

rpri

ses

Mic

rocr

edit

for o

ther

ho

useh

old

need

s/co

nsum

ptio

nLo

ans f

or a

gric

ultu

reLo

ans f

or a

gric

ultu

re

Mic

rocr

edit

for o

ther

ho

useh

old

need

s/co

nsum

ptio

n

Mic

rocr

edit

for o

ther

ho

useh

old

need

s/co

nsum

ptio

nLo

ans f

or a

gric

ultu

reSM

E lo

ans

Othe

r: L

oans

for l

ives

tock

Othe

r: L

oans

for l

ives

tock

Loan

s for

agr

icul

ture

Loan

s for

agr

icul

ture

Loan

s for

agr

icul

ture

Othe

r: C

omm

unity

pr

oduc

tive

infr

astr

uctu

re

sche

mes

(lift

irri

gatio

n an

d la

nd le

velin

g)

Othe

r: S

mal

l int

egra

ted

infr

astr

uctu

re e

nter

pris

eOt

her:

Loa

ns fo

r liv

esto

ck

Loan

s for

edu

catio

nH

ousi

ng lo

ans

Othe

r

Yes

No

No

No

No

Yes

No

Chec

king

acc

ount

s V

olun

tary

savi

ngs a

ccou

nts

Vol

unta

ry sa

ving

s ac

coun

ts

Com

puls

ory

savi

ngs

acco

unts

(cas

h co

llate

ral)

Fix

ed te

rm d

epos

its

Spe

cial

pur

pose

savi

ngs

acco

unts

Ot

her

Yes

Yes

Yes

No

Yes

Yes

No

Soci

al P

erfo

rman

ce In

dica

tors

Rura

l Sup

port

Pro

gram

mes

Pove

rty

Targ

et

Cred

it

prod

ucts

/ser

vice

s of

fere

d

If M

FP ta

kes

savi

ngs

If y

es, s

avin

gs

prod

ucts

offe

red

Com

puls

ory

insu

ranc

e

Indi

cato

rs

3.0

4.0

5.0

5.1

6.0



Cred

it lif

e in

sura

nce

Oth

er: L

ife (a

ccid

enta

l de

ath)

and

hea

lth

(hos

pita

lizat

ion)

insu

ranc

e Cr

edit

life

insu

ranc

eCr

edit

life

insu

ranc

eCr

edit

life

insu

ranc

e

Agri

cultu

ral i

nsur

ance

Oth

er: M

icro

-hea

lth

insu

ranc

e Ot

her

Debi

t/Cr

edit

Card

Sav

ings

faci

litat

ion

serv

ices

N

one

offe

red

Sav

ings

faci

litat

ion

serv

ices

N

one

offe

red

Oth

er: C

omm

unity

In

vest

men

t Fun

d (C

IF)

Mob

ile b

anki

ng se

rvic

es

Oth

er: I

ncom

e Ge

nera

ting

Gran

t (IG

G)

Sav

ings

faci

litat

ion

serv

ices

R

emitt

ance

serv

ices

M

icro

leas

ing

Othe

r

Ente

rpri

se se

rvic

esEn

terp

rise

serv

ices

Educ

atio

n se

rvic

esN

one

offe

red

Ente

rpri

se se

rvic

esEn

terp

rise

serv

ices

Educ

atio

n se

rvic

esEd

ucat

ion

serv

ices

Hea

lth se

rvic

esEd

ucat

ion

serv

ices

Educ

atio

n se

rvic

es

Hea

lth se

rvic

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Yes

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pmn.org.pk · EDITORIAL BOARD Mr. Ghalib Nishtar Chairperson Editorial Board President, Khushali Bank Mr. Syed Samar Hasnain Director, Agriculture Credit and Microfinance Department,