May 02, 2024 (MLN): Pakistan Credit Rating Agency Limited (PACRA) has maintained entity ratings of Telenor Microfinance Bank Limited at "A" for long term and "Al" for short term with a stable outlook forecast, latest press release issued by PACRA showed.
Telenor MFB is associated with robust sponsors, Telenor Group (55%) and AliPay (Hong Kong) Holding Limited (45%).
Telenor MFB is a mid-tier player in Pakistan’s microfinance sector with a 4.5% share in the total gross loan portfolio as of end-Dec23.
The bank's business profile emanates from its nationwide network of more than 213,000 registered branchless banking agents, serving over 13 million customers every month.
The bank is in the process of transitioning from a microfinance bank to a digital retail bank.
In this regard, certain milestones achieved as the Bank has been granted a NOC and an in-principal approval from SBP for a digital banking license, the only operational bank in Pakistan to achieve this so far, this is attributable to the largest digital footprint of the bank in the country through EasyPaisa, Pakistan’s first mobile banking platform launched in 2009.
The conversion shall entail the grant of the Digital Retail Bank license which shall replace the existing Microfinance Bank license.
Organogram has been redesigned with verticals of payment solutions, productive lending, and consumptive lending. At end-Dec23, the net advances of the bank increased by 56% to stand at Rs17.6 billion (end-Dec22: Rs11.3bn).
The NPLs of the bank increased to Rs1.1bn (end-Dec22: Rs736m). Consequently, the infection ratio of the bank inched down to 6.2% (end-Dec22: 6.4%).
During the period, the bank successfully disbursed a significant amount of Rs21.5bn (end-Dec22: Rs4bn) through digital lending.
The deposit base of the bank increased to stand at Rs 50.938bn (end-Dec22: Rs46.598bn) tilted toward demand deposits with a concentration of 83%.
The average cost of the deposit base of the bank stands at 1.8%, one of the lowest in the industry.
During CY23, the NIMR of the bank strengthened by 90% to stand at PKR 12.7bln (CY22: Rs6.7bn) with a major contribution of income from core banking operations.
The fee and commission income enhanced to PKR 12.9bln (CY22: Rs6.5bn) with a major concentration of income from branchless banking. Subsequently, the Bank reported a net profit of Rs502m (CY22: Loss of Rs7.092bn).
At end-Dec23, the CAR of the bank remained the strongest in the industry clocked in at 21.9% (end-Dec22: 19%) owing to a successive capital injection from the sponsors in the hour of need.
The management has undertaken a redesign of the business model, balancing the secured and unsecured (EMI) portfolio as per market dynamics and growth potential.
The digital strategy will be a key driver in the execution of the model, an essential change in the character of the bank. Hence, the rating watch is placed to capture the transition of the bank.
The maintenance in rating represents the bank's plan for growth is in place and the business profile has demonstrated improvement in CY23.
The sustenance and growth of critical parameters are projected to flow in quarters to come.
The bank’s successful completion of the transition from a microfinance bank to a digital retail bank will impact the ratings accordingly.
Copyright Mettis Link News
Posted on: 2024-05-02T10:27:23+05:00
