VIS reaffirms rating of Mobilink Microfinance Bank at 'A-'

May 08, 2024 (MLN): The VIS Credit Rating Company Limited has reaffirmed the entity rating of Mobilink Microfinance Bank Limited (MMBL) at ‘A-‘ for long term and ‘A-1’ for short term with a stable outlook forecast, latest press release issued by VIS showed.

MMBL was established in Pakistan on November 29, 2010, as a public limited company under the Companies Ordinance, 1984.

It received its microfinance operations license from the State Bank of Pakistan (SBP) on September 12, 2011, enabling nationwide operations.

MMBL primarily focuses on providing microfinance banking and associated services to underserved communities under the Microfinance Institution Ordinance, 2001.

Additionally, it offers Branchless Banking Services through an agreement with Pakistan Mobile Communications Limited (PMCL), a related entity, under SBP's Branchless Banking license.

The ratings assigned to MMBL are based on its ownership structure, with complete ownership held by VEON Microfinance Holding B.V., a leading global telecom group, and its association with Pakistan's largest cellular operator, Jazz (formerly Mobilink).

These ratings take into account the implicit support available from the sponsor, both financial and technological, which strengthens the Bank's market presence through synergies.

MMBL's business model incorporates a combination of conventional micro-credit services and branchless banking operations.

Leveraging the sponsor's network and brand name, particularly through JazzCash, MMBL has experienced growth in its branchless banking domain, expanding primarily through mobile-wallet accounts.

Going forward, MMBL aims to sustain growth primarily through expanding deposit outreach, with a particular emphasis on those acquired via digital platforms.

Ratings are supported by Bank’s presence in the digital sphere, which provides cost-effective funding for growth and efficiency in lending operations.

Primary concerns include the emerging trends in asset quality and loan portfolios. Increasing business volumes and margins become imperative to absorb this high cost of risk.

Nevertheless, assigned ratings are based on the continued containment of the rising cost of risk within the Bank’s risk absorption capacity, underscored by improving earnings generation, and overall maintained liquidity and capital buffers.

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