Microfinance Review 2018

ANNUAL ASSESSMENT OF
THE MICROFINANCE INDUSTRY
FINANCIAL SERVICES FOR ALL

Produced by Pakistan Microfinance Network
Design and Layout by O3 Interfaces
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ANNUAL ASSESSMENT
OF THE MICROFINANCE INDUSTRY
Pakistan Microfinance Review 2016
Financial Services for all
Editorial Board
Mr. Ghalib Nishtar

Chairperson, Editorial Board
President, Khushhali Bank Limited (KBL)
Syed Samar Husnain

Executive Director, Development Finance Group,
State Bank of Pakistan (SBP)
Mr. Blain Stephens

COO and Director of Analysis,
Microfinance Information eXchange, Inc. (MIX)
Mr. Yasir Ashfaq

CEO,
Pakistan Microfinance Investment Company (PMIC)
Mr. Azfar Jamal

Executive Vice President, Head Payment Services & E-Banking,
National Bank of Pakistan (NBP)
Mr. Masood Safdar Gill

Director Programme, Urban Poverty Alleviation Programme,
National Rural Support Programme (NRSP)
i
PMN Team
Mr. Ali Basharat

Author and Managing Editor
Mr. Miqdad Haider

Co-Author and Data Collection
Ms. Saba Abbas

Co-Author and Data Collection
Ms. Saquiba Aziz

Data Collection
ii
Acronyms and
Abbreviations
AC&MFD Agriculture and Microfinance Division

ADB Asian Development Bank
AMRDO Al-Mehran Rural Development Organization
AML Anti-Money Laundering
BPS Basis Points
CAR Capital Adequacy Ratio
CIB Credit Information Bureau
CDD Customer Due Diligence
CGAP Consultative Group to Assist the Poor
CGL Credit Guarantee Limits
CNIC Computerized National Identity Card
CPP Client Protection Principles
CPI Consumer Price Index
CPI Client Protection Initiative
CPC Consumer Protection Code
DFI Development Financial institute
DFID Department for International Development, UK
DPC Deposit Protection Corporation
DPF Depositor’s Protection Fund
ECA Eastern and Central Europe
ESM Environment and Social Management
EUR Euro
FATF Financial Action Task Force
FIP Financial Inclusion Program
FINCA FINCA Microfinance Bank Ltd.
FMFB The First Microfinance Bank Ltd.
FSS Financial Self Sufficiency
FY Financial Year
G2P Government to Person
GBP Great Britain Pound
GDP Gross Domestic Product
iii Annual Assessment of the Microfinance Industry

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
JWS Jinnah Welfare Society
KBL Khushhali Bank Ltd.
KF Kashf Foundation
KIBOR Karachi Inter-Bank Offering Rate
KP Khyber Pakhtunkhwa
KYC Know Your Customer
LCPS Low Cost Private Schools
MIV Microfinance Investment Vehicle
MIX Microfinance Information Exchange
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
MFT Microfinance Transparency
MIS Management Information System
MMFB Mobilink Microfinance Bank Ltd
MSME Micro, Small and Medium Enterprises
MIV Microfinance Investment Vehicle
MO Micro-Options

NADRA National Database and Registration Authority

NBMFI Non-Bank Microfinance Institutes

Annual Assessment of the Microfinance Industry iv

NGO Non-Governmental Organization

NFLP National Financial Literacy Program
NFIS National Financial Inclusion Strategy
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 Sufficiency
OTC Over-The-Counter
P2P Person to Person
P2G Person to Government
PAR Portfolio at Risk
PBA Pakistan Banks Association
PBS Pakistan Bureau of Statistics
PKR Pakistan Rupee
PMN Pakistan Microfinance Network
PO Partner Organization
PPAF Pakistan Poverty Alleviation Fund
PPI Grameen Progress out of Poverty Index
PRISM Programme for Increasing Sustainable Microfinance
PRSP Punjab Rural Support Programme
PTA Pakistan Telecommunication Authority
ROA Return on Assets
ROE Return on Equity
RSP Rural Support Programme
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 Telenor Microfinance Bank Ltd
UBL United Bank Limited
USD United States Dollar
USSPM Universal Standards for Social Performance Management
VDO Village Development Organization
WPI Wholesale Price Index
v Annual Assessment of the Microfinance Industry

Highlights
Year 2012 2013 2014 2015 2016

Active Borrowers 2.0 2.4 2.8 3.6 4.2
(in millions)
Gross Loan Portfolio 33.1 46.6 61.1 90.2 132.0
(PKR billions)
Active Women Borrowers 1.3 1.4 1.6 2.0 2.3
(in millions)
Branches 1,460 1,606 1,747 2,754 2,367
Total Staff 14,648 17,456 19,881 25,560 29,413
Total Assets 61.9 81.5 100.7 145.1 225.3
(PKR billions)
Deposits 20.8 32.9 42.7 60.0 118.1
(PKR billions)
Total Debt 24.9 26.9 31.1 44.5 54.7
(PKR billions)
Total Revenue 12.5 17.3 24.3 32.8 41.8
(PKR billions)
OSS 109.5 118.1 120.6 124.1 127.0
(percentage)
FSS 107.5 116.5 119.6 121.0 123.9
(percentage)
PAR > 30 3.7 2.5 1.1 1.5 1.2
(percentage)
Annual Assessment of the Microfinance Industry vi

Contents
The Year in Review
01
Macroeconomy and Microfinance Industry 03
Policy and Regulatory Environment 05
Industry Initiatives 06
Conclusion 09
Financial Performance Review
02
Scale and Outreach 14
Financial Structure 22
Profitability and Sustainability 25
Productivity 29
Risk 30
Conclusion 31
Social Performance
03
Analysis of the Sector’s SP Indicators 35
vii Annual Assessment of the Microfinance Industry

Challenges and Opportunities
04
Digital Financial Services 51
Transition Challenges 53
The Interest Rate Conundrum 54
Responsible Finance & Financial Literacy 54
Meeting the Funding Challenge 56
Annexures
05
AI - Performance indicators of industry 2016 61
AII - Performance indicators of individual MFPs 2016 67
AIII - Social Performance Indicators 2016 115
Annexure B - Regional Benchmark 175
Annexure C - Sources of Data 2016 177
Annexure D - Adjustment to Financial Data 187
Annexure E - Terms and Definitions 191

Annual Assessment of the Microfinance Industry viii


1 Annual Assessment of the Microfinance Industry

Section 1
THE YEAR IN
REVIEW
The Year in Review

Section 1
Annual Assessment of the Microfinance Industry 2

The Year in Review
The year 2016 saw the microfinance industry transition of Microfinance Institutes (MFIs) and
continue to grow and expand. Outreach Rural Support Programmes (RSPs) to Non-Bank
continued to grow at a double-digit rate with Microfinance Institutes.
notable expansion in the deposit base of the
microfinance industry. Overall, the microfinance On the funding side the microfinance industry
industry is now viewed as an important pillar in saw a practitioner successfully tapping capital
furthering the financial inclusion agenda in the markets to raise debt and several successful debt
country. placements were made by international lenders.
Branchless banking continued to grow and
A favourable macroeconomic environment and mature as the percentage of transactions through
economic stability played a catalytic role in the m-Wallets picked up as compared to over-the-
growth witnessed by the industry over the last counter (OTC) transactions. Lending to micro-
one year. As a follow up to the launch of the enterprises by MFBs and Interest Free Loans
National Financial Inclusion Strategy (NFIS) under the Prime Minister’s Youth Loan Scheme
and the introduction of a regulatory framework also witnessed an increase. On the responsible
for Non-Bank Microfinance Institutes (NBMFI) finance side, a number of advances took place
by the Securities & Exchange Commission especially in setting up client grievance redressal
of Pakistan (SECP) in 2015, 2016 saw steps mechanisms.
being taken to promote access to finance and
Macroeconomy and Microfinance

Industry
The Year in Review
Pakistan’s economy continued its upward impetus. Nevertheless, the dismal performance
momentum during the fiscal year 2016. The of the agriculture sector partially offset the
country’s GDP witnessed an 8-year high of growth momentum, resulting in the economy
4.7 percent during 2016 as compared to 4.0 falling short of the target of 5.5 percent. Despite
percent in 20151. Higher infrastructure spending, modest growth in the economy, the microfinance
better energy supplies, lower interest rates and industry surged by nearly 16 percent in terms of
declining security concerns contributed to this outreach while the Gross Loan Portfolio grew by
Section 1
1
Annual Report 2015-16 (State of the Economy), SBP

47 percent to close at PKR 132 billion2. all-time high of USD 18.1 billion in year 2016 on
the back of support from the IMF programme,
Inflation measured by the consumer price index short-term commercial borrowing, and a surge
(CPI) continued its downward trajectory during in Foreign Direct Investment (FDI). Although
the year. The annual inflation clocked in at 2.9 the exchange rate has remained stable over
percent as compared to 4.5 percent during the the period under review, it continued to be
fiscal year 2015 on the back of a stable exchange under pressure owing to an expanding trade
rate and lower oil prices3. This led to the deficit. This exchange rate stability may not be
continuation of an expansionary monetary policy sustainable in the long run and may require an
by State Bank of Pakistan whereby the policy adjustment at some point in time. Meanwhile the
rate witnessed cuts of 50 and 25 basis point (bps) decline in interest rates remained positive for
during fiscal year 2016 bringing it to 5.75 percent private businesses. Credit to the private sector
as shown in Exhibit 1.1. This should result in witnessed an expansion of PKR 460.6 billion
reduced cost of borrowing for microfinance in 2016, which is more than double the level of
Exhibit 1.1: Discount rate, KIBOR and CPI Trend
Consumer Price Inflation (Average) 6 - months KIBOR Discount Rate

14.00
12.00
10.00
8.00
6.00
4.00
2.00
2012 2013 2014 2015 2016
practitioners. expansion seen during fiscal year 2015. All the

major sectors resorted to bank borrowing to
On the fiscal front, the current account deficit fulfill their financing needs. Moreover, decline
deteriorated further as compared to last year, in government borrowing from commercial
though financial inflows kept it afloat. Similarly, banks coupled with improvement in the business
the trade deficit also suffered and expanded environment allowed the private sector to
by 6.9 percent during the period under review. reap benefits of the lowered policy rate. This
Nevertheless, growth in tax revenues and bodes well for MFPs as well which are showing
stringent control over current expenditures increased reliance on commercial borrowing to
reduced the overall budget deficit to 4.6 percent meet their funding needs.
from 5.3 percent in previous year4. Moreover,
SBP’s foreign exchange reserve witnessed an
The Year in Review
Section 1
2
MicroWatch, A quarterly outreach publication, Qtr 4, 2016, PMN
3
Annual Report 2015-16 (State of the Economy), SBP
4
Ibid

Policy and Regulatory

Environment
One of the main reasons for the growth in the corporate governance of these organizations.
microfinance industry has been the enabling Cross directorship and the requirement for
policy and regulatory environment, which has directors to meet the fit and proper criteria as
been recognized globally at various forums. prescribed by SECP remained key impediments.
Pakistan’s regulatory and enabling environment SECP gave an exemption for cross directorship
for financial inclusion has been ranked 5th by The up till April 2017 and meeting the requirement
Economist5. Significantly the last year witnessed for fit and proper criteria was delinked from the
the transformation of MFIs and RSPs into licensing process. In addition, keeping in view the
regulated entities. dynamics of the microfinance industry, people
having expertise in fields like the social sector
and economic development were allowed on the
Transition to NBMFIs boards of NBMFIs.
Following amendments in the Non-Bank Moreover, to facilitate small borrowers and

Finance Companies Framework to allow for reduce costs, the requirement for generating a
the establishment of Non-Bank Microfinance credit inquiry for any loan above PKR 5,000 was
Institutes (NBMFIs), transformation of non-bank revised upwards to PKR 10,000. The license fee
microfinance players into regulated entities was also reduced by half from PKR 750,000 to
under the umbrella of Securities and Exchange PKR 375,000 to facilitate the players.
Commission of Pakistan was initiated. During
the entire process, there was close interaction As a result, over 21 entities have been licensed
between the industry association, PMN, national by SECP as NBMFIs and the remaining are in
apex, PMIC, and SECP itself to ensure a smooth the process of acquiring the license. It is hoped
transition. that the transformation of non-bank players into
NBMFIs would lead to transparency, create a
Initially awareness sessions around the level playing field in the industry and accelerate
regulations were conducted by both SECP and growth like the MFBs which are regulated by the
PMN for the forty plus non-bank MFPs. As many central bank.
of the entities had worked in an unregulated
environment since inception, transforming them
into regulated entities was quite challenging. Reaching Out to Small &
While regulations were welcomed by all as the
next step forward, several issues arose which had Marginalized Farmers
to be addressed during the transition.
According to the Agriculture Census 2010,
Although some of the larger companies had there are nearly 5.3 million (out of a total of
been registered as companies, several others 8.3 million) farm households with landholdings
had to first register as companies before below 5 acres. Despite having a large share in
applying for licenses. To facilitate the players in the total agricultural output, the small individual
getting the licenses the deadline for obtaining landholdings result in difficulty in obtaining credit
the licenses was extended from early 2016 from formal financial institutions.
to end of 2016. Another notable issue was
The Year in Review
meeting the Minimum Capital Requirements of The microfinance industry plays a crucial role
PKR 50 million. Several smaller organizations in providing access to finance to small and
were unable to meet this criterion and were marginalized farmers as the sector enjoys
assisted by PMIC in meeting the shortfall excellent outreach in rural areas, with over 54
through endowments or subordinated debt. In percent of the total current clientele belonging to
addition, another prominent issue had to do with rural areas and over 42 percent affiliated with the
Section 1
5
The Global Microscope 2016: The enabling environment for financial inclusion, EIU,2016
6
MicroWATCH, A quarterly outreach publication by PMN, Issue 42, Quarter 4, 2016

agriculture & livestock sector6. There remains, FY 2016.

however, considerable room for expansion in
serving this market niche. As MFIs and RSPs are non-deposit taking
institutions, financing remains a key challenge. To
SBP has included MFIs and RSPs in its annual facilitate them, in 2016, SBP allowed commercial
agriculture disbursement targets and PMN banks to provide wholesale lending to MFIs and
has been made part of the Agriculture Credit RSPs to meet their annual farm sector credit
Advisory Committee (ACAC) which is chaired target to subsistence farmers. It is hoped that the
by the Governor SBP and the Agriculture Credit resulting synergies between commercial banks
Committee (ACC). An initial target of a GLP of 34 and NBMFIs will result in meeting the financing
billion was assigned to 16 MFIs and RSPs in the needs of small and marginalized farmers.
Industry Initiatives
The year saw several new initiatives being the number of transactions grew by 28 percent
undertaken especially on the funding side while from 374 million to 478 million9. The total
existing ones were enhanced and expanded. number of branchless banking accounts stood
at 19.96 million at the end of the year showing
an increase of 30 percent10. Out of the total
Branchless Banking branchless banking accounts 49 percent of them
were active. Women accounted for 21 percent
Buoyed by an enabling regulatory and supportive of the mobile accounts11. Total deposits in the
business environment, the branchless banking m-Wallet accounts stood at PKR 11,717 million12.
sector in the country continued to expand in the Branchless banking continues to be dominated
year 2016. With the National Financial Inclusion by three players namely Easypaisa, Jazzcash and
Strategy (NFIS) aiming to provide access to UBL Omni which accounted for 98 percent of
finance to 50 percent of the adult population the branchless banking accounts at the end of
and 25 percent of adult women by 20207, digital 2016 as compared to 97 percent13 in the previous
financial services are likely to play a crucial role in year despite the entry of several new players in
meeting these goals. Branchless banking provides the arena. As the industry matures the adoption
an excellent channel for the microfinance of m-Wallets is increasing as compared to OTC
industry to increase outreach, reduce reliance on transactions. The m-Wallet to OTC transaction
conventional branch networks and hence reduce ratio has increased from 34 percent in 2015 to 49
operating costs. Utilizing digital credit models to percent in 201614.
extend microloans and mobile money accounts to
mobilize savings are some tools available to the Nearly 19 MFPs are using branchless banking
practitioners to boost financial inclusion at the channels primarily for recollection for loans,
base of pyramid. however, there remains scope for using them
for additional services such as disbursements,
All the main indicators of branchless banking savings and insurance. In this regard, alliances
have exhibited robust growth over the last and partnerships between branchless banking
one year. The value of branchless banking providers and MFPs would go a long way in
transactions grew from PKR 1,872,451 million broad adoption of digital channels for extending
to PKR 2,169,541 million showing a growth of financial services.
16 percent over the year8. Over the same time,
The Year in Review
7
National Financial Inclusion Strategy (NFIS), SBP, 2015
8
Branchless Banking Newsletter, Multiple Issues, SBP
9
Ibid
10
Ibid
Section 1
11
Ibid
12
Ibid
13
Ibid
14
Ibid

Client Protection and outlined.
Social Performance International Lending

Management The year saw continued investor interest in the
The year in review saw many advances in industry with several international Development
the client protection and social performance Financial Institutions, Microfinance Investment
management domain, reflecting the commitment Vehicles (MIVs) and impact investors exploring
of the sector to becoming a double bottom line the market. Eco Trade & Development Bank,
industry. ADB, Symbiotics, Incofin, Triple Jump, Proparco,
Blue Orchard and Microvest were among the
The State Bank of Pakistan introduced investors who actively explored the markets
revised protocols for Client Grievance largely for debt placement.
Handling Mechanisms (CGHM), which are a
comprehensive set of guidelines, highlighting Last year, saw the successful finalization of deals
the overarching principles to establish robust worth over USD 14.5 million by various funds to
CGHM in banks. The protocols put forth specific Kashf Foundation, USD 20 million by ADB and
rules for establishment and operation of the USD 5 million by ECO Trade & Development
systems at all banks including microfinance Bank to KBL and USD 10 million for NRSP Bank.
banks. Going forward it is expected that several mid-
tier entities would also likely finalize deals with
Considering the importance of Grievance international lenders this year for debt.
Redressal Mechanisms in ensuring the provision
of responsible and client-centric financial
services, PMN in collaboration with The Smart
Tapping Capital Markets
Campaign, developed a progressive GRM
With the industry growth in double digits over the
framework to establish minimum standards of
last few years, the funding needs of the industry
good practice for its member MFPs, keeping in
are also growing. Increasingly, practitioners
view their scale and scope of operations. The
are looking towards diversifying their funding
project was undertaken realizing the need for
sources and capital markets are a natural avenue
standardization in the GRM domain as there
for that.
remains a great deal of variation in the GRM
processes employed by the MFPs. Since PMN’s
The year saw a successful attempt by an MFP
partners range from very small institutions to
to tap the debt capital market to meet funding
large banks, PMN is keen on supporting the
needs. NRSP Bank issued a Term Finance
microfinance industry by helping them improve
Certificate worth PKR 3 billion with a tenor
their practices around grievance redressal. Based
of 2 years. JS Bank and Faysal Bank were lead
on the framework, over the next two years, PMN
arrangers for the facility. The principal amount
will extend technical assistance to its members
is payable in 8 equal installments and the bonds
to bring their practices at par with the standards
Box 1
FINCA and Khushhali Microfinance Bank becomes first MFB in Pakistan to get
Smart Certified
The Year in Review
FINCA Microfinance Bank and Khushhali Bank Limited underwent a comprehensive third party smart
assessment in 2016 and earlier 2017 respectively, with both banks becoming the first ones among
microfinance Banks in Pakistan to be Smart Certified– a testament to the organizations’ focus on client
centricity and responsible practices. Client protection has always been a conscious decision made by
FINCA and KBL and institutionalizing it has been a process of exchange and learning from the clients.
An international recognition of these standards will help stakeholders, including clients; understand
the level of commitment to FINCA and KBL’s clients and its priority of aligning products, services, and
Section 1
procedures to clients’ needs.

are priced at 3-months KIBOR + 2.35. The facility industry. They also have the potential to generate
is secured against a cash coverage of PKR 300 employment and grow their business.
million and hypothecation of current and future
current assets of the bank. A key highlight of At present 8 out of 11 MFBs are lending to this
the transaction was that unlike previous issues segment and the number of borrowers in this
the Term Finance Certificate was not secured segment has risen to 32,000 from 12,000 in
through a credit guarantee. 201517 showing a growth of 261 percent. In the
same time, the total loan outstanding for the
segment stood at PKR 7.3 billion up from PKR 3
Interest-Free Loan Scheme billion18 as shown in Table 1.1 below.
The Interest Free Loan Scheme was launched While the borrowers from this segment are a
by the current Government as part of the Prime small fraction of the overall borrowers of the
Minister’s Youth Loan Scheme in 2014 with microfinance industry but they account for
an aim of reducing poverty and generating nearly 5 percent of the total GLP. Lending to this
employment. Pakistan Poverty Alleviation Fund micro-enterprise segment will likely increase the
(PPAF) has been tasked by the Government of funding requirement of MFPs exponentially and
Pakistan to mobilize, implement and monitor the dedicated funding lines for the segment would
scheme. A key element in the monitoring process likely increase lending and encourage NBMFIs to
has been to ensure the there is no overlap cater to this segment.
between conventional microfinance and interest
free loans.
Commencement of
The scheme was launched with an allocation of
PKR 3.5 billion out of which PKR 3.1 billion was Operations by PMIC
for on-lending. By the end of 2016, PKR 5.5 billion
had been disbursed through the revolving of Incorporated in August 2016 as an Investment
funds15. The scheme is being implemented in 431 Finance Company, PMIC is setup jointly by
Union Councils across the country through 26 Pakistan Poverty Alleviation Fund (PPAF),
MFIs16. Moreover, more than 50,000 recipients Department for International Development
of the loans were BISP beneficiaries who are now (DFID) through Karandaaz Pakistan and the
running their own businesses instead of relying German Development Bank (KFW) to catalyze
on cash grants. and lead the next phase of growth in the
microfinance sector of Pakistan as the wholesale
lender and sector developer. Recognized as an
Micro-enterprise Lending important financial sector player in the National
Financial Inclusion Strategy (NFIS) launched by
Micro-enterprise lending has the potential to Government of Pakistan in 2015, the purpose
fill the financing gap between the microfinance of the organization is to improve financial
and traditional Small and Medium Enterprises inclusion, employment and wellbeing of the
(SME). The entities falling in this gap have similar poor by providing wholesale financing to the
dynamics as the clientele of the microfinance microfinance service providers in the country.
Table 1.1: Micro-enterprise Lending19
Year 2013 2014 2015 2016

The Year in Review
Number of Loans 136 2,185 12,612 32,958

GLP 33,902,858 530,587,461 3,061,824,879 7,279,497,227
Average Loan Size (PKR) 249,286 242,832 242,771 220,871.9348
15
PPAF
Section 1
16
Ibid
17
MicroWATCH, A quarterly outreach publication, PMN, Multiple Issues
18
Ibid
19
Ibid

The institution also has a role in the development entity in December 2016 by taking over PPAF’s
and strengthening of the microfinance sector by portfolio in the microfinance sector. As the apex
actively contributing to policy and regulations for institution and sector developer, PMIC will
microfinance, capacity building of microfinance issue a broad array of funding instruments and
players as well as to promote innovation and financial services to its borrowers (Non-bank
responsible financial practices in the sector. In Microfinance Institutions and Microfinance
sync with the Microfinance Growth Strategy Banks) in the form of senior debt, guarantees,
2020 articulated by the sector, PMIC envisions debt syndication, mezzanine capital among
to become the largest provider of wholesale others. As a private sector commercial entity,
funds to the sector to increase the number of PMIC is strategically placed to raise funds from
microcredit borrowers to 10 million by 2020. commercial banks as well as capital markets to
raise the quantum of funding available for the
PMIC is taking over the task PPAF has sector. PMIC aims to be the sector developer
successfully carried out for more than 16 years with emphasis on development of need based
for the development of the microfinance sector products for the sector which are innovative,
in the country which has been recognized and market-based, abiding by international best
acknowledged both nationally and internationally. practices, technologically savvy and, above all,
PMIC started its operations as a separate legal are beneficiary-centric.
Conclusion
Overall, the microfinance industry continued its Capital markets, international lending and the
upward trajectory in the 2016. With the NFIS in Pakistan Microfinance Investment Company
place and the entire microfinance sector under (PMIC) all provide avenues for MFPs to meet
a regulatory umbrella, the players have in place their increasing financing needs. Continued
a supportive environment to grow and become economic stability will continue to play a crucial
a significant part of the financial landscape. role in the progress of the sector. In addition,
Moreover, with the industry infrastructure in players need to strengthen their corporate
place including the credit information bureau, governance, build capacity, focus on product
digital financial services, responsible finance development and innovation and explore newer
initiatives, players have an excellent opportunity markets to become an increasingly important
to continue expanding outreach and tapping new part of the financial landscape.
market segments.
The Year in Review
Section 1

The Year in Review

Section 1


Section 2
FINANCIAL
PERFORMANCE
REVIEW
Section 2

Financial
Performance Review
This section provides a detailed analysis of the reliable and fair assessment of sector.
financial performance of Pakistan’s microfinance
industry in 2016. Performance has been assessed Detailed financial information is provided in
on three levels: industry wise, across peer groups Annex A-I and A-II of the PMR. Aggregate data
and institution wise. The analysis is backed has been reproduced for five years, whereas, the
by 88 financial indicators, calculated from the peer group and institution specific data has been
audited financial statements of the reporting made available only for the year 2016.
organizations. These indicators have been
compared across time and regions to develop a A total of 35 MFPs submitted their audited
Box 2.1
Peer Groups
Microfinance Institution
A non-bank microfinance institution (NBMFI) providing microfinance services. With the introduction
of the non-bank microfinance regulatory framework by SECP in 2016, the institutions carrying out
microfinance services are required to be registered with SECP as NBMFIs. Presently, 11 MFIs have
obtained the NBMFI license while 12 MFIs are in the process of obtaining the license.
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,
11 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 11 MFBs
operating in the country.
Rural Support Programme

A non-bank microfinance institution (NBMFI) providing microfinance services. An RSP is differentiated
from the MFI peer group based on the purely rural focus of its credit operations. As of now, these
organizations are in the process of registering with SECP under the new regulatory framework
for NBMFIs. At present, 3 organizations have obtained the license while 1 RSP is in the process of
obtaining the license.
Section 2

financial statements for PMR 2016. For a Support Programmes (RSPs). See Box 2.1 for
complete list of reporting organizations refer to detailed definitions.
Annex B.
The distribution of respondents (number of
Industry players are categorized into three reporting organizations) by peer group is given in
groups for benchmarking and comparison Exhibit 2.1. The MFI peer group comprises of the
purposes: Microfinance Banks (MFBs), largest number of respondents followed by MFBs
Microfinance Institutions (MFIs) and Rural and then RSPs.
Exhibit 2.1: Distribution of Respondents by Peer Groups
RSP 4
MFI 22
MFB 9
Scale and Outreach

This section focuses on outreach indicators to 2015 (Exhibit 2.2). Among the MFPs, growth in
provide a performance analysis of the industry in active borrowers was driven by Akhuwat which
terms of credit growth and composition, deposit added 162,000 borrowers, registering a growth
mobilization, depth of outreach and gender. of 40%. Telenor Microfinance Bank added 98,000
borrowers to its portfolio in 2016, while NRSP
Bank added 67,000 borrowers.
Scale and Outreach:
The industry in terms of outreach remained

Breadth dominated by 9 MFPs comprising of 80 percent of
the total active borrowers as shown in Exhibit 2.3.
In the year 2016, credit outreach remained NRSP maintained its top position with a portfolio
positive with active borrowers increasing to of 650,000 borrowers. During the year under
4.2 million from 3.6 million in 2015 recording review, Akhuwat surpassed Khushhali Bank and
a growth of 16%. Meanwhile, the gross loan became the second largest provider of micro-
portfolio witnessed a staggering growth of 47% credit in terms of active borrowers by recording
and crossed the PKR 100 billion mark. The GLP 568,000 borrowers. Khushhali Bank reported
stood at PKR 132 billion from PKR 90 billion in 557,000 active borrowers in its portfolio.
Section 2

Exhibit 2.2: Growth in Number of Active Borrowers and GLP
GLP Active borrowers

4.50 140
4.00
120
3.50
GLP in PKR Billions

100
3.00
Active Borrowers
in Millions
2.50 80
2.00 60
1.50
40
1.00
20
0.50
2012 2013 2014 2015 2016
Exhibit 2.3: Active Borrowers of Largest MFPs
2016 2015
90
FINCA 132
KF 247
215
177
FMFB 221
263
ASA-P 322
258
NRSP-B 326
287
TMFB 385
521
KBL 557
406
Akhuwat 568
590
NRSP 650
100 200 300 400 500 600 700

Active Borrowers in Thousands
Among the peer groups, MFBs continue to year and stood at 37%. Similarly, the RSPs market
dominate the sector with a market share of 42% share also reduced to 21% from 23% in 2015 as
- registering an increase of 3%. This increase is shown in Exhibit 2.4.
attributed to growth in outreach of TMFB and
NRSP-B. During the same period, the MFIs share In terms of GLP, MFBs enjoy the largest market
witnessed a marginal reduction of 1% from last share of 68% among the peer group, followed
Exhibit 2.4: Share in Active Borrowers by Peer Group

RSP MFI MFB

100%
90% 23% 21%
27% 25% 27%
80%
70%
60% 38% 37%
34% 35% 31%
50%
40%
30%
20% 39% 40% 42% 39% 42%
10%
Section 2
2012 2013 2014 2015 2016

Exhibit 2.5: Share of GLP by Peer Group
RSP MFI MFB

100%
16% 12%
90% 20% 18% 18%
80%
70% 23% 20%
23% 22% 24%
60%
50%
40%
30% 57% 60% 58% 61% 68%
20%
10%
2012 2013 2014 2015 2016
by MFIs and RSPs having a market share of 20% In terms of GLP, the top nine players dominate
and 12%, respectively. The MFBs share in total the sector accounting for 78% of the overall
GLP witnessed a growth of 7% which is mainly on GLP. KBL continued to lead with a GLP of PKR
account of substantial increases in the portfolios 23.3 billion, recording a healthy growth of 33%
of KBL, FINCA, U Bank, MMFB, and NRSP-B. The over the last year. This growth is supported by a
greater average loan size of MFBs (PKR 51,771) larger borrowers’ portfolio coupled with a high
among peer groups is also a factor for the largest average loan size (PKR 48,508). TMFB continued
market share. Despite the robust performance to maintain its second position with a GLP of
by MFIs and RSPs with increased GLP by PKR PKR 15.9 billion. During the period under review,
27 billion and PKR 16 billion respectively, their NRSP-B surpassed NRSP and became the third
market share weakened in the current year. largest provider with a GLP of PKR 13.3 billion.
Moreover, FINCA’s performance remained
During the current year, total GLP for the impressive registering a growth of 85% with an
industry stood at PKR 132 billion up from PKR 90 addition of PKR 4.7 billion to its portfolio.
billion in the previous year. Although this growth
was supported by all the players of the sector, During the period under review, the industry
however, MFBs contributed the most, adding witnessed a substantial growth (88%) in number
PKR 33.7 billion to their portfolios, followed by of depositors thereby taking the total depositors
MFIs, and RSPs which added PKR 6 billion and to 15.9 million from 10.7 million in 2015 as shown
PKR 2.3 billion, respectively (see Exhibit 2.6). in Exhibit 2.8. Similarly, the value of deposits also
This growth is supported by an increase in active posted hefty growth of 41% and grew to PKR
borrowers coupled with improvement in the 118 billion from PKR 60 billion a year earlier.
average loan size. The largest increase in number of depositors
came from Mobilink Microfinance Bank (MMFB)
Exhibit 2.6: GLP by Peer Group

RSP MFI MFB

140
120 16.0
100 27.0
PKR in Billions
80 13.7
21.0
60 11.4
8.4 15.3 89.1

40
6.7 10.2
55.4
20 7.6 36.8
Section 2
28.1
18.7
2012 2013 2014 2015 2016

Exhibit 2.7: GLP of 9 Largest MFPs
2016 2015
0.1
MMFB 5.9
0.0
AMFB 6.3
4.8
Akhuwat 8.1
5.6
FMFB 8.3
5.5
FINCA 10.2
10.1
NRSP 12.0
9.1
NRSP Bank 13.3
12.2
TMFB 15.9
17.5
KBL 23.3
10 20 30
PKR in Billions
Exhibit 2.8: Growth in Deposits and Number of Depositors
Deposits Outstanding Despositor

18,000 140
16,000
120
Deposits outstanding in Billions

14,000
Depositors in Thousands
100
12,000
10,000 80
8,000 60
6,000
40
4,000
20
2,000
2012 2013 2014 2015 2016
which added 4.9 million depositors in the current taking its total deposits outstanding to PKR 16.9
year and became the industry leader with total billion in the current year.
depositors standing at 8.1 million. This growth
was followed by KBL and FMFB with an addition There was an impressive growth in deposit
of 240,000 and 162,000 depositors, respectively. base by MFBs in the current year leading to a
This astounding increase in the depositors can be considerable increase in Deposit-to-GLP ratio,
attributed to growth in mobile banking activities, from 108% in 2015 to 133% in 2016 posting a jump
especially opening of m-Wallet accounts. of 24% (Exhibit 2.10). This ratio depicts MFBs are
Government of Pakistan’s policy of biometric mainly relying on deposits to meet their funding
verification of all mobile sim card holders has needs, thereby reducing their cost of funds to
eased the process of opening an m-Wallet 5.1% from 5.7% a year earlier. Moreover, a higher
account. During the period under review, deposit-to-GLP ratio ascertains that MFBs have
performance of TMFB in terms of depositors excess funds on hand and are adequately liquid,
remained dull, as the bank’s total depositors which remains positive for the sector.
witnessed a decline of 293,000. This is mainly due
to closure of dormant m-Wallet accounts. Micro-insurance continued its upward trajectory
during the year under review showing healthy
TMFB remained the largest contributor to the growth. The number of policy holders increased
value of deposits by adding PKR 12.1 billion, to 5.8 million from 4.6 million a year earlier thus
taking the deposit base to PKR 27.8 billion from posting a growth of 28% (Exhibit 2.11). Moreover,
PKR 15.7 billion in 2015 as shown in Exhibit the sum insured showed a remarkable growth of
Section 2
2.9. This growth was followed by NRSP-B which 85% thereby taking the total sum insured to PKR
increased its deposit base by PKR 9.7 billion, 150 billion in 2016 from PKR 81 billion in 2015.

Exhibit 2.9: Deposit Growth by MFB
2016 2015
0.0
Advans 0.0
1.1
Ubank 8.1
3.2
MMFB 10.3
4.5
AMFB 10.4
6.1
FINCA 11.1
7.3
NRSP-B 16.9
9.7
FMFB 12.2
12.5
KBL 21.2
15.7
TMFB 27.8
5 10 15 20 25 30
PKR in Billions
Growth in policy holders was mainly fueled by MFB peer group with an addition of PKR 27
the MFIs peer group which added 1.3 million new billion even though the market share reduced to
policy holders – taking their market share to 44% 50% from 60% in the previous year. KF surpassed
from 28% in 2015, which was followed by MFBs, NRSP to become the largest provider of micro-
which added 507,000 policy holders. However, insurance with 1.5 million policy holders. KF was
the sum insured remained dominated by the followed by NRSP which recorded 905,000 policy
Exhibit 2.10: Deposit-To-GLP Relation for MFBs
Deposit-to-GLP GLP Deposits

140 140%
120 120%
Deposit-to-GLP Ratio
100 100%
In PKR Billions
80 80%
60 60%
40 40%
20 20%
2012 2013 2014 2015 2016
Exhibit 2.11: Growth in Number of Policy Holders & Sum Insured

Sum Insured Policy Holders

6.20 160
5.70
140
5.50
Sum Insured in PKR Billions
Policy Holders in millions
120
4.70
4.20 100
3.70 80
3.20
60
2.70
40
2.20
1.70 20
Section 2
2012 2013 2014 2015 2016

holders. Akhuwat remained the third largest by the continuous increase in the MFB ratio of
provider with 665,000 policy holders. In terms average loan balance to per capita GNI. Similarly,
of sum insured, KF again dominated the sector MFIs and RSPs are also showing an increasing
and recorded PKR 38.4 billion, followed by KBL trend, albeit at a slower pace. This is due to
with PKR 25.2 billion and NRSP moving down industry’s shift in focus towards larger loan sizes,
to third place having PKR 20.9 billion worth of demonstrating the realization among the players
sum insured. The sector remained dominated by of appropriate loan sizes in the wake of Pakistan’s
Exhibit 2.12: Depth of Outreach by Peer Groups
MFB Cut-off Industry RSP MFI

35%
30%
Average Loan Balance Per GNI
25%
20%
15%
10%
5%
2012 2013 2014 2015 2016
health and credit life insurance having a market inflationary environment. Moreover, increase in
share of 46% and 52%, respectively. enterprise lending across the sector also demands
larger loan sizes, which could be another factor
for the upward movement in the ratio of average
Scale and Outreach: Depth loan balance to per capita GNI. Exhibit 2.12
highlights that among the peer groups the MFBs’
The depth of outreach in microcredit operations ratio stood at 33% recording an increase of 8%
is measured by a proxy indicator: average loan during 2016. This rise can be attributed to an
balance per borrower in proportion to per capita increase in lending to microenterprises by MFBs.
Gross National Income (GNI). A value below Meanwhile, the ratio of MFIs and RSPs witnessed
20 percent is assumed to mean that the MFP is a modest increase of 1 percent each.
poverty focused. However, the trend over the
Exhibit 2.13: Lending Methodology Trend

Group Borrowing Individual Borrowing

5,000
4,500
Active Borrowers In Thousands
4,000
3,500 49%
3,000
58%
2,500
2,000 69%
75%
1,500 82%
51%
1,000
42%
500
Section 2
25% 31%
18%
2012 2013 2014 2015 2016

years reveals that the industry’s ratio is following
an upward trajectory, which is mainly caused
Exhibit 2.14: Gender Distribution of Credit Outreach by Peer Group
Female Borrowers Male Borrowers

100%
90% 25%
80%
54%
70%
73%
60% 78%
50%
40% 75%
30%
46%
20%
27%
10% 22%
MFB MFI RSP Total
Lending Methodology 55% in 2015, and in 2016, with a marginal decline

of 1%, it stood at 54%. The proportion of women
For many years the microfinance industry borrowers for MFIs posted a marginal decline of
remained dominated by the group lending 2%, whereas, MFBs and RSPs registered a growth
methodology. However, this domination has of 1% and 3%, respectively. Among the peer
witnessed a steady decline over the last five groups, the MFBs client base is skewed towards
years with focus shifting towards the individual male borrowers, while MFIs and RSPs are more
lending methodology. Thus, during the period focused on female borrowers (Exhibit 2.14).
under review individual lending surpassed group
lending and recorded an increase of 9% thereby Portfolio Distribution by Sector
capturing 51% market share of active borrowers
as shown in Exhibit 2.13. This shift in lending Overall, the trading sector attracted the major
methodology is primarily driven by KBL, MMFB, portion of active borrowers though its share
and TMFB. witnessed a marginal decline of 1% during 2016
as shown in Exhibit 2.15. Trading was followed by
Gender Distribution the agriculture and livestock sectors which posted
market shares of 18% and 22% respectively.
The microfinance sector has always remained Agriculture’s share declined by 2% during the
women centric resulting in a majority of women year, while the share of livestock increased
borrowers. However, over recent years this trend by 3% in the same period. Meanwhile, the
is reversing with the industry’s focus moving market share of services and the manufacturing
towards male borrowers. The percentage of sector remained in the single digits with slight
women borrowers was 58% in 2014 which fell to deterioration in the current year.
Exhibit 2.15: Active Borrowers by Sector
Other Housing Manufacturing/Production Services Trade

Livestock/Poultry Agriculture
100%
9% 15% 15%
90% 0% 18% 21%
9% 0% 0%
9% 9% 0%
80% 9% 8% 1%
6%
70% 8% 8%
10% 9%
60%
35% 30% 29%
50% 25% 24%
40%
30% 16% 16% 16% 19% 22%
20%
10% 22% 22% 23% 20%
Section 2
18%
2012 2013 2014 2015 2016

Rural-Urban Lending Conventional and Islamic Lending

The orientation of the sector has always The microfinance sector is divided into
remained towards rural borrowers. During conventional and Islamic modes of lending.
the period under review, the concentration of Presently, the industry is tilted towards
Exhibit 2.16: Active Borrowers by Urban / Rural Areas
Rural Urban
100%
90%
80%
56% 58% 57% 54% 54%
70%
60%
50%
40%
30%
44% 42% 43% 46% 46%
20%
10%
2012 2013 2014 2015 2016
rural borrowers remained stagnant at 54%, conventional lending with 85% of total active
while urban clients constituted 46% of the borrowers utilizing conventional loans, whereas,
sector (Exhibit 2.16). Moreover, the majority of 15% of the borrowers are making use of the
borrowers of two main players – NRSP and KBL Islamic mode of financing. Among the peer
– remained concentrated in the rural segment of groups, in terms of conventional lending, MFBs
the population. have a share of 50%, followed by MFIs and RSPs
with 26% and 24% shares respectively. The
Islamic lending is primarily led by MFIs having a
market share of 99%, while MFBs constitute the
remaining 1% (Exhibit 2.17).
Exhibit 2.17: Active Borrowers by Conventional and Islamic Lending
MFB 1%
MFI 99%
RSP 24%
MFB 50%
MFI 26%
Conventional
Islamic
Section 2

Unsecured-Secured Lending a market share of 43% and 40% respectively,

while RSPs contribute 17% as shown in Exhibit
The industry is overall supported by unsecured 2.18. MFIs with a share of 43% are on top in
financing which constitutes 88% of total active terms of secured lending, which is followed by
borrowers, whereas, the remaining 12% is MFBs (41%) and RSPs (16%).
secured lending. In terms of unsecured lending,
MFBs and MFIs contain the major portion having
Exhibit 2.18: Active Borrowers by Unsecured / Secured Lending
RSP 43%
MFB 41%
RSP 17%
MFB 43%
MFI 40%
Unsecured
Secured
MFI 16%
Financial Structure
Asset Base The major contribution to the total asset base of
the industry comes from the top 10 larger players
which account for 86% of the sector’s asset
The total asset base of the industry registered a
base. Akhuwat and NRSP are the only non-bank
remarkable growth of 55% in 2016 and stood at
players among the 10 largest MFPs, while all
PKR 225 billion as compared to PKR 145 billion

others belong to the MFB peer group. Among the
in 2015. MFBs accounted for 75% of the total
players, TMFB has the largest asset base of PKR
asset base, while MFIs and RSPs constituted 16%
36 billion followed by KBL (PKR 34 billion) and
and 9% respectively. The asset base of MFB’s
NRSP Bank (PKR 26 billion) as shown in Exhibit
increased substantially from PKR 97 billion in
2.20. Among MFIs, Akhuwat remained on top
2015 to PKR 168 billion in 2016 thereby posting
with assets of PKR 10 billion, while KF reporting
a growth of 73% (see Exhibit 2.19). Meanwhile,
an asset base of PKR 7 billion stood at second
the MFI’s asset base recording a growth of 22%
place. The RSP peer group is dominated by NRSP
stood at PKR 36 billion, whereas, RSP’s assets
which has an asset base of PKR 15 billion.
increased by 16% and stood at PKR 22 billion.
Section 2

Exhibit 2.19: Total Asset Base by Peer Group
RSP MFI MFB

180
160
140
120
PKR in Billions
100
80
60
40
20
2012 2013 2014 2015 2016
Exhibit 2.20: Asset Base of Larger MFPs
2015 2016
Akhuwat 7
10
Ubank 2
11
AMFB 1
14
5
MMFB 14
13
NRSP 15
8
FINCA 16
FMFB 12
17
14
NRSP Bank 26
27
KBL 34
21
TMFB 36
10 20 30 40
PKR in Billions
Asset Composition utilization in Pakistan is low as shown in Exhibit

2.22. This provides room for further growth
which could be done through the use of extended
The sector’s asset utilization ratio (gross loan
grace periods and financing instruments with
portfolio-to-total assets) has remained range
bullet repayments.
bound over the years. However, during 2016 it
witnessed a marginal decline from 62.2% to 58.6%
as seen in Exhibit 2.21 largely as a result of the
decline in utilization ratio of MFBs which stood at
Funding Profile
53% as compared to 56.9% in 2015. The MFIs and Over the last five years, the capital structure
RSPs asset utilization ratios noted improvement of the industry has shown a consistent shift
and stood at 75.7% and 73.9% respectively. The towards deposits as the main source of funding.
decline in the MFB’s utilization ratio is mainly due Meanwhile, reliance on debt and equity has
to a shift in their asset composition. Investments consistently declined. Deposits now constitute
increased from 14% in 2015 to 19% in 2016 as 56% of the total funding of the sector up from
a percentage of total assets, while composition 45% in 2015. Debt financing witnessed a decline
of cash and cash equivalents increased to 19% of 8% and stood at 26% in 2016. Despite an
(from 15% in 2015). Despite an improvement increase in profitability in the sector, the share
in the overall gross loan portfolio, the share of of equity also reduced from 22% in 2015 to
advances in total assets reduced, which is evident 17% in 2016 (Exhibit 2.23). To sustain further
from the utilization ratio. growth, practitioners may be forced to capitalize
Section 2
themselves either through equity injections or

In comparison to global players, the asset issuing subordinated debt.

Exhibit 2.21: Asset Utilization Ratio
Asset Utilization Ratio

70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
2012 2013 2014 2015 2016
Exhibit 2.22: Regional Comparison of Asset Utilization
100.00%
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
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Exhibit 2.23: Capital Structure of the Industry
Equity Debt Deposits
100%
90%
37%
80% 43% 44% 45%

56%
70%
60%
50%
40% 44% 35% 33% 33%
30% 26%
20%
10% 20% 22% 23% 22% 17%
2012 2013 2014 2015 2016

Section 2

The capital structure among the peer groups in 2015. Meanwhile, equity and debt financing
differs substantially. Non-bank MFPs completely witnessed a decline and recorded 15% and 9%
rely on debt and equity to fulfill their funding needs share, respectively as shown in Exhibit 2.24. In
since they cannot mobilize deposits, whereas, the the case of MFIs and RSPs, debt continued to be
MFBs ability to take deposits keeps their capital the primary source of funding accounting for 77%
structure skewed towards the deposits as the and 70% of the capital structure, respectively.
primary source of financing. During the period However, RSPs equity funding showed a marginal
under review, 76% of MFBs funding needs were increase of 1% during the current year and stood
met through deposits which increased from 67% at 30%.
Exhibit 2.24: Capital Structure by Peer Group
Deposits Debt Equity

90%
80%
70%
60%
50%
40%
30%
20%
10%
2015 2016 2015 2016 2015 2016
MFBs MFIs RSPs
Profitability and Sustainability

The total revenue of the industry stood at PKR The total revenue ratio of the industry declined
41.8 billion, while net income was PKR 6.9 billion from 26% in 2015 to 23% in 2016 shown in Exhibit
in 2016 which had increased from 5.1 billion 2.26. This is mainly attributed to a decrease in
in 2015. The unadjusted ROA and ROE for the yield on gross loan portfolio which reduced from
industry stood at 3.9% and 21.4%, respectively. 34.6% in 2015 to 33.0% in 2016 coupled with an
MFBs remained the major contributors (45.8%) increase in the asset base.
to the total profitability, while MFIs and RSPs
accounted for 35.6% and 18.6%. A comparison with global players reveals that
Pakistan’s yield on gross loan portfolio is highest
The industry continued to be sustainable with in all regions (see Exhibit 2.27). The higher yield
Operational Self Sufficiency (OSS) and Financial is a factor of high operating costs which is on
Self Sufficiency (FSS) well above 100 percent, account of smaller loan sizes. Nevertheless, with
consistently showing an increasing trend as every passing year, a decline in yield points to the
depicted in Exhibit 2.25. During the period fact that the increase in loan sizes after targeting
under review, OSS and FSS recorded 127% and enterprise lending is bringing operational costs
124%, respectively. Out of the 35 reporting down.
organizations 32 have OSS above 100 percent
thereby reflecting the strong sustainability of the
industry players.
Section 2

Exhibit 2.25: OSS and FSS Trend
Financial Self Sufficiency (FSS) Operational Self Sufficiency (OSS)

130.00%
125.00%
120.00%
115.00%
110.00%
105.00%
100.00%
2012 2013 2014 2015 2016
Exhibit 2.26: Total Revenue Ratio & Yield on Portfolio
Yield on gross portfolio (Real)
Yield on gross portfolio (Nominal) Total revenue ratio

40.0%
35.0%
30.0%
25.0%
20.0%
15.0%
10.0%
5.0%
2012 2013 2014 2015 2016
Exhibit 2.27: Regional Comparison of Nominal Yield
Yield on gross portfolio (Normal)

35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
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The total revenue of the industry registered a 21.5% in the same period last year (see Exhibit
growth of 27% and stood at PKR 41.8 billion in 2.29). This decrease is primarily on the back of
2016 from PKR 32.9 billion in 2015. The major industry attempts to curtail operating expenses
portion of the revenue comes from earnings coupled with the reduction in financial expense
from loan portfolio (87%), whereas investments made possible by the lower interest rate scenario.
in financial assets contributed 7% and the
contribution of financial services was 6%. The The operating expense to GLP ratio continued
share of financial assets and financial services its downward trend for the third consecutive
reduced in comparison to the corresponding year. The ratio declined from 20.7% in 2015 to
Exhibit 2.28: Revenue Streams
Financial Services Financial Assets Loan Portfolio

45.0
40.0
35.0
30.0
PKR in Billions
25.0
20.0
15.0
10.0
5.0
2012 2013 2014 2015 2016
period of last year (see Exhibit 2.28). During 18.6% in 2016 as shown in Exhibit 2.30. The
the period under consideration, income from decline is supported by a reduction in personnel
branchless banking stood at PKR 4.97 billion as and administrative expense. The industry’s shift
compared to PKR 3.9 billion in 2015 on the back towards larger loan sizes, in turn, catering to the
of a substantial increase in MMFB’s income. financing requirements of microenterprises, has
led to this downward trend. In future years, this
The expense to asset ratio of the industry has trend is expected to continue since market players
been declining for the last three years. During the are aggressively focusing on microenterprise
period under review, the ratio fell to 18.9% from lending.
Exhibit 2.29: Expense Ratio Trends
Adjusted total expense / total assets Adjusted loan loss provision expense/ total assets
Adjusted operating expense/ total assets Adjusted financial expense/ total assets
25.0%
20.0%
15.0%
10.0%
5.0%
Section 2
2012 2013 2014 2015 2016

Exhibit 2.30: Operating Expense to GLP Trend
Admin expense/ Gross loan portfolio
Operating expense / Gross loan portfolio Personnel expense/ Gross loan portfolio
25.0%
20.0%
15.0%
10.0%
5.0%
2012 2013 2014 2015 2016
The unadjusted operating expense of Pakistan is Pakistan has yet to achieve economies of scale in
close to the average of global players (see Exhibit terms of loan size; though year-on-year expense
2.31). However, in comparison to regional players has reduced which shows that the industry has
operating expense is quite high. This shows that started moving in this direction.
Exhibit 2.31: Regional Comparison of Operating Expense/Assets
Operating Expense / Assets

14.00%
12.00%
10.00%
8.00%
6.00%
4.00%
2.00%
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Section 2

Productivity
The personnel allocation ratio for the industry substantial dip and stood at 276. Depositors per
saw a substantial increase in 2016. The ratio staff which showed a hefty increase recorded at
improved from 39.2% in 2015 to 52.5% in the 542. The decline in loans per loan officer points
current year (Exhibit 2.32). This surge is primarily to the fact that individual lending is on the rise.
on the back of significant improvement in ratios Meanwhile, the increase in depositors per staff
of KBL, MMFB, UBank, and NRSP, which depicts is a factor of the significant increase in m-Wallet
that the industry is gearing up for further growth. accounts.
The ratio varies among the peer group, with
Exhibit 2.32: Personnel Allocation Ratio Trend
Personnel allocation ratio

60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
2012 2013 2014 2015 2016
RSPs leading the industry with a ratio of 77.2%, Comparison with regional players shows that
followed by MFIs having 52.5%, while MFBs Pakistan’s depositors per staff is the highest
having the lowest share recorded at 44.0%. globally (see Exhibit 2.34), which is mainly a
factor of significant surge in branchless banking
During the period under review, productivity operations. At the same time, loans per staff and
indicators followed a mixed trend as shown in loans per loan officer is below the average of
Exhibit 2.33. Loans per staff remained stagnant global players.
at 144, while loans per loan officers witnessed a
Exhibit 2.33: Productivity of MFPs
Loans per staff

Loans per Loan Officer Depositors per staff

600
500
400
300
200
100
Section 2
2012 2013 2014 2015 2016

Exhibit 2.34: Regional Comparison of Productivity
Depositors per Staff Loans per Loan Officers Loans per Staff
600
500
400
300
200
100
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rib ica
c
h
a
k
rth Ea
Ce E
Pa
ut
th t A
Ca r
e me
So
d ern
No dle
s
Ea
Th A
an ast
id
tin
M
E
La
Risk
Credit Risk 30 days reduced to 0.8% from 1.3% in 2015. Over
the recent years, the industry’s PAR > 30 days has
remained below 2%, which is well under the 5%
During 2016, PAR > 30 days slightly declined to
cutoff point. This reflects positively on the quality
1.2% from 1.5% in 2015 (Exhibit 2.35). Meanwhile,
of the industry’s portfolio. Despite the lower PAR
write-offs also remained low and reduced to 1.0%
value, the industry’s risk coverage ratio remained
from 1.2% a year earlier. This reduction in PAR is
high and stood at 179.8%.
supported by the MFB peer group whose PAR >
Exhibit 2.35: PAR > 30 days & Write-off Trend
Cut off Write Off Portfolio at Risk >30 days

7.0%
6.0%
5.0%
2.3%
4.0%
1.5%
3.0%
2.3% 1.2%
2.0% 3.7% 1.0%
2.5%
1.0%
1.5% 1.2%
1.1%
2012 2013 2014 2015 2016

Section 2

Conclusion
The year 2016 was significant for the industry. to GLP ratio witnessed a deterioration primarily
The sector witnessed double-digit growth in due to the industry’s shift in focus to larger loan
all the key indicators including credit, deposits, sizes thereby catering to the requirements of
and insurance. Growth in savings remained microenterprises.
phenomenal during the year on the back of a
surge in mobile banking operations. Meanwhile, The industry’s asset base remained strong
credit outreach crossed PKR 100 billion which is and stood at over PKR 200 billion with MFBs
an important milestone for the industry. Among comprising 75% of the total assets. MFBs
the peer groups, MFBs continued to dominate continued to rely on deposits as their main source
the sector in terms of GLP with a market share of funding, whereas, MFIs and RSPs had to rely
of 68%. Overall, credit operations remained on debt as their primary source of financing. The
women-focused with rural areas as the primary sector’s portfolio quality remained strong with
target market and the agriculture and livestock PAR > 30 days declining to 1.2% from 1.5% in
sectors captured the majority share of available 2015, while risk coverage remained high.
financing.
The sector’s performance in the current year
The year also remained profitable with positioned it well for further growth. If this trend
improvement in sustainability. MFBs continued continues the industry could play a crucial role in
to lead the sector’s profitability in turn providing financial inclusion.
room for further growth. The operating expense
Section 2


Section 2


Section 3
SOCIAL
PERFORMANCE
REVIEW
Social Performance Review
Section 3

Social Performance
Review
Microfinance in Pakistan is essentially a double- and social bottom-lines. In all cases, it has become
bottom line industry – financial sustainability important for MFPs to track their progress
is not the end in itself, rather it is the means towards achieving their respective social goals,
to achieving social goals. These goals differ using social performance indicators in the same
across the sector; some MFPs may have a way that financial data is used to manage the
vision of poverty alleviation, others of women financial bottom-line.
empowerment, while still others may be working
for increasing access to formal financial services. The following section will outline key social
To better ascertain an institution’s intended performance indicators as monitored across the
goals, microfinance stakeholders around the Pakistan microfinance landscape. We will attempt
world now believe that unless an MFP’s systems, to analyze industry trends across various SP
activities and outputs are deliberately geared indicators, including social goals, poverty target,
towards its social vision, it is difficult to make governance and HR, diversity in financial and
the impact that the institution is aiming for. For non-financial service provision, client protection,
an MFP, therefore, performance management pricing norms and environment.
means focusing simultaneously on its financial
Analysis of the Sector’s SP

Indicators
The Microfinance Information eXchange (MIX), categories that are applicable to their respective
in collaboration with the Social Performance institution. For example, within the ‘target
Task Force (SPTF), has developed an annual social population sub-section, an MFP may report to
performance reporting framework for MFPs. This targeting all or none of the ‘women’, ‘clients living
framework has recently been formatted to better in the urban area’, ‘youth and adolescents’ and
suit the reporting needs of the industry, and ‘clients living in the rural areas’ categories if those
includes a new comprehensive set of indicators are applicable to their practices.
on institutions’ social goals, target segments
and other services. As self-reported data, the At the time of this publication, 35 PMN member
Section 3
MIX framework allows MFPs to select multiple MFPs20 reported on the new MIX Social
These include KBL, FINCA, TMBL, UBANK, NRSP Bank, FMFB, MMFB, POMFB, APMBL, JWS, DSP, MICROOPTIONS, SAATH, SRDO, SWWS, VDO, ASA,
20
SVDP, BRAC, OLP, OCT, AKHUWAT, CEIP, MOJAZ, AGAHE, BEDF, SSF, RCDP, KF, FFO, SRSO, NRSP, GBTI, PRSP and TMF.

Table 1: Number of Reporting MFPs for Social Performance
Reporting to MIX SP Framework 2016 Total PMN Membership

MFB 09 10
MFI 21 36
RSP 05 06
Total 35 52
Performance framework, including 9 MFBs (out is relatively greater, urban clients are not far
of 10 MFB members), 21 MFIs (out of 36 MFI behind, particularly among MFPs providing
members) and 5 RSPs (out of 6 RSP members). individual loans.
Target Market Development Goals

Defining a target population that an MFP aims All reporting MFPs were found to have some
to reach helps to focus their efforts and optimize social development goals built into their mission,
the limited resources available. Providing which rarely change on an annual basis. An
services that are relevant, client oriented and analysis of the statements yield commonality
effective in serving an organization’s mission among the peer groups, for example, the
requires a thorough identification of the target microfinance banks are more focused on financial
market. MFP target markets by peer group are inclusion, with their mission being expanding
Exhibit 3.2.1: MFPs’ Target Markets
RSPs MFIs MFBs

35
30 4 5
4
25
No. of Responses
20
19
19 17
15
10
5 9 9
8
3
Women Clients living in Clients living in Adolescents and

rural areas urban areas youth
highlighted in Exhibit 3.2.1. All 9 reporting MFBs, access to quality financial service to low income
cited multiple targets, including women, clients population, employment generation and growth
living in rural areas and clients living in urban areas, of existing businesses and as a result improve
while none of the MFBs is currently catering to their quality of life, economically and socially.
the youth and adolescent segment of society. Of Non-bank MFIs have holistic developmental
the 21 reporting MFIs, the majority (19) target goals, thus, poverty alleviation, empowerment
women and clients in rural areas. Clients in urban of the ‘marginalized’ and expanding economic
areas make the second largest target group with opportunities emerged as more common
17 MFIs catering to them, while 3 MFIs and 1 RSP amongst the non-bank MFPs. The majority of
also reported targeting the youth. MFPs now are also making concentrated efforts
for achieving gender equality, contributing
Section 3
Overall, clients are targeted based on gender towards women empowerment.

and location. While the focus on rural areas

Exhibit 3.2.2: Development Goals
RSPs MFIs MFBs

40
35
5
30 5 3
25 2
3
20
18 20 19
15 18 3
17
10 8
2 2
5 9 9 9 2
6 4 3
5 5 2
2 2 1
n
n
g
t
en
tie
se tin
io
io
tio
vic s
rp of
er d
er es
es
es
t
ct
at
em
w an
ni
en
ta
es xis
te nt
l s cc
du
er
ris
rtu
ni
m
en e
po ty
ov
sin f e
s
cia d a
en
p m
re
sa
po
i
pr
l
bu o
p
tg
em ua
rty
an se
d
op
t-u lo
im
h
an
en
's eq
t
fin ea
ar e
ve
ow
h
st Dev
th
m
to Incr
er
ut
Po
en r
Gr
m de
al
oy
at
Yo
He
W
pl
wo Ge
Em
The most common objectives were found out to in terms of income is low income clients, closely
be increased access to financial services, poverty followed by poor clients. Only 5 reporting MFIs
reduction and growth of existing businesses, with and 2 RSPs reported targeting very poor clients.
32, 34 and 31 reporting MFPs respectively MFIs and RSPs are largely targeting both poor
citing these as their objectives. The other most and low income clients, while the MFBs tend to
commonly cited development goals across all cater more to low income clients.
peer groups are employment generation, and
gender equality and women’s empowerment.
Support to start-up businesses, which is generally Poverty Measurement
considered a risky initiative for microfinance, has
also seen growing interest among some MFPs Tools
(Exhibit 3.2.2).
Many MFPs in Pakistan collect economic, social,
and/or other types of wellbeing indicators from
Poverty Targeting clients for the express purpose of determining
clients’ poverty levels and tracking their progress.
In terms of poverty levels of targeted clients, Assessing the poverty level of clients serves
almost all of the reporting institutions target multiple purposes like guide client targeting and
more than one segment of the poor. Overall, selection for MFPs, establish baselines of client
the most common target market for the sector poverty for subsequent impact evaluations,
Exhibit 3.2.3: Poverty Targets
RSPs MFIs MFBs

35
30
4
25
No. of MFP responses
20
19
15
17
10
5 2
8
Section 3
5 5
Very poor clients Poor clients Low income clients

Exhibit 3.2.4: Poverty Assessment Tools used by MFPs
RSPs MFIs MFBs

12
1
10
2
1
8
6
1
6
5
6
4 4
4
2 4
3
2 2 2 2
1 1
lth
e
rty
ld
d
PI t
ex
ex
(P u
ov
ol
re ho
x so
d
g ea
x ve
e eh
ab
in
in
)
itu se
de es
in w
de po
m us
e
nd ou
In ogr
nk ry
in
rit
th
co o
in xy
pe a h
in a h
us
ra ato
cu
rty Pr
of
o
Ho
pr
se
ex it
cip
i
ne
ve en
ap
ap
n
od
rti
No
Ow
Po e
rc
rc
of ram
Fo
Pa
Pe
Pe
G
appraisal of financial services to better suit goals at the institutional level.

needs of clients and overall measurement of the
programme’s effectiveness. Sensitivity to social performance in governance
structures entails Board members receiving
While 20 reporting MFIs cited using one or more orientation on the social mission of the MFP,
poverty scoring methods, only 5 MFBs reported the presence of a SP champion or committee at
doing so. Some MFPs employed only one method the Board level, and Board level experience in
to measure poverty levels, others used multiple SPM. During orientation, Board members are
assessment tools, as shown in Exhibit 3.2.4. provided with an explanation of (or training
MFPs reported use of their own proxy poverty on) the institution’s social mission and goals.
index, as well as the Grameen Progress out of Social performance champions are members
Poverty Index (PPI) and per capita household of the Board of Directors that are assigned
income and expenditure. While the MIX SP to oversee integration of social performance
Framework does not cover the poverty scorecard management practices within an institution
prescribed by the Pakistan Poverty Alleviation while SP committees are formal entities within
Fund (PPAF) designed by The World Bank, the Board that meet on a regular basis to discuss
this is predominantly used by MFIs as partner topics related to institutional SP. SP-related work
organizations of PPAF. experience should be understood broadly as
referring to any experience or training related to
managing social performance at MFPs.
Governance and Human
Exhibit 3.2.5 shows 7 out of 9 reporting MFBs
Resource responded positively to Board members
receiving SP orientation on a routine basis and
An MFP cannot be considered socially one or more Board members having experience
responsible unless they have robust processes in SP management, while 3 of the 9 MFBs have a
in place ensuring both an involved and informed SP champion or committee at the Board level.
governance body and the well-being of its
employees. Keeping that in mind, the Universal Majority of reporting MFIs show strong
Standards of Social Performance Management performance on Board orientation of social
(USSPM) highlights standards relating to mission and experience in SPM (17 out of 21 and
Governance and Human Resource (HR) 19 out of 21 reporting MFIs respectively).
management and how to design policies so as to
further the social goals of MFPs. The rationale A thorough assessment of staff incentives at
behind inculcating social performance indicators MFPs is crucial to avoid encouraging any negative
Section 3
in governance and HR structures is to allow MFPs behavior that may in turn harm social goals of
to gauge commitment to their social development the organization. Additionally, analysis of staff

Exhibit 3.2.5: Social Performance Management at the Board
RSPs MFIs MFBs
Board 5
experience 17
in SPM 7
SPM champion/ 2
committee at 14
Board 3
Board 4
orientation of 19
social mission 7
5 10 15 20
Exhibit 3.2.6: Staff Incentives related to SPM
35
30
25
Number of MFPs
20
15
10
Number of clients Quality of interaction Quality of social Portfolio quality

with clients based on data collected
client feedback
mechanism
working conditions is important to ensure that clients, returning clients, etc.), or both. Exhibit
they are not being burdened beyond capacity. 3.2.7 shows that all MFPs use a combination of
Some of the indicators gauged here are number of these measures for calculating staff incentives,
clients entertained by the field staff, the quality of with the most common being total number of
interaction with clients based on client feedback clients, followed by number of new clients.
mechanisms, quality of social data collected and/
or the portfolio quality maintained by field staff. The USSPM necessitates an MFP to treat its
Exhibit 3.2.6 shows that across the Pakistan employees responsibly. Building upon that
microfinance industry, portfolio quality is the Human Resource policies related to SP include
most cited factor for staff incentives, both for the presence of social protection (medical
MFBs and non-Bank MFIs. This means that MFPs insurance and/or pension contribution), a safety
have incentives and/or bonus systems designed policy (protecting staff members from external
to reward staff based (in whole or in part) on harm while in the field), an anti-harassment
whether staff members consistently collect loan policy, a non-discrimination policy (explicit policy
payments on time. The second most prevalent against discrimination based on sex or ethnicity
factor is number of clients, which means MFPs in matters of hiring, firing, and payment of staff
have incentives and/or bonus systems designed members) and a grievance resolution policy (a
to reward staff based (in whole or in part) on the formal channel or channels for communicating
number of clients in field offices’ portfolios. These and redressing problems staff may have on
Section 3
can be based on total number of clients, number the job). Exhibit 3.2.8 shows that all reporting
of clients meeting specific criteria (e.g. new MFPs have strong reporting on having a social

Exhibit 3.2.7: Method for incentivizing number of clients
RSPs MFIs MFBs

25
20
No. of Reporting MFPs
4 3
15
2
7
10
10
9
5 9
6
4
Incentive on Incentive on Incentive on

'total number of clients' number of new clients' 'client retention'
Exhibit 3.2.8: HR policies related to SP
RSPs MFIs MFBs

35
30 4
4 4
4
No. of Responding MFPs
25
20
18 2 20 14
18
15
10 12
5 9 8 8 8
5
l
n
y
nt
ut r ica
io
tio
lic
y at
lic sm
rib /o d
po
lu
nt nd me
lic in
lic so
po ras
ty
po crim
po e re
co a (
y
fe
n)
n ce on
ha
y
Sa
io
nc
io an ti
ti-
di
ns ur tec
An
n-
va
pe ins pro
No
ie
Gr
l
cia
So
protection, an anti-harassment policy in place, a along with credit. This sub-section summarizes
grievance resolution policy for staff, and a non- the range of financial products offered by MFPs
discrimination policy. However, there appears in Pakistan, based on the assumption that
a gap in policies pertaining to safety of the staff microfinance clients are a heterogeneous group
members while out in the field with only 15 out of with varying financial needs.
32 reporting MFPs having any safety mechanism
in place.
Credit
Products and Services: All reporting organizations offer microcredit
services, for income generating purposes as
Financial well as for non-income generating purposes.
According to Exhibit 3.2.9.1a, while all reporting
Microfinance refers to a range of financial services MFPs offer income generating loans, a few also
Section 3
for the low income and poor households including offer non-income generating or consumption
savings, insurance and money transfer services based loans.

Exhibit 3.2.9.1a: Type of Credit Products offered by MFPs
Non-income
generating loans
5% Income
generating loans
23%
In addition, increasing competition and maturing products include SME Loans and Express Loans. This
markets require MFPs to go beyond ‘cookie suggests that product differentiation in credit
cutter’ approaches and differentiate their is under way and MFPs are beginning to offer
products to serve different market segments and products beyond the typical microenterprise
customer demands. Exhibit 3.2.9.1b shows the loan, with some MFPs moving up the market
range of activities for which income-generating to target MSMEs as well as offer timely Express
loans are available in Pakistan. Loans.21
The most common categories were found out to Deposits

be Loans for Microenterprises, and Agricultural and
Livestock Microcredit, with all 35 reporting MFPs Considering the legislative structure around
offering the former and 30 out of 35 reporting the product, only 37 percent of the reporting
MFPs offering the latter. Other activities for MFPs offer savings products (13 out of 35). All
which a growing number of MFPs offer credit MFBs, under SBP regulations, can intermediate
Exhibit 3.2.9.1b: Credit Offerings
RSPs MFIs MFBs

40
35
5
30
5
25
20 21
17
15
10
9
5 9 8
4
Microenterprise SME loans Agriculture/livestock Express loans

loans loans
Section 3
21
While express loans are generally considered short-term loans intended to help clients take advantage of unexpected business opportunities, there is a
need to analyze the increasingly popularity of express loans, as well as their use in financing the MSME sector through microfinance.

Exhibit 3.2.9.2: Savings Products Offered
Does not offer

savings accounts
63% Savings
accounts
37%
client deposits, and thus, all reporting MFBs and voluntary insurance offered to clients as a
take deposits. Non-bank MFPs can only mobilize stand-alone product. A majority of reporting
deposits. All MFBs offer both demand deposit MFPs offer insurance products to meet clients’
accounts and time deposit accounts, based on the needs and to protect them against risk of losses.
needs of their clients, though further diversified Out of the reporting MFPs offering compulsory
savings products and access to these savings insurance products, the majority offer credit life
products would help boost uptake among small insurance only, with a few MFPs offering other
savers. types of insurance such as life/accident and
agriculture (see Exhibit 3.2.9.3a).
Insurance
Over the past few years, some MFIs have
Offering micro insurance serves to protect introduced voluntary insurance products
vulnerable clients against risk of losses. A through partnerships with insurance providers,
majority of the reporting MFPs offer insurance offering life/accident, agriculture/livestock and
products to meet clients’ needs. The insurance health insurance products. The most common
indicator looks both at compulsory insurance, category remains health insurance with 9
which is typically clubbed with credit products, reporting MFPs offering various health insurance
Exhibit 3.2.9.3a: Compulsory and Voluntary Insurance Provision by Peer Groups
RSPs MFIs MFBs

30
25
2
20
No. of Responses
15 14
10
2
2
5 4
8
5
3
Section 3
Credit life insurance Life/accident Agriculture

insurance insurance

Exhibit 3.2.9.3b: Types of Voluntary Insurance by Peer Groups
RSPs MFIs MFBs

10
9
1
8
No. of responding MFPs
7
6 4
5
4
1
3 4
5
2 2 4
1
1 1
Credit Life Insurance Life/accident Agriculture insurance Health insurance

insurance
packages (see Exhibit 3.2.9.3b). Selected partner MFBs. However, some MFIs are now offering
organizations of PPAF have piloted agriculture/ clients the facility to repay loan installments
crop and livestock insurance products for their through branchless banking agents. MFBs tend
clients with explicit monitoring indices to insure to dominate other financial services provided
clients’ losses of crops or livestock in the event of by MFPs, offering one or more other financial
external risks. services amongst the following categories:
debit/credit card, mobile banking services, savings
Generally, there is need to expand insurance facilitation, remittances services/money transfer
services to cover the wider set of risks that services, payment services and scholarship/
vulnerable clients face. Additionally, there is also educational grants (as shown in Exhibit 3.2.10).
a need to create greater awareness around the
benefits of existing insurance products that are
available for clients. Products and Services:
Other Financial Services Non-Financial
MFPs offer non-financial services in addition to
The provision of financial services other than
financial products and services to strengthen
traditional credit, savings and insurance remains
livelihoods of vulnerable clients; these are
marginally low, with primary suppliers being
frequently supplied in partnership with
Exhibit 3.2.10: Provision of other financial services
RSPs MFIs MFBs

12
1
10
No. of MFP Responses
8
5
6
1
4
7 7
5 5 5
2
n
es y
ice ss
s
d
ice
s t io
vic ne
ar
rv le
c
er o
ice lita
se nch
v
s
r s /m
it
er
d
Section 3
rv ci
ts
re
in bra
fe ce
se s fa
en
t/c
ns tan
nk e/
m
g
bi
g
ba obil
vin
tra mit
De
y
Pa
Sa
M
Re

Exhibit 3.2.11: Non-Financial Services
RSPs MFIs MFBs

25
20
4
No. of MFP Responses
4
15 4
10 12
3
14 13
5
7
1
Enterprise services Womens Education services Health services

empowerment
specialized public or private agencies and vary balance method of calculation and disclose
according to the capacity and vision of the interest rates, most of the MFPs in Pakistan are
institution, but the purpose is to develop client still using the flat methodology, primarily due to
skills and/or provide basic services that they are the simplicity in calculation and marketing. As per
unable to attain due to financial limitations. These State Bank of Pakistan’s regulations, however,
can take the form of provision of basic services MFBs are bound to disclose interest cost using
like health and education or business and/or the declining balance method to clients – which
technical skills training. For this analysis, such means interest is communicated on the amount
services are grouped into four main categories: of the loan principal which the borrower has not
enterprise, education, health and women’s yet repaid. There is some resistance by MFPs
empowerment. generally in switching from flat to declining
balance interest rate disclosures, fearing loss
Unlike the MFBs which have a lead in provision of clientele owing to a lack of level playing field
of other financial services, in this domain, MFIs in the absence of regulations mandating all peer
and RSPs are actively providing all types of non- groups to follow a similar methodology.
financial services in the market, especially those
committed to a particular social mission (see Many MFPs in Pakistan continue to use the flat
Exhibit 3.2.11). While MFIs and RSPs are offering methodology to communicate prices to clients
at least one (in some cases multiple) non-financial – where interest rate is communicated on the
service, only one MFB is offering education basis of the stated initial principal amount of the
services to its clients. Education services like loan irrespective of the payment plan. Around
financial literacy education, child and youth 54 percent of reporting MFPs are using the flat
education and basic health/nutrition education interest rate method while 46 percent use the
are the most popular non-financial service declining balance method (as shown in Exhibit
being offered by MFPs. Followed by enterprise 3.2.12).
services, such as enterprise skills development
and business development services and
women’s empowerment including women’s rights Client Protection
education/gender issues training and leadership

training. A handful of MFPs also offer health Client Protection (CP) principles refer to the
services like basic medical and special medical minimum ‘do no harm’ standards that clients
services for women and children. should expect to receive when doing business
with a microfinance institution. These principles
help protect clients and help institutions practice
Transparency of Cost good ethics and smart business – which is good
for the industry overall.
Globally the case of adopting the declining
balance method to calculate and display There are seven all-encompassing principles
Section 3
interest rates to clients is widely accepted as of client protection developed by The SMART
the ‘transparent’ way. While Pakistani MFPs Campaign, an international consortium of
accept the importance of employing the declining microfinance stakeholders, which coordinates

Exhibit 3.2.12a: How Service Cost is communicated
Flat interest
54%
Declining balance
46%
with the work of MFTransparency in the area of the presence of various institutional-level
pricing transparency.22 The seven CP principles client protection indicators, including policies
include: supporting good repayment capacity analysis,
internal audit compliance, full pricing terms
• Appropriate product design and delivery disclosure, APR disclosure, CP code of conduct,
• Prevention of over-indebtedness sanctions for code of conduct violations, clear
• Transparency reporting systems and data privacy clauses.
• Responsible pricing
• Fair and respectful treatment of clients Overall, the sector shows positive compliance
• Privacy of client data to CP principles, particularly with all reporting
• Mechanisms for complaint resolution MFPs having in place strong repayment capacity
analysis, internal audit systems, full pricing
For self-reporting on social performance terms disclosure, and defined code of conduct.
indicators, MFPs provided information regarding However, as indicated in the sub-section above,
Exhibit 3.2.12b: Methods of Stating Service Cost by Peer Group
RSPs MFIs MFBs

20
18 2
16 3
14
No. of MFPs
12
10 7 14
8
6
4
6
2 3
Declining balance Flat interest

Section 3
22
See the Smart Campaign website for more details on the seven CP principles and how these are promoted and monitored through Smart Assessment
tools: http://www.smartcampaign.org/

Exhibit 3.2.13: Client Protection Indicators
40
35
30
No. of Reporting MFPs
25
20
15
10
5
is
ed
au a
ne of
an od
d )
nc or
se R
ys
nc
cl de
cl d
fin
lo (AP
ra e f
tio e
ity go
se
s
s
to an
al
ia
d
nc od
he
nt
cy clu
de
t b l ac
pl
ac rt
ie
d s
sa f c
isc es
ie m
ap po
iva in
se rm
ly
sa p
ct s o
lic co
s d at
t c up
pr ts
ar
nt in
lo te
ta ac
du on
le
y
en es s
uc ge
s
cl em
sc ,
di nts
rif
tc
r
on ti
da t
od ta
n
ith e
t
uc
ym ici
ly e
m ys
w tv
Co
pr n
l
t
o
o
ul lm
ie
pa ol
nd
Vi
ro s
p
di
an rc
l
re P
s f ng
s f ta
au
co
lo pe
c
on ns
nt ti
al
of
ai or
of ual
iti s, i
rn
pl ep
de
n
nd ce
te
m rr
An
Co
In
co ri
co ea
P
Cl
not all pricing is disclosed in Annual Percentage piloting, including products related to renewable
Rate (APR) format, particularly by the non-Bank energy, for example solar panels, biogas digesters
MFIs. Due to the regulatory framework under and so on. Some MFPs are also engaged in
which MFBs fall, all reporting Banks show full financing environmentally friendly businesses,
compliance to the basic CP indicators. Now with for example organic farming, recycling and/or
the MFIs coming under the regulatory framework waste management (see Exhibit 3.2.14b).
of SECP, any gaps in their compliance are likely to
be plugged in near future. The strong performance of the MFI peer group
in this area reflects the efforts carried out by
the PPAF, to ensure compliance of all its partner
Environmental Policies organizations to the Environment and Social
Management (ESM) Framework. As PPAF-funded
In recent years, the microfinance sector has seen institutions, these MFIs are trained on the ESM
the momentum being built for achieving the Framework and required to provide quarterly
triple bottom-line i.e. inculcating environmental progress update on ESM compliance. External
management in mainstream operations in environmental and/or social performance audits
addition to financial and social management. are commissioned by PPAF to monitor and
To gauge the current state of MFPs in Pakistan physically verify PO compliance of the ESMF.
in the green domain, these indicators provide Finally, MFIs are encouraged to incorporate ESM
information about the environmental policies/ objectives into the Terms of Partnership that
products that they may have in place. These they sign with their respective community based
environmental policies refer to MFPs promoting institutions.
awareness on environmental impacts, having
tools to evaluate environmental risks of clients’ While reporting is relatively new in this
activities and including clauses in loan contracts respect, the industry is taking positive steps
to ensure mitigation of environmental risks in moving towards supporting/financing more
through the clients’ businesses (see Exhibit environmentally sustainable businesses. There is
3.2.14a). still a need for more comprehensive work in this
area, specifically a natural disaster risk mitigation
In addition to this, a few MFPs reported on strategy not just to protect MFPs but also clients
various types of environmentally friendly and their businesses.
products and/or practices that they are currently
Section 3

Exhibit 3.2.14a: Environmental Policies in Place
RSPs MFIs MFBs

30
25
No. of Responding MFPs
5
20 2
15
2
15
10 17 1
9
8
5
4 4
2 2
es lly
s l
es ta
pa n
isk ta
m o
tic ta
iti en
s
l r en
li g
ct
ac en
tiv m
ta isin
ta m
on en cts
pr m
ac ron
en on
en ra
or ron
vir e ra
m vir
s' vi
en rov nt
m ss
nt en
d/ vi
te p co
on ne
an en
cl ate
vir re
ga im n
ts to
iti to loa
en wa
of lu
uc ed
ie
ks va
A
/m ts in
od k
ris to e
pr lin
es ien es
tic cl us
y s
s
dl an
ol
ac g la
To
en lo
pr rin C
fri ific
ec
Sp
i
qu
re
Exhibit 3.2.14b: Environmentally friendly Products/Services Offered
RSPs MFIs MFBs

12
10
2 2
6
6
4 8
2 2
2
1
Products related to Products related to energy Products related to

renewable energy efficiency environmentally friendly
(e.g. solar panels, biogas (e.g. insulation, improved practices (e.g. organic
digesters etc) cooking stove etc) farming,
recycling, waste
management etc)
Section 3


Section 3


Section 4
CHALLENGES
AND
OPPORTUNITIES
Section 4

Challenges and
Opportunities
As the microfinance industry in Pakistan continues to grow and expand its footprint across the country,
it faces several new challenges and opportunities. Some of these opportunities and challenges are
discussed as follow.
Digital Financial Services

Digital Financial Services provide an opportunity
for the microfinance industry to reach out to
Digital Credit
the unbanked in a convenient and affordable
According to CGAP, digital credit as compared
manner. It allows MFPs to reduce their costs by
to conventional microfinance loans is instant,
ending reliance on brick and mortar structures,
automated and remote. Digital credit requires
increasing outreach and delivering customer
limited human contact as the loan provider
centric products.
can assess the credit risk without extensive in-
person interviews and leverages the technology
With the total cellular customers touching
infrastructure and any available data from
136 million in the country and cellular mobile
multiple data sources such as social profiles,
tele-density reaching 70 percent by the end of
transactional data, credit information, and mobile
201623, technology can be leveraged to tap the
data including voice, SMS and internet. It can
unbanked. With three out of four MNOs owning
allow microfinance providers to expand outreach
MFBs, digital financial services can be the engine
and reduce costs at the same time.
of growth for the microfinance industry and
financial inclusion. This fact has not been lost

Digital loans follow a ramp-up process starting
on policy makers and DFS are a critical part of
with smaller denominations and gradually
reaching the financial inclusion goals outlined in
increasing the amount with more data based on
the NFIS.
usage and repayment behavior. Loans extended
under the facility are mostly of small amounts
Some of the key components of DFS which
and shorter durations as they are used to meet
can assist in reaching out to the unbanked are
the short-term liquidity needs of borrowers.
highlighted below.
Due to high risks associated with this kind of
model, exposure is kept minimal in terms of
Section 4
23
www.pta.gov.pk

value and duration of such loans. Digital credit scalability and expanding to new markets remains
can be either considered a standalone product, a due to high operational costs and sometimes
bundled offer with products like micro insurance inefficient processes.
or a customer acquisition tool. Loans can be
extended directly to borrowers or through third Due to different operating models, MFPs mix
parties like distributers, merchants or value chain and match partnerships with banks and mobile
aggregators. money providers. These partnerships are formed
to meet specific business needs pertaining to
The credit decision can be made in a few seconds loan disbursement, repayments, insurance and
and at most within a day as part of digital credit. other value-added services. At present, MFPs
The decision is automated and relies on a series of rely mostly on partner banks for managing their
decision trees and algorithms. Human interaction loan disbursements either via cheques or cash on
is kept at a bare minimum as disbursements and counter (COC); transaction costs vary according
repayments are done through mobile money to the negotiated deals. Provision for these
accounts. Digital credit requires all collection services requires MFPs to directly deal with
processes to be front loaded with proactive banks and mobile money providers, which comes
engagement of customer prior to due date, and it with its own set of operational requirements and
is important to understand that smaller size and overheads. Subsequently, MFPs have limited
large volume of these loans makes conventional access to agent networks, as it is not feasible to
collection methods irrelevant. Data available with integrate with every service provider due to time
Credit Information Bureaus can play a significant and cost constraints.
role in strengthening the credit decision.
Keeping this in view, PMN has undertaken a
Digital Credit can have significant financial project to create a ‘Digital Services Platform’
inclusion implications as many digital credit (DSP) that will enable MFPs to link with the
models are not dependent on prior financial larger financial services industry by digitalizing
account ownership or credit histories which is their work/process flows as well as digitizing
why it has witnessed a growing trend especially in the datasets via a shared hosting platform.
low income countries with significant unbanked As a result, clients will be enabled to perform
populations especially in Sub Saharan Africa. transactions (repayments, disbursements,
payments, etc.) either through mobile accounts
In a country, like Pakistan, where access to or plastic cards.
finance is a major challenge and only a fraction The Platform comprises of four main
of population borrows from formal financial components: m-Wallets, payment services, agent
channels, digital credit can be useful tool to reach aggregation, and digital services. DSP shall act
out to the unbanked. With an excellent existing as a switch for integration with mobile money
digital infrastructure in place in the form of high players (m-Wallets), POS machine networks,
tele density, credit information bureaus, national ATM switch (in this case 1-Link), as well as with
ID system and several branchless banking agent networks. DSP, as a platform, will also
services working in the country, the market is provide value-added services to MFPs in the form
ripe for a digital credit takeoff. Mobile network of digital services (data analytics, customized
operators (MNOs) owned MFBs and growing MIS solutions, General Ledger, et cetera). PMN
number of upcoming FinTechs can play a crucial has laid out a strategic plan for the realization
role in this field. Moreover, it would also provide of these objectives that will be done through
MFPs an opportunity to reduce their operating partnering with relevant FinTech firms and/or
costs by reducing their customer acquisition payment gateways.

costs. There exists room for partnerships and
alliances between MNOs, FinTechs and MFPs to The use of the DSP can help MFPs to not
promote and extend digital credits. only achieve their growth objectives through
increased outreach and agility but also to
reduce high administrative expenses. Previously,
Digital Support Platform acquiring technology platforms or digital tools
was quite expensive and out of reach for MFPs,
While the DFS providers were introducing however, now these services have become more
products such as OTC, m-Wallets, payments open and inclusive through provision of shared
through mobile phones, the microfinance services.
Section 4
institutions have relied heavily on conventional

operating models with limited investment on Synergies between microfinance and DFS
building technology platforms. Thus, achieving

remain critical for a digital financial eco-system. be created and maintained in an exchange of
DFS players can augment their uptake if mobile value without a central intermediary. Due to
wallet usage is pushed by MFIs to millions of the structure of the technology, all users of the
active borrowers. Both parties can collaborate blockchain become participants (nodes) in the
to introduce savings, insurance and other transaction by maintaining a ledger that records
value-added products to customers through and confirms the transaction every time the
collaborative models. Essentially, the business blockchain progresses. The more nodes there are
viability hinges on DFS providers offering in the network confirming the transaction, the
low cost of transactions and MFPs providing more secure the system becomes in maintaining
recurring high volumes of transactions. its integrity.
One of the biggest implications for the financial

Blockchain industry due to adoption of blockchain
technology will be the cutting out of the
Blockchain, the technology underlying bitcoins, middleman. Since financial institutions are
has unleashed a new wave of innovation and viewed as financial intermediaries, however,
disruption especially in the financial industry. with blockchain the intermediary role can
Using its decentralized approach, it allows for be eliminated by directly linking borrowers
greater efficiencies and executes real time and savers. The payment business provides
transactions in a secure and discreet manner. an interesting example of disruption due to
blockchain. At present, payments being sent
Blockchain refers to a type of data structure that are routed through an electronic payment
enables identifying and tracking transactions network. However, two machines connected to
digitally and sharing this information across a a blockchain can process the payment directly
distributed network of computers, creating in a without the need of middleware.
sense a distributed trust network24. It is a protocol
that allows for peer to peer exchange of value. Blockchains have important implications for
Data can be continually added in the blockchain, financial inclusion. They are being used (can
however, once entered it cannot be altered. be used) to provide digital identity to clients
Depending upon accessibility, blockchains can and used for remittances services. Access
be categorized as private or public. Private block to databases of “online and retail payments”,
chains have restricted access and require trust as utility companies, MNOs and credit information
compared to public ones which are open to all. bureaus can allow for better assessing the
creditworthiness of clients.
According to a publication by the Planet N
Group on the topic, blockchain allows trust to
Transition Challenges
With the amendments in the NBFC rules and and proper criteria as prescribed by the regulator
regulations in 2015 by SECP, the transition for directors. As per corporate governance
process of MFIs and RSPs into NBMFIs started. best practices independence of the board is
The transition was fraught with challenges. Out compromised due to cross directorship, however,
of the nearly 40 MFIs and RSPs operating in due to small pool of board members available to
the country, nearly 21 have so far been able to NBMFIs they have to resort to this practice. In
obtain licenses to operate as NBMFIs. However, addition, as all the NBMFIs are structured as non-
the key challenge facing most of the entities has profits they cannot remunerate to their board
been corporate governance and the minimum members. In this scenario attracting qualified and
paid up capital requirement in case of smaller competent persons to be directors at NBMFIs is a
organizations. difficult proposition. The best approach can be to
train and develop a pool of directors for NBMFIs
Corporate governance has been a key challenge – a role to be filled by PMN and PMIC. Until then
facing nearly all the organizations because of exemption may be sought from the NBMFIs for
issues like cross directorship and applicability of fit cross directorship.
Section 4
24
www.webopedia.com

Smaller players have also been finding it difficult growing and if given time would be able to meet
to meet the Minimum Capital Requirement the MCR. In this regard, SECP has forwarded the
(MCR) of PKR 50 million set by SECP. While some GOP a proposal to give entities with less than
have been provided a subordinated debt facility 5,000 borrowers and a GLP of PKR 50 million
by PMIC, other are still trying to meet the capital exemption from being regulated.
requirement. Most of these players are young and
The Interest Rate Conundrum

The microfinance industry around the globe and costs unlike commercial banks. Operating costs
in Pakistan continues to be beset by questions are themselves a function of the loan sizes. Since
about the high interest rates being charged from the loan size is smaller for MFPs, their operating
their clients. With a poverty focused agenda costs are higher.
and a clientele belonging to the lower income
segments, the high interest rates being charged In addition, the low interest rates have allowed
by practitioners are thought to add to the debt the sector to move away from subsidized
burden and not in sync with the social agenda funding to commercial funding which is far more
of the industry. Moreover, availability of donor dependable and sustainable. Moreover, MFBs
funding and grants for the industry have further have been able to meet noteworthy success
compounded the issue. in deposit mobilization over the last few years
by offering above market rates to depositors.
In Pakistan with the prevailing low interest rate Because of the low interest rates environment,
environment where the benchmark policy rate MFBs could offer such high rates without any
has touched a 42-year low at 5.75 percent, policy impact on the pricing side. An increasing ROE
makers and regulators are raising concerns since for the players has been essential to sustain the
there has been no corresponding decrease in the double-digit growth witnessed over the last
interest rates being charged by MFPs. It must few years by allowing them to meet the capital
be noted that the loan pricing of MFPs is not adequacy requirements.
dependent upon the funding costs but operating
Responsible Finance & Financial

Literacy
Strengthening Grievance Currently, most of the MFPs in the sector are
making conscious efforts to bring clients to the
Redressal Mechanisms
center of their services. Most of the weak spots

identified are due to the lags in the capacity
among MFPs in Pakistan and lack of formalization of grievance redressal
processes rather than the lack of will.
With tremendous growth in the past several
years, it is widely recognized that microfinance in According to a baseline study conducted by PMN
this increasingly complex and competitive global in collaboration with The Smart Campaign, while
environment needs various interventions; one the majority of the MFPs in the industry have
of the most important ones being strengthening some forms of grievance redressal channels in
grievance redressal mechanisms at the place, their appropriateness for the size and
institutional level as well as provision of a third- scope of respective MFPs remains questionable.
Section 4
party platform at the sector level. The study findings depict that the complaint
avenues offered by the medium and small MFPs
are in line with the standards expected of their

capacity and size, however, much work needs the country, is not only interested in establishing
to be done with the large MFPs to bring much- such a system at the sector level but is also willing
needed sophistication in their GR policies as to do the needed legwork.
well as processes. A comparison between peer
groups revealed that while MFBs have robust At present, there are few countries in the world
multi-channel processes in place, owing to the that have an industry-wide complaint resolution
SBP regulations, the same cannot be said for the system for microfinance clients and experience
NBMFIs, who irrespective of their size are still thereof. Nonetheless, there exists at least one
employing rudimentary mechanisms of complaint very strong example of an existing national
handling. Among large MFPs, 6 still do not have system: the Client Grievance Cell housed at the
a separate designated resource/department for National Credit Regulator (NCR) in South Africa.
complaint resolution, and complaints are often
routed through the operations department, The South African grievance redressal system
highlighting an inherent conflict of interest and caters to the clients of not only the microfinance
inappropriateness of the mechanism in place. sector, but clients of all financial services at the
This calls for regulators and policy makers to national level. The National Credit Regulator
introduce mandatory formal GR protocols for (NCR) was established as the regulator in South
this peer group as well. Africa under the National Credit Act 34 of 2005
and is responsible for the regulation of the South
African credit industry. It is tasked with carrying
Establishing an out education, research, policy development,
registration of industry participants, and
Independent Grievance investigation of complaints. In addition, the NCR
Redressal Platform is tasked with the registration of credit providers,

credit bureaus and debt counselors, and
enforcement of compliance with the Act.25 It is
In addition to well-functioning complaints within the NCR that a client grievance redressal
handling mechanisms at the MFP level, there is cell records and resolves client complaints.
also a need to set up an independent grievance
resolution authority at the national level. In another example from beyond the border,
Currently, only clients of microfinance banks Microfinance Institutions Network (MFIN) as
(MFBs) have access to an independent, third party a Self-Regulatory Organization (SRO) has set
complaint resolution mechanism through the up a toll-free number (which was instituted in
State Bank of Pakistan. There is no such platform July 2015)26 number that gives direct access
for clients of non-bank microfinance providers. to microfinance clients to reach out to the
The absence of such a platform increases the risk SRO with their grievances. Although the SRO
of clients approaching politicians and media (or grievance redressal mechanism is an appellate
other actors such as lawyers and thugs) in case level mechanism, there is no restriction on clients
they have a complaint against their respective reaching out to MFIN. In the event of clients
service provider. Intervention by these types of reaching out, the SRO facilitates communication
players is detrimental for the sector and can lead of client complaints to the concerned MFI and
to a delinquency crisis as was witnessed in Punjab tracks its resolution and where the case is not
in 2008-09. resolved to the satisfaction of the client within
the stipulated Turn Around Time (TAT), MFIN’s
Moreover, absence of a sector-level platform Enforcement Committee steps in to resolve the
distorts the playing field for bank and non-bank
same.
MFPs. In addition, such platforms, if available,
can raise ‘red flags’ by bringing to notice any Drawing upon the experiences from across the
systemic issues before they snowball into sector- globe, all the industry stakeholders, regulators,
wide disasters. Increasing competitiveness in donors/investors and practitioners need to come
the industry can lead to unhealthy practices and together to develop a third-party solution for
pose reputation risks, and damage the vulnerable clients as the industry continues to scale new
population that makes up the microfinance client heights in terms of expansion and maturity.
base. Pakistan Microfinance Network, as the
national association of microfinance providers in
Section 4
25
http://www.ncr.org.za/
26
http://mfinindia.org/our-work/self-regulation/

Financial Literacy and of people surveyed in A2FS were found out to be

using mobile banking or mobile phone banking,
Client Awareness and understanding of these relatively more
sophisticated financial terms is low even among
In Pakistan, as is the case internationally, there the banked population, particularly women.
is growing pressure on the microfinance sector
to generate economic growth and poverty There is an enormous potential in Pakistan
alleviation through creating greater access currently to use financial literacy programmes
to formal financial institutions for the poor. as a means to promote responsible finance in
Given the social objectives tied to this sector in the microfinance sector. PMN has undertaken a
particular, it is important for financial institutions financial literacy and client awareness campaign,
and other stakeholders to provide responsible with an objective to effectively and consistently
finance and create an environment that is communicate (through multiple mediums) the
conducive for consumers to improve their socio- intended messages to microfinance clients,
economic wellbeing. It is a natural progression, promoting responsible behavior by clients and
therefore, that the target clients of microfinance making them aware of what to expect from their
are made aware of basic money matters – that service provider.
is they are given financial literacy trainings of
savings, budgeting, debt management and other The Nationwide Financial Literacy Program
issues relevant to their success. undertaken by the SBP focuses on the poor
income category of the population. It is expected
Currently only about 16% of the population in to harness the combined efforts of multiple
Pakistan is availing formal financial services, stakeholders including key outreach partners,
about one third are using some kind of informal possibly microfinance providers, to utilize the
financial service, while the remaining majority established network for dissemination of the
of 56% are entirely financially excluded (A2FS financial literacy curriculum through trainings
survey, 2015). If the situation of financial access in across all provinces. Keeping in mind some of
Pakistan is to be remedied, then creating greater the facts mentioned previously, it is hoped that
financial literacy among the excluded segments this broad-based Financial Literacy Program will
of the population will play a crucial role in this be successful in imparting theoretical financial
regard (notwithstanding the disparity in financial education, as well as practical knowledge
access across gender and urban/rural divides). including information on available financial
Moreover, while there is policy emphasis on services and how/when to best utilize these, and
enhancing outreach of financial services through the importance of consumer protection, to people
cellular technology, it is noteworthy that only 3% who will benefit most from such an initiative.
Meeting the Funding Challenge

Funding remains one of the key challenges facing requirements.
the industry. The funding needs of the industry
have enhanced considerably due to growth The funding challenge is more precarious for
witnessed over the last few years. As outlined MFIs and RSPs since they are dependent upon
in the Microfinance Growth Strategy 2020 borrowed funds for on-lending. Moreover, unlike
published by PMN, the total funding requirement MFBs, they have not been regulated entities until
of the industry will reach PKR 400 billion which recently which has caused many commercial
will be met by a combination of deposits and debt. lenders to shy away from them leaving them
MFPs are gradually diversifying their sources of dependent upon the national apex to raise funds.
funds to meet their financing needs. It is hoped that the regulatory umbrella will help
these organizations to borrow commercially.
MFBs have been successful in mobilizing deposits
and to a considerable extent are relying on Recent commencement of operations by PMIC
Section 4
deposits to meet their funding needs. However, and enhancement of its funding base is likely to
a few MFBs have also borrowed both locally play a crucial role in the continued growth of the
and internationally to meet their liquidity sector. Some of the specific funding challenges

and opportunities facing the sector are discussed players which would enable them to borrow from
as follow. commercial lenders.
Deposit Mobilization: The International Lending

Way Forward Solid growth and all-round positive indicators
have generated considerable investor interest
MFBs have met considerable success in in the microfinance industry in Pakistan.
mobilizing deposits over the last few years International DFIs, MIVs, Social and Impact
allowing them to fuel their credit growth from Investors have been aggressively exploring
funds obtained through deposits. However, most the market. Their target has been both larger
of their deposits have been obtained by offering and medium sized institutes for debt mainly.
above market rates to corporate entities and high However, high pricing including the hedging
net worth individuals. costs coupled with the current low interest rate
environment has kept bigger players borrowing
The current low interest rate environment from local sources of funds. Only a few DFIs
has facilitated the above strategy by keeping offering competitive rates have been able to
the funding costs low. However, an increasing place funds with such entities.
interest rate would push the funding costs up,
leading MFBs to either reduce the markup being In comparison, mid-sized institutes are willing to
offered on deposits and risk being uncompetitive pay a premium to meet their increasing funding
in comparison to the commercial banks or to needs by borrowing from international donors.
suffer a cut in profitability. Since mid-sized entities are facing difficulty in
raising funds from local markets in absence of
With a solid deposit base combined with collateral, clean lines extended by international
prevailing low interest environment, MFBs donors are an attractive option for them. In
need to diversify their sources of deposits by addition, the PMIC requirement for borrowing
developing newer savings products that meet the institutes to raise at least 30 percent of their
needs of micro-savers. M-Wallet accounts can financing from other sources has also pushed
play a crucial role in this regard. MFIs and RSPs organizations to borrow internationally.
as regulated entities now have the ability to raise
funds by issuing Certificate of Deposits (CODs)
contingent upon a capital requirement of PKR 1 Coopting Government
billion and a favorable credit rating.
Initiatives and Credit
Why Guarantee Schemes? Interventions
Guarantee facilities have played a crucial role in For an industry that counts funding among its
encouraging commercial lenders to lend to the key challenges, coopting government credit
microfinance sector and develop their comfort initiatives and interventions can provide an
level about extending credit to practitioners. It avenue for additional funding. The Interest
has enabled bigger and more established players Free Loan scheme launched under the Prime
to obtain clean funding lines from financial Minister’s Youth Loan Scheme provides an ideal
institutions and raise funds through the capital example. Administered by PPAF, funded by GOP
markets. and channelized through MFPs the scheme has

been a win-win for both government and MFPs.
However, the same cannot be said about the mid-
sized and smaller players. Commercial lenders The Government’s initiative to reach out to
are reluctant to lend to mid-sized players and small and marginalized farmers and provide
smaller players in the absence of a guarantee low cost housing segments through retail credit
facility or any tangible collateral. The situation guarantees schemes can be similarly coopted by
has been compounded by the expiry of the the microfinance industry. It would open newer
Microfinance Credit Guarantee Facility (MCGF). funding avenues for the MFPs and allow them to
There is a need for similar facilities for mid-sized enter newer market segments.
Section 4


Section 4


Section 5
ANNEXURES
Annexures
Section 5

AI - Performance
indicators of industry
2016
Infrastructure
2010 2011 2012 2013 2014 2015 2016
Total Assets (PKR 000) 35,826,211 48,569,411 61,928,036 81,557,894 105,443,135 145,186,197 225,316,798
Branches (including Head 1,405 1,550 1,630 1,606 2,026 2,754 2,430
Office)
Total Staff 12,005 14,202 15,153 17,456 21,516 25,560 29,413
Growth Rate
Total Assets 17.6% 35.6% 27.5% 31.7% 29.3% 37.7% 55.2%
Branches (including Head 15.1% 10.3% 5.2% -1.5% 26.2% 35.9% -11.8%
Office)
Total Staff 3.9% 18.3% 6.7% 15.2% 23.3% 18.8% 15.1%
Financing Structure
2010 2011 2012 2013 2014 2015 2016
Total Assets (PKR 000) 35,826,211 48,569,411 61,928,036 81,557,894 105,443,135 145,186,198 225,316,798
Total Equity (PKR 000) 8,359,260 10,314,307 11,679,373 17,049,706 22,873,920 29,688,776 36,535,925
Total Debt (PKR 000) 27,466,951 38,255,104 25,876,598 26,913,359 34,682,369 38,554,959 54,710,855
Commercial Liabilities (PKR 4,910,265 12,332,456 19,361,179 21,662,200 18,679,724 19,030,672 43,167,480
000)
Annexures
Deposits (PKR '000)* 10,132,332 13,908,759 20,840,990 32,925,558 42,715,846 60,028,340 118,096,732
Gross Loan Portfolio (PKR 20,295,915 24,854,747 33,877,284 46,613,582 63,531,465 90,296,341 132,003,052
'000)
Ratios
Equity-to-Asset Ratio 23.3% 21.2% 18.9% 20.9% 21.7% 20.4% 16.2%

Section 5

2010 2011 2012 2013 2014 2015 2016

Commercial Liabilities-to- 17.9% 32.2% 74.8% 80.5% 53.9% 49.4% 78.9%
Total Debt
Debt-to-Equity Ratio 3.29 3.41 2.22 1.58 1.52 1.30 1.50
Deposits-to-Gross Loan 49.9% 56.0% 61.5% 70.6% 67.2% 66.5% 89.5%

Portfolio
Deposits-to-Total Assets 28.3% 28.6% 33.7% 40.4% 40.5% 41.3% 52.4%
Gross Loan Portfolio-to- 56.7% 51.2% 54.7% 57.2% 60.3% 62.2% 58.6%
Total Assets
*Only MFB deposits included
Outreach
2010 2011 2012 2013 2014 2015 2016
Active Borrowers 1,567,355 1,661,902 2,040,518 2,392,874 2,997,868 3,632,532 4,225,968
Active Women Borrowers 811,520 917,058 1,275,387 1,442,197 1,692,451 2,001,772 2,273,389
Gross Loan Portfolio (PKR 20,295,915 24,854,747 33,877,284 46,613,582 63,531,465 90,100,405 132,003,052
000)
Annual per Capita Income 105,300 107,505 118,085 143,808 143,808 153,060 153,060
(PKR)***
Number of Loans 1,547,197 1,661,902 2,040,518 2,401,849 2,998,895 3,632,532 4,227,317

Outstanding
Depositors**** 764,271 1,332,705 1,730,823 2,150,675 5,675,437 10,661,366 15,937,079
Number of Deposit 764,271 1,332,705 1,730,823 2,998,641 5,675,437 10,661,366 15,937,079

Accounts
Number of Women 64,159 259,104 334,994 837,144 2,503,582 3,009,992 142,784

Depositors
Deposits Outstanding 10,132,332 13,908,759 20,840,990 32,925,559 42,715,786 60,028,340 118,096,732
Weighted Avg.
Proportion of Active 51.8% 55.2% 62.5% 60.3% 56.5% 55.1% 53.8%

Women Borrowers (%)
Average Loan Balance per 12,949 14,956 16,602 19,480 21,192 24,804 31,236
Active Borrower (PKR)
Average Loan Balance per 12.3% 13.9% 14.1% 13.5% 14.7% 16.2% 20.4%
Active Borrower/Per Capita
Income
Average Outstanding Loan 13,118 14,956 16,602 19,407 21,185 24,804 31,226
Balance (PKR)
Average Outstanding Loan 12.5% 13.9% 14.1% 13.5% 14.7% 16.2% 20.4%
Balance /Per Capita Income
Proportion of Active 8.4% 19.4% 19.4% 38.9% 44.11% 28.23% 0.90%

Women Depositors (%)
Average Saving Balance per 13,258 10,436 12,041 15,309 7,526 5,630 7,410
Active Depositor (PKR)
Active Deposit Account 13,258 10,436 12,041 10,980 7,526 5,630 7,410
Balance (PKR)
* Includes KF data
** Without KF data
*** Source: http://www.sbp.org.pk/reports/stat_reviews/Bulletin/2012/Feb/EconomicGrowth.pdf
**** Only MFB deposits included
Annexures
Section 5

Financial Performance
2010 2011 2012 2013 2014 2015 2016
Income from Loan Portfolio 6,122,154 7,998,956 10,040,720 13,542,893 18,581,489 26,007,641 36,582,140
Income from Investments 870,809 1,203,306 1,774,610 1,742,975 2,051,547 3,946,607 2,716,932
Income from Other Sources 528,457 899,713 816,461 2,093,035 3,707,417 2,919,233 2,471,332
Total Revenue 7,521,420 10,101,975 12,631,792 17,378,903 24,340,453 32,873,481 41,770,404
Less : Financial Expense 2,016,795 2,905,049 3,974,467 4,767,589 5,451,197 6,550,481 8,963,917
Gross Financial Margin 5,504,624 7,196,926 8,657,325 12,611,314 18,889,256 26,323,001 32,806,487
Less: Loan Loss Provision 745,660 623,988 643,991 658,812 794,500 1,258,313 2,504,433
Expense
Net Financial Margin 4,758,964 6,572,938 8,013,334 11,952,503 18,094,756 25,064,687 30,302,054
Personnel Expense 2,819,891 3,345,284 3,784,676 5,032,342 6,557,709 8,712,495 11,575,971
Admin Expense 1,961,816 2,446,750 2,886,025 3,880,920 5,951,408 7,244,592 9,076,966
Less: Operating Expense 4,781,707 5,792,035 1,342,633 8,913,262 12,509,117 15,957,087 20,652,937
Other Non-Operating 257,651 380,993 1,546,240 2,719,173 772,940

Expense
Net Income before Tax (22,742) 780,903 1,084,982 2,658,248 4,039,399 6,388,427 8,876,178
Provision for Tax (7,047) 116,314 152,380 503,118 614,684 1,230,787 1,977,555
Net Income/(Loss) (15,696) 664,589 932,602 2,155,130 3,424,715 5,157,640 6,898,623
Adjusted Financial Expense - 372,524 205,943 181,422 113,553 402,632 491,926

on Borrowings
Inflation Adjustment - (3,073) 870 1,152 916 270 722

Expense
Adjusted Loan Loss - 357,688 49,456 18,743 13,625 275,656 321,188

Provision Expense
Total Adjustment Expense - 727,138 256,270 201,317 128,095 678,559 813,820
Net Income/(Loss) After (15,696) (62,549) 676,332 1,953,814 3,296,620 4,479,081 6,084,802
Adjustments
Average Total Assets 30,399,088 42,282,393 57,182,714 70,192,281 95,494,664 125,951,408 178,064,618
Average Total Equity 7,854,713 8,719,204 11,594,943 14,513,187 20,629,780 89,551,880 32,240,189
Ratios weighted avg. weighted avg. weighted avg.
Adjusted Return-on-Assets (0.1%) (0.1%) 1.2% 3.3% 3.5% 3.6% 3.4%
Adjusted Return-on-Equity (0.2%) (0.7%) 5.8% 16.1% 16.0% 5.0% 18.9%
Operational Self Sufficiency 99.7% 108.4% 109.4% 118.1% 119.9% 124.1% 127.0%
(OSS)
Financial Self Sufficiency 81.7% 100.5% 107.0% 116.5% 117.7% 121.0% 123.9%
(FSS)
* Includes KF data
** Without KF data
Operating Income
2010 2011 2012 2013 2014 2015 2016
Revenue from Loan Portfolio 6,122,154 7,998,956 10,040,720 13,542,893 18,581,489 26,007,641 36,582,140
Annexures
Total Revenue 7,521,420 10,101,975 12,631,792 17,378,903 24,821,486 32,873,481 41,770,404
Adjusted Net Operating -22,742 5,252 828,712 2,456,931 3,286,779 4,474,629 6,084,786
Income/(Loss)
Section 5
Gross Loan Portfolio 16,948,466 20,576,342 25,743,757 34,668,730 48,423,008 63,402,462 89,528,314
(Opening Balance)

2010 2011 2012 2013 2014 2015 2016

(Closing Balance)
Average Gross Loan 18,622,190 22,715,544 29,810,520 40,387,221 55,977,237 76,842,899 110,765,683
Portfolio
Inflation Rate *** 15.0% 11.2% 10.4% 9.2% 8% 4% 4%
weighted avg. weighted avg. weighted avg.
Total Revenue Ratio (Total 24.7% 23.9% 22.3% 24.8% 26.0% 26.1% 23.5%
Revenue-to-Average Total
Assets)
Adjusted Profit Margin (0.3%) 0.1% 7.0% 14.1% 13.2% 13.6% 14.6%
(Adjusted Profit/(Loss)-to-
Total Revenue)
Yield on Gross Portfolio 32.9% 35.2% 34.2% 33.5% 34.6% 34.6% 33.0%
(Nominal)
Yield on Gross Portfolio 15.5% 21.6% 21.6% 22.3% 24.4% 29.9% 29.8%
(Real)
* Includes KF data
** Without KF data
*** Source: http://www.sbp.org.pk/reports/stat_reviews/Bulletin/2012/Feb/IND.pdf
Operating Expense
2010 2011 2012 2013 2014 2015 2016
Adjusted Total Expense 7,544,162 10,096,723 11,803,080 14,540,979 20,842,120 27,121,782 33,707,341
Adjusted Financial Expense 2,016,795 3,304,504 4,181,281 4,950,162 5,742,091 6,911,552 9,455,843
Adjusted Loan Loss 745,660 1,000,184 693,447 677,555 808,125 1,533,970 2,825,622
Provision Expense
Adjusted Operating Expense 4,781,707 5,792,035 6,928,352 8,913,262 14,291,904 18,676,260 21,425,876
Adjustment Expense - 775,651 256,270 201,317 453,639 678,579 813,837
Adjusted Total Expense-to- 24.8% 23.9% 20.6% 20.7% 21.8% 21.5% 18.9%
Average Total Assets
Adjusted Financial Expense- 6.6% 7.8% 7.3% 7.1% 6.0% 5.5% 5.3%
to-Average Total Assets
Adjusted Loan Loss 2.5% 2.4% 1.2% 1.0% 0.8% 1.2% 1.6%
Provision Expense-to-
Adjusted Operating 15.7% 13.7% 12.1% 12.7% 15.0% 14.8% 12.0%

Expense-to-Average Total
Assets
Adjusted Personnel Expense 9.3% 7.9% 6.6% 7.2% 6.9% 6.9% 6.5%
Adjusted Admin Expense 6.5% 5.8% 5.0% 5.5% 6.2% 5.8% 5.1%
Adjustment Expense-to- 0.0% 1.8% 0.4% 0.3% 0.5% 0.5% 0.5%

* Includes KF data
** Without KF data
Annexures
Section 5

Operating Efficiency
2010 2011 2012 2013 2014 2015 2016
Operating Expense (PKR 4,781,707 5,792,035 6,928,352 8,913,262 12,745,665 15,957,087 20,652,937
000)
Personnel Expense (PKR 2,819,891 3,345,284 3,784,676 5,032,342 6,794,257 8,712,495 11,575,971
000)
Portfolio (PKR 000)
Average Number of Active 1,567,355 1,661,902 2,040,518 2,350,650 2,997,868 3,632,532 4,225,968
Borrowers
Average Number of Active 1,567,355 1,661,902 2,040,518 2,359,625 2,998,895 3,632,532 4,227,317
Loans
Adjusted Operating 25.7% 25.5% 23.2% 22.1% 22.8% 20.8% 18.6%

Expense-to-Average Gross
Loan Portfolio
Adjusted Personnel 15.1% 14.7% 12.7% 12.5% 12.1% 11.3% 10.5%

Expense-to-Average Gross
Loan Portfolio
Average Salary/Gross 2.23 2.19 2.12 2.00 2.2 2.2 2.6

Domestic Product per
Capita
Adjusted Cost per Borrower 3,051 3,485 3,395 3,792 4,252 4,393 4,887
(PKR)
Adjusted Cost per Loan 3,051 3,485 3,395 3,777 4,250 4,393 4,886
(PKR)
* Includes KF data
** Without KF data
Productivity
2010 2011 2012 2013 2014 2015 2016
Number of Deposit 764,271 1,332,705 1,730,823 2,707,872 5,675,437 10,661,366 15,937,079
Accounts
Total Staff 12,005 14,202 15,153 15,673 19,227 25,343 29,413

Total Loan Officers 5,148 7,165 7,541 6,892 8,801 9,923 15,342
Borrowers per Staff 131 117 135 144 156 143 144
Loans per Staff 131 117 135 144 156 143 144
Borrowers per Loan Officer 304 232 271 327 341 366 275
Loans per Loan Officer 304 232 271 328 328 366 276
Depositors per Staff 64 94 114 121 295 421 542
Deposit Accounts per Staff 64 94 114 173 295 421 542
Personnel Allocation Ratio 42.9% 50.5% 49.8% 44.0% 45.8% 39.2% 52.2%
* Includes KF data
** Without KF data
Annexures
Section 5

Risk
2010 2011 2012 2013 2014 2015 2016
Portfolio at Risk > 30 days 829,314 793,966 1,232,842 1,157,297 659,418 1,321,207 1,565,459
Portfolio at Risk > 90 days 577,972 516,623 1,020,316 932,166 379,637 781,212 1,073,562
Adjusted Loan Loss Reserve 733,338 623,988 759,621 708,355 1,189,884 1,468,006 2,814,919
Loan Written Off during 335,463 592,429 675,835 615,293 1,222,076 917,855 1,147,319
Year
Portfolio
Portfolio at Risk (>30)-to- 4.1% 3.2% 3.6% 2.5% 1.0% 1.5% 1.2%
Gross Loan Portfolio
Portfolio at Risk(>90)-to- 2.8% 2.1% 3.0% 2.0% 0.6% 0.9% 0.8%

Write Off-to-Average Gross 1.8% 2.6% 2.3% 1.5% 2.2% 1.2% 1.0%
Loan Portfolio
Risk Coverage Ratio 88.4% 78.6% 61.6% 61.2% 180.4% 111.1% 179.8%
(Adjusted Loan Loss
Reserve-to-Portfolio at Risk
> 30 days)
* Includes KF data
** Without KF data
Annexures
Section 5

AII - Performance
indicators of
individual MFPs
2016
Infrastructure
MFB
KBL TMFB FMFB NRSP-B FINCA
Age 16 12 16 8 9
Total assets (PKR 33,773,478 36,303,646 16,878,231 26,452,428 15,617,965

000)
Total equity (PKR 4,937,097 4,585,909 3,830,504 3,203,730 2,432,553

000)
Total liabilities (PKR 28,836,382 31,717,737 13,047,727 23,248,698 13,185,412

000)
Branches (including 139 74 120 97 105

Head Office)
Personnel 2,708 3,473 1,541 2,340 1,324
MFB
AMFB MMFB U-Bank ADVANS Sub
Annexures
Age 14 6 5 5
Total assets (PKR 13,554,003 14,233,857 10,591,716 684,455 168,090

000)
Total equity (PKR 707,199 1,230,493 1,122,466 615,175 22,665,126

000)
Section 5

MFB
Total liabilities (PKR 12,846,804 13,003,364 9,469,250 69,281 145,425
000)

Head Office)
Personnel 1,516 740 939 141 14,722
MFI
OCT KASHF SAFCO DAMEN CSC
Age 32 10 8 3 2
Total assets (PKR 762,613 7,370,015 1,093,119 1,832,714 853,096

000)
Total equity (PKR 340,469 1,575,047 364,477 451,455 220,644

000)
Total liabilities (PKR 422,144 5,794,969 728,642 1,381,260 632,451

000)

Head Office)
Personnel 140 2,096 286 250 208
MFI
GBTI FFO ASA-P MO BRAC-P
Age 21 14 9 8 9
Total assets (PKR 696,390 487,403 6,103,602 114,864 1,641,931

000)
Total equity (PKR 401,773 42,683 1,481,968 53,907 189,550

000)
Total liabilities (PKR 294,617 444,720 4,621,634 60,957 1,452,382

000)

Head Office)
Personnel 93 158 1,592 26 474
MFI
JWS ORIX RCDP Agahe AMRDO
Age 15 31 1 1 9
Total assets (PKR 919,256 464,559 1,686,561 253,338 275,488

000)
Total equity (PKR 270,601 170,090 540,138 66,594 48,216

000)
Total liabilities (PKR 648,655 294,469 1,146,422 186,744 227,272

000)
Head Office)
Personnel 249 73 421 86 104

Annexures
Section 5

MFI
OPD SAATH SRDO SVDP VDO
Age 25 3 16 2 1
Total assets (PKR 120,321 181,089 142,292 208,463 37,412

000)
Total equity (PKR 5,414 30,141 34,428 49,043 25,332

000)
Total liabilities (PKR 114,907 150,948 107,864 159,420 12,080

000)
Head Office)
Personnel 62 35 26 71 12
MFI
Akhuwat OSDI Sub
Age 7
Total assets (PKR 10,316,587 23,172 35,584,284

000)
Total equity (PKR 1,402,831 22,836 7,787,635

000)
Total liabilities (PKR 8,913,756 336 27,796,650

000)
Branches (including 500 4 1,246

Head Office)
Personnel 3,491 46 9,999
RSP
NRSP PRSP TMF SRSO Sub
Age 8 19 17 14
Total assets (PKR 15,485,752 2,971,177 2,004,171 1,181,633 21,642,732

000)
Total equity (PKR 4,467,973 1,025,673 647,658 (58,140) 6,083,164

000)
Total liabilities (PKR 11,017,778 1,945,504 1,356,514 1,239,773 15,559,569

000)

Head Office)
Personnel 3,221 641 527 303 4,692
Sub MFB Sub MFI Sub RSP Total

Age
Total assets (PKR 168,090 35,584,284.586 21,642,732.911 225,316,798

000)
Total equity (PKR 22,665,126 7,787,635 6,083,164 36,535,925

000)
Total liabilities (PKR 145,425 27,796,650 15,559,569 188,780,873

Annexures
000)
Branches (including 757 1,246 427 2,430

Head Office)
Personnel 14,722 9,999 4,692 29,413

Section 5

Financing Structure In PKR (000)

MFB
Total assets 33,773,478 36,303,646 16,878,231 26,452,428 15,617,965
Total equity 4,937,097 4,585,909 3,830,504 3,203,730 2,432,553
Total debt 6,199,882 - 297,820 5,349,535 1,350,002
- Subsidized debt* 1,454,918 - - - -
- Commercial debt 4,744,964 - 297,820 5,349,535 1,350,002
Total Deposits 21,179,403 27,829,780 12,237,466 16,922,084 11,069,656
Total Liabilities 28,836,382 31,717,737 13,047,727 23,248,698 13,185,412
Gross loan portfolio 23,308,981 15,945,319 8,273,926 13,271,040 10,209,129
Equity-to-asset ratio 14.6% 12.6% 22.7% 12.1% 15.6%
Commercial 76.5% #DIV/0! 100.0% 100.0% 100.0%

liabilities-to-total
debt
Debt-to-equity ratio 1.3 0.0 0.1 1.7 0.6
Deposits-to-gross 90.9% 174.5% 147.9% 127.5% 108.4%

loan portfolio
Deposits-to-total 62.7% 76.7% 72.5% 64.0% 70.9%

assets
Cost of funds 6.6% 4.0% 4.6% 5.6% 5.2%
Gross loan portfolio- 69.0% 43.9% 49.0% 50.2% 65.4%

to-total assets
MFB
Total assets 13,554,003 14,233,857 10,591,716 684,455 168,089,780
Total equity 707,199 1,230,493 1,122,466 615,175 22,665,126
Total debt 204,002 - 1,000,000 - 14,401,240.699
- Subsidized debt* - - - - 1,454,918
- Commercial debt 204,002 - 1,000,000 - 12,946,323
Total Deposits 10,420,589 10,306,362 8,109,924 21,469 118,096,732.386
Total Liabilities 12,846,804 13,003,364 9,469,250 69,281 145,424,654
Gross loan portfolio 6,320,692 5,933,962 5,576,802 212,539 89,052,391
Weighted Avg.
Commercial 0.0% 0.0% 0.0% 0.0% 89.9%

debt
Deposits-to-gross 164.9% 173.7% 145.4% 10.1% 132.6%

loan portfolio
Deposits-to-total 76.9% 72.4% 76.6% 3.1% 70.3%

assets
Annexures
Cost of funds 6.3% 2.5% 4.7% 3.9% 5.1%

to-total assets
Section 5

MFI
Total assets 762,613 7,370,015 1,093,119 1,832,714 853,096
Total equity 340,469 1,575,047 364,477 451,455 220,644
Total debt 360,007 5,535,202 687,435 1,365,310 607,482
- Subsidized debt* - 233,850 144,000 - -
- Commercial debt 360,007 5,301,352 543,435 1,365,310 607,482
Total Deposits - - - - -
Total Liabilities 422,144 5,794,969 728,642 1,381,260 632,451
Gross loan portfolio 594,625 4,562,209 765,014 1,251,104 483,208
Commercial 100.0% 95.8% 79.1% 100.0% 100.0%

debt
Deposits-to-gross - - - - -
loan portfolio
Deposits-to-total - - - - -
assets
Cost of funds 10.3% 10.2% 7.1% 7.5% 6.1%

to-total assets
MFI
Total assets 696,390 487,403 6,103,602 114,864 1,641,931
Total equity 401,773 42,683 1,481,968 53,907 189,550
Total debt 233,237 399,313 4,214,517 60,725 977,499
- Subsidized debt* 56,389 20,000 - - 66,397
- Commercial debt 176,847 379,313 4,214,517 60,725 911,102
Total Liabilities 294,617 444,720 4,621,634 60,957 1,452,382
Gross loan portfolio 192,672 369,319 5,654,742 80,870 1,505,789
Commercial 75.8% 95.0% 100.0% 100.0% 93.2%

debt
loan portfolio
assets
Cost of funds 4.8% 7.5% 4.4% 16.9% 6.9%

Annexures
to-total assets
Section 5

MFI
Total assets 919,256 464,559 1,686,561 253,338 275,488
Total equity 270,601 170,090 540,138 66,594 48,216
Total debt 589,121 183,786 1,109,938 178,525 214,934
- Subsidized debt* 2,182 - 208,081 57,902 60,000
- Commercial debt 586,939 183,786 901,858 120,622 154,934
Total Liabilities 648,655 294,469 1,146,422 186,744 227,272
Gross loan portfolio 718,859 444,451 1,402,610 201,154 174,186
Commercial 99.6% 100.0% 81.3% 67.6% 72.1%

debt
loan portfolio
assets
Cost of funds 2.3% 9.0% 2.6% 4.7% 5.5%

to-total assets
MFI
Total assets 120,321 181,089 142,292 208,463 37,412
Total equity 5,414 30,141 34,428 49,043 25,332
Total debt 110,960 139,083 105,271 153,361 9,084
- Subsidized debt* 17,600 42,591 - - -
- Commercial debt 93,360 96,492 105,271 153,361 9,084
Total Liabilities 114,907 150,948 107,864 159,420 12,080
Gross loan portfolio 90,843 128,934 95,678 148,190 15,524
Commercial 84.1% 69.4% 100.0% 100.0% 100.0%

debt
loan portfolio
assets
Cost of funds 7.1% 7.1% 6.7% 8.5% 11.4%

Annexures
to-total assets
Section 5

MFI
Akhuwat OSDI Sub
Total assets 10,316,587 23,172 35,584,285
Total equity 1,402,831 22,836 7,787,634.674
Total debt 8,848,845 - 26,083,632.559
- Subsidized debt* 8,848,845 - 9,757,837
- Commercial debt - - 16,325,795
Total Deposits - - -
Total Liabilities 8,913,756 336 27,796,650
Gross loan portfolio 8,063,573 11,407 26,954,961
Weighted Avg.
Equity-to-asset ratio 13.6% 98.6% 21.9%
Commercial 0.0% #DIV/0! 62.6%

debt
Debt-to-equity ratio 6.3 0.0 3.35
Deposits-to-gross - - -
loan portfolio
Deposits-to-total - - -
assets
Cost of funds 0.0% #DIV/0! 4.6%
Gross loan portfolio- 78.2% 49.2% 75.7%

to-total assets
RSP
Total assets 15,485,752 2,971,177 2,004,171 1,181,633 21,642,733
Total equity 4,467,973 1,025,673 647,658 (58,140) 6,083,164.225
Total debt 10,553,599 1,172,558 1,305,825 1,194,000 14,225,982.109
- Subsidized debt* 271,400 59,220 - - 330,620
- Commercial debt 10,282,199 1,113,338 1,305,825 1,194,000 13,895,362
Total Liabilities 11,017,778 1,945,504 1,356,514 1,239,773 15,559,569
Weighted Avg.
Equity-to-asset ratio 28.9% 34.5% 32.3% -4.9% 28.1%
Commercial 97.4% 94.9% 100.0% 100.0% 97.7%

debt
Debt-to-equity ratio 2.4 1.1 2.0 -20.5 2.34
loan portfolio
assets
Cost of funds 6.9% 6.7% 6.4% 7.0% 7.1%

Annexures
to-total assets
Section 5


Total assets 168,089,780 35,584,285 21,642,733 225,316,798
Total equity 22,665,126 7,787,634.674 6,083,164.225 36,535,925
Total debt 14,401,240.699 26,083,632.559 14,225,982.109 54,710,855
- Subsidized debt* 1,454,918 9,757,837 330,620 11,543,375
- Commercial debt 12,946,323 16,325,795 13,895,362 43,167,480
Total Deposits 118,096,732.386 - - 118,096,732
Total Liabilities 145,424,654 27,796,650 15,559,569 188,780,873
Gross loan portfolio 89,052,391 26,954,961 15,995,700 132,003,052
Weighted Avg. Weighted Avg. Weighted Avg. Weighted Avg.
Equity-to-asset ratio 13.5% 21.9% 28.1% 16.2%
Commercial 89.9% 62.6% 97.7% 78.9%

debt
Debt-to-equity ratio 0.6 3.35 2.34 1.50
Deposits-to-gross 132.6% - - 89.5%

loan portfolio
Deposits-to-total 70.3% - - 52.4%

assets
Cost of funds 5.1% 4.6% 7.1% 5.2%
Gross loan portfolio- 53.0% 75.7% 73.9% 58.6%

to-total assets
Outreach
MFB
Active borrowers 557,082 385,415 221,078 325,521 132,252
Active women 144,765 144,218 78,088 50,959 6,715

borrowers

(PKR 000)
Annual per capita 153,060 153,060 153,060 153,060 153,060

income (PKR)*
Number of loans 557,082 385,415 221,078 325,521 133,601

outstanding
Depositors 1,369,007 4,666,050 458,210 674,494 406,984
Number of deposit 1,369,007 4,666,050 458,210 674,494 406,984

accounts
Number of women - - - 109,437 20,925

depositors
Deposits outstanding 21,179,403 27,829,780 12,237,466 16,922,084 11,069,656

(PKR 000)
Proportion of active 26.0% 37.4% 35.3% 15.7% 5.1%

women borrowers (%)
Annexures
Average loan balance 41,841 41,372 37,425 40,769 77,195

per active borrower
(PKR)
Average loan balance 27.3% 27.0% 24.5% 26.6% 50.4%

per active borrower/
per capita income
Section 5

MFB
Average outstanding 41,841 41,372 37,425 40,769 76,415
loan balance (PKR)
Average outstanding 27.3% 27.0% 24.5% 26.6% 49.9%

loan balance / per
capita income

women depositors
(%)
Average saving 15,471 5,964 26,707 25,089 27,199

balance per active
depositor (PKR)
Active deposit 15,471 5,964 26,707 25,089 27,199

account balance
(PKR)
MFB
Active borrowers 45,643 90,929 22,254 2,925 1,783,099
Active women 5,963 11,292 3,272 624 445,896

borrowers

(PKR 000)

income (PKR)*
Number of loans 45,643 90,929 22,254 2,925 1,784,448

outstanding
Depositors 113,688 8,086,949 153,039 8,658 15,937,079
Number of deposit 113,688 8,086,949 153,039 8,658 15,937,079

accounts
Number of women - - 12,422 142,784

depositors
Deposits outstanding 10,420,589 10,306,362 8,109,924 21,469 118,096,732

(PKR 000)
Weighted Avg.

women borrowers (%)

per active borrower
(PKR)

per capita income

loan balance (PKR)

loan balance / per
capita income

women depositors
(%)
Average saving 91,660 1,274 52,993 2,480 7,410

Annexures
balance per active

depositor (PKR)
Active deposit 91,660 1,274 52,993 2,480 7,410

account balance
(PKR)
Section 5
* http://www.sbp.org.pk/departments/stats/NDSP.htm

MFI
Active women 18,924 214,787 33,470 44,954 21,427

borrowers

(PKR 000)

income (PKR)*
Number of loans 44,741 214,981 58,468 44,954 22,940

outstanding
Depositors - - - - -
Number of deposit - - - - -
accounts
Number of women - - - - -
depositors
Deposits outstanding - - - - -
(PKR 000)

women borrowers (%)

per active borrower
(PKR)

per capita income

loan balance (PKR)

loan balance / per
capita income
Proportion of active - - - - -
women depositors
(%)
Average saving - - - - -
balance per active
depositor (PKR)
Active deposit - - - - -
account balance
(PKR)
MFI
Active women 12,749 20,669 314,928 3,140 52,339

borrowers

(PKR 000)

income (PKR)*
Number of loans 13,121 20,724 322,015 4,474 56,327

outstanding
Annexures
accounts
Section 5
depositors

MFI
(PKR 000)

women borrowers (%)

per active borrower
(PKR)

per capita income

loan balance (PKR)

loan balance / per
capita income
women depositors
(%)
balance per active
depositor (PKR)
account balance
(PKR)
MFI
Active women 35,293 21,202 64,834 13,574 7,302

borrowers

(PKR 000)

income (PKR)*
Number of loans 35,627 22,718 71,430 14,269 12,891

outstanding
accounts
depositors
(PKR 000)

women borrowers (%)

per active borrower
(PKR)

Annexures

per capita income

loan balance (PKR)
Section 5

MFI
loan balance / per
capita income
women depositors
(%)
balance per active
depositor (PKR)
account balance
(PKR)
MFI
Active women 3,269 3,009 1,780 2,455 1,020

borrowers

(PKR 000)

income (PKR)*
Number of loans 6,094 5,917 3,637 6,314 1,748

outstanding
accounts
depositors
(PKR 000)

women borrowers (%)

per active borrower
(PKR)

per capita income

loan balance (PKR)

loan balance / per
capita income
women depositors
(%)
balance per active
depositor (PKR)
Annexures
account balance
(PKR)
Section 5

MFI
Akhuwat OSDI Sub
Active borrowers 567,761 330 1,551,481
Active women 238,460 2 1,129,587

borrowers

(PKR 000)
Annual per capita 153,060 153,060 153,060

income (PKR)*
Number of loans 567,761 330 1,551,481

outstanding
Depositors - - -
Number of deposit - - -
accounts
Number of women - - -
depositors
Deposits outstanding - - -
(PKR 000)
Weighted Avg.
Proportion of active 42.0% 0.6% 72.8%

women borrowers (%)
Average loan balance 14,202 34,567 17,374

per active borrower
(PKR)
Average loan balance 9.3% 22.6% 11%

per capita income
Average outstanding 14,202 34,567 17,374

loan balance (PKR)
Average outstanding 9.3% 22.6% 11%

loan balance / per
capita income
Proportion of active - - -
women depositors
(%)
Average saving - - -
balance per active
depositor (PKR)
Active deposit - - -
account balance
(PKR)
RSP
Active women 526,364 28,690 79,202 63,650 697,906

borrowers

(PKR 000)

income (PKR)*
Number of loans 649,682 58,890 110,055 72,761 891,388

outstanding
Annexures
accounts
Section 5
depositors

RSP
(PKR 000)
Weighted Avg.

women borrowers (%)

per active borrower
(PKR)
Average loan balance 12% 12% 10% 12% 12%

per capita income

loan balance (PKR)
Average outstanding 12.0% 12.0% 10% 12.1% 11.7%

loan balance / per
capita income
women depositors
(%)
balance per active
depositor (PKR)
account balance
(PKR)

Active borrowers 1,783,099 1,551,481 891,388 4,225,968
Active women 445,896 1,129,587 697,906 2,273,389

borrowers

(PKR 000)
Annual per capita 153,060 153,060 153,060 153,060

income (PKR)*
Number of loans 1,784,448 1,551,481 891,388 4,227,317

outstanding
Depositors 15,937,079 - - 15,937,079
Number of deposit 15,937,079 - - 15,937,079

accounts
Number of women 142,784 - - 142,784

depositors
Deposits outstanding 118,096,732 - - 118,096,732

(PKR 000)
Weighted Avg. Weighted Avg. Weighted Avg. Weighted Avg.
Proportion of active 25.0% 72.8% 78.3% 53.8%

women borrowers (%)
Average loan balance 49,942 17,374 17,945 31,236

per active borrower
(PKR)
Average loan balance 32.6% 11% 12% 20.4%

per capita income
Annexures
Average outstanding 49,905 17,374 17,945 31,226

loan balance (PKR)
Average outstanding 32.6% 11% 11.7% 20.4%

loan balance / per
capita income
Section 5


Proportion of active 0.9% - - 0.90%
women depositors
(%)
Average saving 7,410 - - 7,410

balance per active
depositor (PKR)
Active deposit 7,410 - - 7,410

account balance
(PKR)
Financial Performance in PKR 000

MFB
Income from loan 6,493,876 5,500,627 2,217,401 3,543,641 3,324,590
portfolio
Income from 371,841 516,367 421,632 147,258 102,855

investments
Income from other 179,152 122,830 11,791 223,651 110,194

sources
Total revenue 7,044,869 6,139,824 2,650,824 3,914,550 3,537,639
Less : financial 1,807,109 1,113,495 580,886 1,239,768 647,593

expense
Gross financial 5,237,760 5,026,329 2,069,938 2,674,782 2,890,047

margin
Less: loan loss 684,807 103,555 15,612 155,329 219,211

provision expense
Net financial margin 4,552,953 4,922,774 2,054,326 2,519,453 2,670,836
Personnel expense 1,340,023 1,670,412 835,550 891,854 848,857
Admin expense 1,415,892 1,814,795 724,387 666,912 820,903
Less: operating 2,755,914 3,485,207 1,559,937 1,558,766 1,669,761

expense
Other Non operating 17,957 68,282 2,574 188 13,480

expense
Net income before 1,779,082 1,369,285 491,815 960,499 987,595

tax
Provision for tax 506,348 473,931 175,556 275,711 356,700
Net income/(loss) 1,272,734 895,354 316,259 684,787 630,896
Adjusted Financial - - - - -
Expense on
Borrowings
Inflation Adjustment 0 110 42 84 46

Expense
Adjusted Loan Loss - - - - -

Provision Expense
Total Adjustment 0 110 42 84 46

Expense
Net Income/(Loss) 1,272,734 895,244 316,217 684,704 630,849

Annexures
After Adjustments
Average total assets 30,234,912 28,680,884 14,532,784 20,372,307 12,034,942
Average total equity 4,444,293 4,137,596 2,687,455 2,874,116 2,183,044

Section 5

MFB
Adjusted return-on- 4.2% 3.1% 2.2% 3.4% 5.2%
assets

equity
Financial expense 8.9% 7.9% 8.3% 11.1% 8.3%

ratio
Operational self 133.8% 128.7% 122.8% 132.5% 138.7%

sufficiency (OSS)
Financial self 133.8% 128.7% 122.8% 132.5% 138.7%

sufficiency (FSS)
MFB
Income from loan 1,329,051 1,699,396 1,181,055 96,212 25,385,849
portfolio
Income from 173,923 245,530 182,882 - 2,162,290

investments

sources
Total revenue 1,554,400 1,948,586 1,370,468 102,754 28,263,914
Less : financial 671,551 255,330 428,308 830 6,744,870

expense
Gross financial 882,849 1,693,256 942,160 101,924 21,519,044

margin
Less: loan loss 845,921 67,611 44,490 12,772 2,149,307

provision expense
Net financial margin 36,928 1,625,645 897,670 89,152 19,369,738
Personnel expense 644,650 598,679 439,096 90,602 7,359,723
Admin expense 462,604 688,503 362,846 153,114 7,109,956
Less: operating 1,107,253 1,287,181 801,942 243,716 14,469,679

expense
Other Non operating 27,253 3,629 2,066 2,898 138,327

expense
Net income before (1,097,578) 334,835 93,661 (157,462) 4,761,732

tax
Provision for tax (362,054) 104,077 21,309 48,425 1,600,002
Net income/(loss) (735,524) 230,758 72,353 (205,887) 3,161,730
Expense on
Borrowings
Inflation Adjustment (10) 28 33 16 349

Expense

Provision Expense
Total Adjustment (10) 28 33 16 349

Expense
Net Income/(Loss) (735,514) 230,729 72,320 (205,903) 3,161,381

After Adjustments
Annexures
Average total assets 3,714,717 9,562,207 6,431,319 623,601 126,187,673
Average total equity 798,816 1,115,414 1,085,261 550,871 19,876,866
weighted avg.
Adjusted return-on- -19.8% 2.4% 1.1% -33.0% 2.5%

assets
Section 5

MFB
Adjusted return-on- -92.1% 20.7% 6.7% -37.4% 15.9%
equity

ratio

sufficiency (OSS)
Financial self 58.6% 120.7% 107.3% 39.5% 120.3%

sufficiency (FSS)
MFI
OCT KASHF Safco DAMEN CSC
Income from loan 107,904 1,957,475 215,546 455,625 171,799
portfolio
Income from 11,508 128,607 18,290 24,909 18,144

investments

sources
Total revenue 124,499 2,348,586 251,214 483,835 206,244
Less : financial 36,987 562,273 48,904 102,817 36,840

expense
Gross financial 87,512 1,786,313 202,310 381,019 169,404

margin
Less: loan loss 34,011 (25,327) 14,764 15,338 6,463

provision expense
Net financial margin 53,501 1,811,640 187,546 365,680 162,941
Personnel expense 24,916 689,726 73,066 106,809 66,821
Admin expense 13,384 189,296 47,303 87,136 58,278
Less: operating 38,300 879,022 120,369 193,944 125,099

expense
Other Non operating 7,609 190,941 - 27,556 5,049

expense
Net income before 7,592 741,677 67,178 144,180 32,793

tax
Provision for tax - - - - 4,391
Net income/(loss) 7,592 741,677 67,178 144,180 28,403
Expense on
Borrowings
Expense
Adjusted Loan Loss 167,057 4,326 - - -

Provision Expense
Total Adjustment 167,069 4,338 4 12 3

Expense
Net Income/(Loss) (159,477) 737,339 67,173 144,168 28,400

After Adjustments
Average total assets 764,883 7,190,410 986,827 1,608,334 770,778
Average total equity 336,688 1,163,398 286,788 379,365 159,025

Annexures
Adjusted return-on- -20.8% 10.3% 6.8% 9.0% 3.7%

assets

equity
Section 5

MFI
OCT KASHF Safco DAMEN CSC
ratio

sufficiency (OSS)
Financial self 43.8% 145.8% 136.5% 142.4% 118.9%

sufficiency (FSS)
MFI
Income from loan 37,370 113,590 1,987,001 27,616 544,179
portfolio
Income from 39,608 3,137 15,416 2,089 140

investments

sources
Total revenue 150,956 120,583 2,008,383 36,360 1,106,001
Less : financial 11,218 30,096 184,724 10,243 67,936

expense
Gross financial 139,738 90,486 1,823,659 26,116 1,038,066

margin
Less: loan loss - 7,127 48,580 (1,123) 26,705

provision expense
Net financial margin 139,738 83,359 1,775,079 27,239 1,011,361
Admin expense 11,538 29,505 154,971 8,820 525,286
Less: operating 37,917 65,564 598,708 18,066 950,928

expense
Other Non operating 62,478 1,420 74,060 3,623 457

expense
Net income before 39,343 16,375 1,102,311 5,551 59,976

tax
Provision for tax - - 360,984 - 11,837
Net income/(loss) 39,343 16,375 741,327 5,551 48,139
Adjusted Financial - - 185 4,818 -

Expense on
Borrowings
Inflation Adjustment 14 1 53 (1) 5

Expense

Provision Expense
Total Adjustment 14 1 239 4,817 5

Expense
Net Income/(Loss) 39,328 16,375 741,089 734 48,134

After Adjustments
Average total assets 557,945 524,943 5,138,196 125,184 1,519,718
Average total equity 382,673 34,950 1,419,123 44,542 167,617

Annexures
assets
Adjusted return-on- 10.3% 46.9% 52.2% 1.6% -28.7%

equity

ratio
Section 5

MFI
sufficiency (OSS)
Financial self 135.2% 115.7% 221.6% 102.1% 105.7%

sufficiency (FSS)
MFI
Income from loan 76,667 150,348 129,224 46,255 48,150
portfolio
Income from 2,943 - 3,483 3,081 3,505

investments
Income from other 604 382 71,287 8,161 13,008

sources
Total revenue 80,214 150,731 203,994 57,498 64,663
Less : financial 13,747 16,515 28,852 8,458 11,785

expense
Gross financial 66,467 134,216 175,141 49,039 52,878

margin
Less: loan loss 1,303 2,496 9,401 2,017 (1,968)

provision expense
Net financial margin 65,164 131,720 165,740 47,023 54,846
Admin expense 14,958 31,908 25,634 16,807 12,485
Less: operating 41,019 66,877 60,870 41,361 38,570

expense
Other Non operating 3,544 - - - -

expense
Net income before 20,601 64,844 104,870 5,662 16,275

tax
Provision for tax - - - - -
Net income/(loss) 20,601 64,844 104,870 5,662 16,275
Adjusted Financial 10,287 - 28,142 2,187 1,366

Expense on
Borrowings
Expense
Adjusted Loan Loss - - - - (1,968)

Provision Expense
Total Adjustment 10,297 4 28,159 2,187 (601)

Expense
Net Income/(Loss) 10,304 64,840 76,711 3,475 16,876

After Adjustments
Average total assets 919,283 435,281 1,471,027 227,728 267,391
Average total equity 276,358 137,668 509,082 47,847 39,476

assets

Annexures
equity

ratio

sufficiency (OSS)
Section 5

MFI
Financial self 114.7% 175.5% 160.3% 106.4% 135.3%
sufficiency (FSS)
MFI
Income from loan 31,493 41,057 21,394 45,819 3,764
portfolio
Income from 2,476 1,715 860 2,719 1,334

investments
Income from other 357 869 980 25,266 1,270

sources
Total revenue 34,327 43,640 23,234 73,804 6,369
Less : financial 7,876 9,890 7,052 13,059 1,036

expense
Gross financial 26,451 33,750 16,181 60,745 5,333

margin
Less: loan loss 2,868 1,998 1,902 2,156 (383)

provision expense
Net financial margin 23,582 31,752 14,279 58,589 5,716
Admin expense 8,570 6,865 5,655 8,125 1,728
Less: operating 22,348 11,690 10,738 29,448 3,777

expense
Other Non operating 1,088 510 - 74 -

expense
Net income before 147 19,553 3,541 29,068 1,939

tax
Provision for tax - - - - 341
Net income/(loss) 147 19,553 3,541 29,068 1,598
Expense on
Borrowings
Expense

Provision Expense
Total Adjustment 0 0 0 1 1
Expense
Net Income/(Loss) 147 19,553 3,541 29,066 1,597

After Adjustments
Average total assets 145,416 165,756 137,955 196,961 46,485
Average total equity 5,340 20,364 22,657 46,947 24,533

assets

equity

Annexures
ratio

sufficiency (OSS)
Financial self 100.4% 181.2% 118.0% 165.0% 143.7%

sufficiency (FSS)
Section 5

MFI
Akhuwat OSDI Sub
Income from loan 824,058 - 7,036,334
portfolio
Income from 45,629 - 329,594

investments
Income from other 531,085 20,211 1,630,187

sources
Total revenue 1,400,771 20,211 8,996,115
Less : financial - 59 1,210,366

expense
Gross financial 1,400,771 20,152 7,785,748

margin
Less: loan loss 38,844 - 187,172

provision expense
Net financial margin 1,361,927 20,152 7,598,576
Personnel expense 568,823 18,462 2,683,648
Admin expense 185,645 18,057 1,461,952
Less: operating 754,468 36,518 4,145,600

expense
Other Non operating 241,790 - 620,198

expense
Net income before 365,670 (16,367) 2,832,778

tax
Provision for tax - - 377,553
Net income/(loss) 365,670 (16,367) 2,455,225
Adjusted Financial 444,943 - 491,926

Expense on
Borrowings
Inflation Adjustment 28 1 181

Expense
Adjusted Loan Loss - 5,336 174,752

Provision Expense
Total Adjustment 444,971 5,338 666,859

Expense
Net Income/(Loss) (79,302) (21,704) 1,788,366

After Adjustments
Average total assets 8,512,448 31,631 31,744,580
Average total equity 1,219,996 31,223 6,755,660
weighted avg.
Adjusted return-on- -0.9% -68.6% 5.6%

assets
Adjusted return-on- -6.5% -69.5% 26.5%

equity
Financial expense 0.0% 0.0% 5.1%

ratio
Operational self 135.3% 55.3% 146.0%

sufficiency (OSS)
Financial self 94.6% 48.2% 131.7%

sufficiency (FSS)
Annexures
Section 5

RSP
Income from loan 3,166,610 285,982 404,018 303,348 4,159,958
portfolio
Income from 145,780 50,507 15,981 12,780 225,048

investments

sources
Total revenue 3,357,425 356,889 437,557 358,504 4,510,375
Less : financial 732,121 78,731 114,516 83,312 1,008,680

expense
Gross financial 2,625,304 278,158 323,041 275,192 3,501,695

margin
Less: loan loss 115,381 (1,316) 10,729 43,161 167,955

provision expense
Net financial margin 2,509,923 279,474 312,312 232,031 3,333,740
Personnel expense 1,185,258 81,757 156,942 108,643 1,532,600
Admin expense 368,786 35,159 53,087 48,025 505,058
Less: operating 1,554,044 116,916 210,029 156,668 2,037,658

expense
Other Non operating - 6,901 7,514 14,415

expense
Net income before 955,879 162,558 95,382 67,849 1,281,667

tax
Provision for tax - - - - -
Net income/(loss) 955,879 162,558 95,382 67,849 1,281,667
Expense on
Borrowings
Inflation Adjustment 132 46 19 (5) 191

Expense
Adjusted Loan Loss - - 34,973 111,464 146,437

Provision Expense
Total Adjustment 132 46 34,993 111,458 146,628

Expense
Net Income/(Loss) 955,747 162,512 60,390 (43,609) 1,135,039

After Adjustments
Average total equity 3,933,562 1,164,765 601,400 (92,065) 5,607,662
weighted avg.
Adjusted return-on- 6.7% 5.7% 3.2% -3.7% 5.6%

assets

equity

ratio

sufficiency (OSS)
Financial self 139.8% 183.6% 116.0% 89.2% 133.6%

sufficiency (FSS)
Annexures
Section 5


Income from loan 25,385,849 7,036,334 4,159,958 36,582,140
portfolio
Income from 2,162,290 329,594 225,048 2,716,932

investments
Income from other 715,776 1,630,187 125,369 2,471,332

sources
Total revenue 28,263,914 8,996,115 4,510,375 41,770,404
Less : financial 6,744,870 1,210,366 1,008,680 8,963,917

expense
Gross financial 21,519,044 7,785,748 3,501,695 32,806,487

margin
Less: loan loss 2,149,307 187,172 167,955 2,504,433

provision expense
Net financial margin 19,369,738 7,598,576 3,333,740 30,302,054
Personnel expense 7,359,723 2,683,648 1,532,600 11,575,971
Admin expense 7,109,956 1,461,952 505,058 9,076,966
Less: operating 14,469,679 4,145,600 2,037,658 20,652,937

expense
Other Non operating 138,327 620,198 14,415 772,940

expense
Net income before 4,761,732 2,832,778 1,281,667 8,876,178

tax
Provision for tax 1,600,002 377,553 - 1,977,555
Net income/(loss) 3,161,730 2,455,225 1,281,667 6,898,623
Adjusted Financial - 491,926 - 491,926

Expense on
Borrowings
Inflation Adjustment 349 181 191 722

Expense
Adjusted Loan Loss - 174,752 146,437 321,188

Provision Expense
Total Adjustment 349 666,859 146,628 813,837

Expense
Net Income/(Loss) 3,161,381 1,788,366 1,135,039 6,084,786

After Adjustments
Average total assets 126,187,673 31,744,580 20,132,365 178,064,618
Average total equity 19,876,866 6,755,660 5,607,662 32,240,189
weighted avg. weighted avg. weighted avg. weighted avg.
Adjusted return-on- 2.5% 5.6% 5.6% 3.4%

assets
Adjusted return-on- 15.9% 26.5% 20.2% 18.9%

equity
Financial expense 9.4% 5.1% 6.7% 8.1%

ratio
Operational self 120.3% 146.0% 139.7% 127.0%

sufficiency (OSS)
Financial self 120.3% 131.7% 133.6% 123.9%

sufficiency (FSS)
Annexures
Section 5

Operating Income in PKR 000

MFB
Revenue from loan 6,493,876 5,500,627 2,217,401 3,543,641 3,324,590
portfolio
Total revenue 7,044,869 6,139,824 2,650,824 3,914,550 3,537,639
Adjusted net 1,272,734 895,244 316,217 684,704 630,849

operating income
/ (loss)

(opening balance)

(closing balance)
Average gross loan 20,387,932 14,065,704 6,956,835 11,178,274 7,843,943

portfolio
Inflation rate * 3.7% 3.7% 3.7% 3.7% 3.7%
Total revenue ratio 23.3% 21.4% 18.2% 19.2% 29.4%

(total revenue-to-
average total assets)
Adjusted profit 18.1% 14.6% 11.9% 17.5% 17.8%

margin (adjusted
profit/(loss)-to-total
revenue)
Yield on gross 31.9% 39.1% 31.9% 31.7% 42.4%

portfolio (nominal)
Yield on gross 27.1% 34.1% 27.2% 27.0% 37.3%

portfolio (real)
MFB
Revenue from loan 1,329,051 1,699,396 1,181,055 96,212 25,385,849
portfolio
Total revenue 1,554,400 1,948,586 1,370,468 102,754 28,263,914
Adjusted net (735,514) 230,729 72,320 (205,903) 3,161,381

operating income
/ (loss)
Gross loan portfolio 2,654,416 1,350,107 919,381 205,347 54,986,234

(opening balance)

(closing balance)
Average gross loan 4,487,554 3,642,034 3,248,092 208,943 72,019,312

portfolio
Inflation rate * 3.7% 3.7% 3.7% 3.7% 3.7%
weighted avg.

(total revenue-to-
Annexures
Adjusted profit -47.3% 11.8% 5.3% -200.4% 11.2%

margin (adjusted
revenue)
Yield on gross 29.6% 46.7% 36.4% 46.0% 35.2%

portfolio (nominal)
Section 5

MFB
Yield on gross 25.0% 41.4% 31.5% 40.8% 30.4%
portfolio (real)
MFI
Revenue from loan 107,904 1,957,475 215,546 455,625 171,799
portfolio
Total revenue 124,499 2,348,586 251,214 483,835 206,244
Adjusted net (159,477) 737,339 67,173 144,168 28,400

operating income
/ (loss)

(opening balance)

(closing balance)
Average gross loan 578,025 4,557,959 652,055 1,198,346 402,185

portfolio
Inflation rate * 3.7% 3.7% 3.7% 3.7% 3.7%

(total revenue-to-
Adjusted profit -128.1% 31.4% 26.7% 29.8% 13.8%

margin (adjusted
revenue)
Yield on gross 18.7% 42.9% 33.1% 38.0% 42.7%

portfolio (nominal)
Yield on gross 14.4% 37.8% 28.3% 33.1% 37.6%

portfolio (real)
MFI
Revenue from loan 37,370 113,590 1,987,001 27,616 544,179
portfolio
Total revenue 150,956 120,583 2,008,383 36,360 1,106,001
Adjusted net 39,328 16,375 741,089 734 48,134

operating income
/ (loss)

(opening balance)

(closing balance)
Average gross loan 155,292 369,172 4,736,656 88,960 1,409,005

portfolio
Annexures
Inflation rate * 3.7% 3.7% 3.7% 3.7% 3.7%

(total revenue-to-
Section 5

MFI
Adjusted profit 26.1% 13.6% 36.9% 2.0% 4.4%
margin (adjusted
revenue)
Yield on gross 24.1% 30.8% 41.9% 31.0% 38.6%

portfolio (nominal)
Yield on gross 19.6% 26.1% 36.9% 26.4% 33.7%

portfolio (real)
MFI
Revenue from loan 76,667 150,348 129,224 46,255 48,150
portfolio
Total revenue 80,214 150,731 203,994 57,498 64,663
Adjusted net 10,304 64,840 76,711 3,475 16,876

operating income
/ (loss)

(opening balance)

(closing balance)
Average gross loan 718,361 417,603 1,205,403 168,023 175,018

portfolio
Inflation rate * 3.7% 3.7% 3.7% 3.7% 3.7%

(total revenue-to-
Adjusted profit 12.8% 43.0% 37.6% 6.0% 26.1%

margin (adjusted
revenue)
Yield on gross 10.7% 36.0% 10.7% 27.5% 27.5%

portfolio (nominal)
Yield on gross 6.7% 31.2% 6.8% 23.0% 23.0%

portfolio (real)
MFI
Revenue from loan 31,493 41,057 21,394 45,819 3,764
portfolio
Total revenue 34,327 43,640 23,234 73,804 6,369
Adjusted net 147 19,553 3,541 29,066 1,597

operating income
/ (loss)

Annexures
(opening balance)

(closing balance)
Average gross loan 86,986 111,534 90,573 139,570 19,351

portfolio
Section 5
Inflation rate * 3.7% 3.7% 3.7% 3.7% 3.7%

MFI

(total revenue-to-
Adjusted profit 0.4% 44.8% 15.2% 39.4% 25.1%

margin (adjusted
revenue)
Yield on gross 36.2% 36.8% 23.6% 32.8% 19.5%

portfolio (nominal)
Yield on gross 31.3% 31.9% 19.2% 28.1% 15.2%

portfolio (real)
MFI
Akhuwat OSDI Sub
Revenue from loan 824,058 - 7,036,334
portfolio
Total revenue 1,400,771 20,211 8,996,115
Adjusted net (79,302) (21,704) 1,788,366

operating income
/ (loss)

(opening balance)

(closing balance)
Average gross loan 6,447,100 15,542 23,742,717

portfolio
Inflation rate * 3.7% 3.7% 3.7%
weighted avg.
Total revenue ratio 16.5% 63.9% 28.3%

(total revenue-to-
Adjusted profit -5.7% -107.4% 19.9%

margin (adjusted
revenue)
Yield on gross 12.8% 0.0% 29.6%

portfolio (nominal)
Yield on gross 8.8% -3.6% 25.0%

portfolio (real)
RSP
Revenue from loan 3,166,610 285,982 404,018 303,348 4,159,958
portfolio
Total revenue 3,357,425 356,889 437,557 358,504 4,510,375
Adjusted net 955,747 162,512 60,390 (43,609) 1,135,039

Annexures
operating income
/ (loss)

(opening balance)
Section 5

RSP
(closing balance)

portfolio
Inflation rate * 3.7% 3.7% 3.7% 3.7% 3.7%
weighted avg.

(total revenue-to-
Adjusted profit 28.5% 45.5% 13.8% -12.2% 25.2%

margin (adjusted
revenue)
Yield on gross 28.7% 23.4% 27.2% 23.9% 27.7%

portfolio (nominal)
Yield on gross 24.1% 19.0% 22.7% 19.5% 23.2%

portfolio (real)

Revenue from loan 25,385,849 7,036,334 4,159,958 36,582,140
portfolio
Total revenue 28,263,914 8,996,115 4,510,375 41,770,404
Adjusted net 3,161,381 1,788,366 1,135,039 6,084,786

operating income
/ (loss)
Average total assets 126,187,673 31,744,580 20,132,365 178,064,618

(opening balance)

(closing balance)
Average gross loan 72,019,312 23,742,717 15,003,653 110,765,683

portfolio
Inflation rate * 3.7% 3.7% 3.7% 3.7%
Total revenue ratio 22.4% 28.3% 22.4% 23.5%

(total revenue-to-
Adjusted profit 11.2% 19.9% 25.2% 14.6%

margin (adjusted
revenue)
Yield on gross 35.2% 29.6% 27.7% 33.0%

portfolio (nominal)
Yield on gross 30.4% 25.0% 23.2% 28.3%

portfolio (real)
Annexures
Section 5

Operating Expense in PKR 000

MFB
Adjusted total 5,265,787 4,770,539 2,159,009 2,954,051 2,550,044
expense
Adjusted financial 1,807,109 1,113,495 580,886 1,239,768 647,593

expense
Adjusted loan loss 684,807 103,555 15,612 155,329 219,211

provision expense
Operating expense 2,773,871 3,553,489 1,562,511 1,558,954 1,683,241
Adjustment expense 0 110 42 84 46
Adjusted total 17.4% 16.6% 14.9% 14.5% 21.2%

expense-to-average
total assets
Adjusted financial 6.0% 3.9% 4.0% 6.1% 5.4%

expense-to-average
total assets
Adjusted loan loss 2.3% 0.4% 0.1% 0.8% 1.8%

provision expense-to-
average total assets
Adjusted operating 9.2% 12.4% 10.8% 7.7% 14.0%

expense-to-average
total assets
Adjusted personnel 4.4% 5.8% 5.7% 4.4% 7.1%

expense
Adjusted admin 4.7% 6.3% 5.0% 3.3% 6.8%

expense
Adjustment expense- 0.0% 0.0% 0.0% 0.0% 0.0%

to-average total
assets
MFB
Adjusted total 2,651,978 1,613,751 1,276,807 260,216 23,502,182
expense
Adjusted financial 671,551 255,330 428,308 830 6,744,870

expense
Adjusted loan loss 845,921 67,611 44,490 12,772 2,149,307

provision expense
Operating expense 1,134,506 1,290,810 804,009 246,614 14,608,005
Adjustment expense (10) 28 33 16 349
Weighted avg.
Adjusted total 71.4% 16.9% 19.9% 41.7% 18.6%

expense-to-average
total assets

expense-to-average
Annexures
total assets


expense-to-average
Section 5
total assets

MFB
expense
Adjusted admin 12.5% 7.2% 5.6% 24.6% 5.6%

expense

to-average total
assets
MFI
Adjusted total 283,964 1,611,235 184,036 339,655 173,451
expense
Adjusted financial 36,987 562,273 48,904 102,817 36,840

expense
Adjusted loan loss 201,068 (21,001) 14,764 15,338 6,463

provision expense
Operating expense 45,909 1,069,963 120,369 221,500 130,148
Adjustment expense 167,069 4,338 4 12 3
Adjusted total 37.1% 22.4% 18.6% 21.1% 22.5%

expense-to-average
total assets

expense-to-average
total assets
Adjusted loan loss 26.3% -0.3% 1.5% 1.0% 0.8%


expense-to-average
total assets

expense
Adjusted admin 1.7% 2.6% 4.8% 5.4% 7.6%

expense

to-average total
assets
MFI
Adjusted total 111,613 104,207 906,257 35,626 1,046,025
expense

expense
Adjusted loan loss - 7,127 48,580 (1,123) 26,705

provision expense
Annexures
Operating expense 100,395 66,984 672,768 21,688 951,385
Adjustment expense 14 1 239 4,817 5

Section 5

MFI
Adjusted total 20.0% 19.9% 17.6% 28.5% 68.8%
expense-to-average
total assets

expense-to-average
total assets
Adjusted loan loss 0.0% 1.4% 0.9% -0.9% 1.8%


expense-to-average
total assets

expense
Adjusted admin 2.1% 5.6% 3.0% 7.0% 34.6%

expense

to-average total
assets
MFI
Adjusted total 69,900 85,887 127,265 54,022 47,786
expense

expense
Adjusted loan loss 1,303 2,496 9,401 2,017 (3,935)

provision expense
Adjustment expense 10,297 4 28,159 2,187 (601)
Adjusted total 7.6% 19.7% 8.7% 23.7% 17.9%

expense-to-average
total assets

expense-to-average
total assets
Adjusted loan loss 0.1% 0.6% 0.6% 0.9% -1.5%


expense-to-average
total assets

expense
Adjusted admin 1.6% 7.3% 1.7% 7.4% 4.7%

expense
Adjustment expense- 1.1% 0.0% 1.9% 1.0% -0.2%

to-average total
assets
Annexures
Section 5

MFI
Adjusted total 34,180 24,087 19,692 44,736 4,430
expense

expense
Adjusted loan loss 2,868 1,998 1,902 2,156 (383)

provision expense
Adjustment expense 0 0 0 1 1
Adjusted total 23.5% 14.5% 14.3% 22.7% 9.5%

expense-to-average
total assets

expense-to-average
total assets
Adjusted loan loss 2.0% 1.2% 1.4% 1.1% -0.8%


expense-to-average
total assets

expense
Adjusted admin 5.9% 4.1% 4.1% 4.1% 3.7%

expense

to-average total
assets
MFI
Akhuwat OSDI Sub
Adjusted total 1,480,045 41,914 6,830,015
expense
Adjusted financial 444,943 59 1,702,293

expense
Adjusted loan loss 38,844 5,336 361,924

provision expense
Operating expense 996,258 36,518 4,765,798
Adjustment expense 444,971 5,338 666,859
Weighted avg.
Adjusted total 17.4% 132.5% 21.5%

expense-to-average
total assets
Adjusted financial 5.2% 0.2% 5.4%

expense-to-average
total assets
Adjusted loan loss 0.5% 16.9% 1.1%

Annexures
Adjusted operating 11.7% 115.5% 15.0%

expense-to-average
total assets
Adjusted personnel 6.7% 58.4% 8.5%

Section 5
expense

MFI
Akhuwat OSDI Sub
Adjusted admin 2.2% 57.1% 4.6%
expense
Adjustment expense- 5.2% 16.9% 2.1%

to-average total
assets
RSP
Adjusted total 2,401,546 194,332 377,148 402,119 3,375,144
expense
Adjusted financial 732,121 78,731 114,516 83,312 1,008,680

expense
Adjusted loan loss 115,381 (1,316) 45,702 154,624 314,391

provision expense
Operating expense 1,554,044 116,916 216,930 164,182 2,052,073
Adjustment expense 132 46 34,993 111,458 146,628
Weighted avg.
Adjusted total 16.9% 6.8% 19.8% 34.5% 16.8%

expense-to-average
total assets

expense-to-average
total assets


expense-to-average
total assets

expense
Adjusted admin 2.6% 1.2% 2.8% 4.1% 2.5%

expense

to-average total
assets
Annexures
Section 5

Operating Efficiency
MFB
Operating expense 2,755,914 3,485,207 1,559,937 1,558,766 1,669,761
(PKR 000)
Personnel expense 1,340,023 1,670,412 835,550 891,854 848,857

(PKR 000)

portfolio (PKR 000)
Average number of 557,082 385,415 221,078 325,521 132,252

active borrowers

active loans

expense-to-average
gross loan portfolio

expense-to-average
Average salary/gross 3.2 3.1 3.5 2.5 4.2

domestic product per
capita
Adjusted cost per 4,947 9,043 7,056 4,789 12,626

borrower (PKR)

loan (PKR)
MFB
Operating expense 1,107,253 1,287,181 801,942 243,716 14,469,679
(PKR 000)
Personnel expense 644,650 598,679 439,096 90,602 7,359,723

(PKR 000)

portfolio (PKR 000)
Average number of 45,643 90,929 22,254 2,925 1,783,099

active borrowers
Average number of 45,643 90,929 22,254 2,925 1,784,448

active loans
weighted avg.

expense-to-average

expense-to-average

capita

borrower (PKR)
Annexures

loan (PKR)
Section 5

MFI
(PKR 000)

(PKR 000)

portfolio (PKR 000)

active borrowers

active loans

expense-to-average

expense-to-average

capita
Adjusted cost per 856 4,089 2,059 4,314 5,453

borrower (PKR)
Adjusted cost per 856 4,089 2,059 4,314 5,453

loan (PKR)
MFI
(PKR 000)

(PKR 000)

portfolio (PKR 000)

active borrowers

active loans

expense-to-average

expense-to-average

capita

borrower (PKR)

loan (PKR)
Annexures
Section 5

MFI
(PKR 000)

(PKR 000)

portfolio (PKR 000)

active borrowers

active loans

expense-to-average

expense-to-average

capita
Adjusted cost per 1,151 2,944 852 2,899 2,992

borrower (PKR)
Adjusted cost per 1,151 2,944 852 2,899 2,992

loan (PKR)
MFI
(PKR 000)

(PKR 000)

portfolio (PKR 000)

active borrowers

active loans

expense-to-average

expense-to-average

capita

borrower (PKR)

loan (PKR)
Annexures
Section 5

MFI
Akhuwat OSDI Sub
Operating expense 754,468 36,518 4,145,600
(PKR 000)
Personnel expense 568,823 18,462 2,683,648

(PKR 000)

portfolio (PKR 000)
Average number of 567,761 330 1,551,481

active borrowers
Average number of 567,761 330 1,551,481

active loans
weighted avg.
Adjusted operating 11.7% 235.0% 17.5%

expense-to-average
Adjusted personnel 8.8% 118.8% 11.3%

expense-to-average
Average salary/gross 1.1 2.6 1.8

capita
Adjusted cost per 1,329 110,662 2,672

borrower (PKR)
Adjusted cost per 1,329 110,662 2,672

loan (PKR)
RSP
Operating expense 1,554,044 116,916 210,029 156,668 2,037,658
(PKR 000)
Personnel expense 1,185,258 81,757 156,942 108,643 1,532,600

(PKR 000)

portfolio (PKR 000)

active borrowers

active loans
weighted avg.

expense-to-average

expense-to-average

capita

borrower (PKR)

loan (PKR)
Annexures
Section 5


Operating expense 14,469,679 4,145,600 2,037,658 20,652,937
(PKR 000)
Personnel expense 7,359,723 2,683,648 1,532,600 11,575,971

(PKR 000)

portfolio (PKR 000)
Average number of 1,783,099 1,551,481 891,388 4,225,968

active borrowers
Average number of 1,784,448 1,551,481 891,388 4,227,317

active loans
Adjusted operating 20.1% 17.5% 13.6% 18.6%

expense-to-average
Adjusted personnel 10.2% 11.3% 10.2% 10.5%

expense-to-average
Average salary/gross 3.3 1.8 2.1 2.6

capita
Adjusted cost per 8,115 2,672 2,286 4,887

borrower (PKR)
Adjusted cost per 8,109 2,672 2,286 4,886

loan (PKR)
Productivity
MFB
Number of active 557,082 385,415 221,078 325,521 132,252
borrowers
Number of active 557,082 385,415 221,078 325,521 133,601

loans
Number of active 1,369,007 4,666,050 458,210 674,494 406,984

depositors
Number of deposit 1,369,007 4,666,050 458,210 674,494 406,984

accounts
Total staff 2,708 3,473 1,541 2,340 1,324
Total loan officers 1,396 1,366 710 1,289 689
Borrowers per staff 206 111 143 139 100
Loans per staff 206 111 143 139 101
Borrowers per loan 399 282 311 253 192

officer
Loans per loan officer 399 282 311 253 194
Depositors per staff 506 1,344 297 288 307

Annexures
Deposit accounts 506 1,344 297 288 307

per staff
Personnel allocation 51.6% 39.3% 46.1% 55.1% 52.0%

ratio
Section 5

MFB
Number of active 45,643 90,929 22,254 2,925 1,783,099
borrowers
Number of active 45,643 90,929 22,254 2,925 1,784,448

loans
Number of active 113,688 8,086,949 153,039 8,658 15,937,079

depositors
Number of deposit 113,688 8,086,949 153,039 8,658 15,937,079

accounts
Total staff 1,516 740 939 141 14,722
Total loan officers 339 266 357 62 6,474
weighted avg.
Loans per staff 30 123 24 21 121

officer
Depositors per staff 75 10,928 163 61 1,083
Deposit accounts 75 10,928 163 61 1,083

per staff

ratio
MFI
Number of active 44,741 214,981 58,468 44,954 22,940
borrowers
Number of active 44,741 214,981 58,468 44,954 22,940

loans
Number of active - - - - -
depositors
accounts
Total staff 140 2,096 286 250 208
Total loan officers 65 1,105 139 88 82
Loans per staff 320 103 204 180 110

officer
Depositors per staff 0 0 0 0 0
Deposit accounts 0 0 0 0 0
per staff

ratio
Annexures
Section 5

MFI
GBTI FFO ASA-P MO BRAC
Number of active 13,121 20,724 322,015 4,474 56,327
borrowers
Number of active 13,121 20,724 322,015 4,474 56,327

loans
depositors
accounts
Total staff 93 158 1,592 26 474
Total loan officers 12 83 912 14 274
Loans per staff 141 131 202 172 119
Borrowers per loan 1,093 250 353 320 206

officer
Loans per loan officer 1,093 250 353 320 206
per staff

ratio
MFI
Number of active 35,627 22,718 71,430 14,269 12,891
borrowers
Number of active 35,627 22,718 71,430 14,269 12,891

loans
depositors
accounts
Total staff 249 73 421 86 104
Loans per staff 143 311 170 166 124

officer
per staff

ratio
Annexures
Section 5

MFI
Number of active 6,094 5,917 3,637 6,314 1,748
borrowers
Number of active 6,094 5,917 3,637 6,314 1,748

loans
depositors
accounts
Total staff 62 35 26 71 12
Loans per staff 98 169 140 89 146

officer
per staff

ratio
MFI
Akhuwat OSDI Sub
Number of active 567,761 330 1,551,481
borrowers
Number of active 567,761 330 1,551,481

loans
Number of active - - -
depositors
Number of deposit - - -
accounts
Total staff 3,491 46 9,999
Total loan officers 1,899 2 5,245
weighted avg.
Borrowers per staff 163 7 155
Loans per staff 163 7 155
Borrowers per loan 299 165 296

officer
Loans per loan officer 299 165 296
Depositors per staff 0 0 -
Deposit accounts 0 0 -
per staff
Personnel allocation 54.4% 4.3% 52.5%

ratio
Annexures
Section 5

RSP
Number of active 649,682 58,890 110,055 72,761 891,388
borrowers
Number of active 649,682 58,890 110,055 72,761 891,388

loans
depositors
accounts
Total staff 3,221 641 527 303 4,692
Total loan officers 3,014 224 237 148 3,623
weighted avg.
Loans per staff 202 92 209 240 190

officer
Depositors per staff - - - - -
Deposit accounts - - - - -
per staff

ratio

Number of active 1,783,099 1,551,481 891,388 4,225,968
borrowers
Number of active 1,784,448 1,551,481 891,388 4,227,317

loans
Number of active 15,937,079 - - 15,937,079

depositors
Number of deposit 15,937,079 - - 15,937,079

accounts
Total staff 14,722 9,999 4,692 29,413
Total loan officers 6,474 5,245 3,623 15,342
Borrowers per staff 121 155 190 144
Loans per staff 121 155 190 144
Borrowers per loan 275 296 246 275

officer
Loans per loan officer 276 296 246 276
Depositors per staff 1,083 - - 542
Deposit accounts 1,083 - - 542

per staff
Personnel allocation 44.0% 52.5% 77.2% 52.2%

ratio
Annexures
Section 5

Risk in PKR 000

MFB
Portfolio at risk > 347,374 93,891 58,873 48,060 114,977
30 days

90 days
Loan loss reserve 369,450 110,070 90,698 144,309 126,865

(balance sheet)
Loan Portfolio 535,708 52,348 55,057 97,336 152,428

written off during
year

portfolio
Portfolio at risk 1.5% 0.6% 0.7% 0.4% 1.1%

(>30)-to-gross loan
portfolio
Portfolio at risk(>90)- 0.8% 0.2% 0.2% 0.1% 0.5%

to-gross loan
portfolio
Write off-to-average 2.6% 0.37% 0.8% 0.9% 1.9%

Risk coverage ratio 106.4% 117.2% 154.1% 300.3% 110.3%

(adjusted loan loss
reserve-to-portfolio
at risk >30 days)
MFB
Portfolio at risk > 24,400 - 25,633 6,007 719,215
30 days
Portfolio at risk > 449 - 13,153 4,006 334,590

90 days
Loan loss reserve 913,163 75,138 48,381 4,511 1,882,585

(balance sheet)
Loan Portfolio - - 2,589 23,651 919,119

written off during
year

portfolio
weighted avg.

(>30)-to-gross loan
portfolio

to-gross loan
portfolio

Annexures
Risk coverage ratio 3742.5% #DIV/0! 188.7% 75.1% 261.8%

(adjusted loan loss
at risk >30 days)
Section 5

MFI
Portfolio at risk > 234,972 14,798 10,466 5,057 50
30 days

90 days

(balance sheet)
Loan Portfolio 15,919 3,099 27,428 9,319 7

written off during
year

portfolio

(>30)-to-gross loan
portfolio

to-gross loan
portfolio


(adjusted loan loss
at risk >30 days)
MFI
Portfolio at risk > - 5,918 11,410 753 30,551
30 days
Portfolio at risk > - 3,680 11,410 436 28,876

90 days

(balance sheet)
Loan Portfolio - 318 8,486 - 32,304

written off during
year

portfolio

(>30)-to-gross loan
portfolio

to-gross loan
portfolio


(adjusted loan loss
Annexures
at risk >30 days)
Section 5

MFI
Portfolio at risk > 306 3,170 4,291 26 4,996
30 days
Portfolio at risk > 306 2,991 2,767 - 3,042

90 days

(balance sheet)
Loan Portfolio 4,678 1,892 1,242 425 -

written off during
year

portfolio

(>30)-to-gross loan
portfolio

to-gross loan
portfolio


(adjusted loan loss
at risk >30 days)
MFI
30 days

90 days
Loan loss reserve 6,744 5,619 4,712 7,319 776

(balance sheet)
Loan Portfolio 1,294 1,086 1,463 343 1,302

written off during
year

portfolio

(>30)-to-gross loan
portfolio

to-gross loan
portfolio


(adjusted loan loss
Annexures
at risk >30 days)
Section 5

MFI
Akhuwat OSDI Sub
Portfolio at risk > 26,325 11,407 384,524
30 days
Portfolio at risk > - 11,407 308,278

90 days
Loan loss reserve 80,642 6,071 562,898

(balance sheet)
Loan Portfolio 5,466 - 116,072

written off during
year

portfolio
weighted avg.
Portfolio at risk 0.3% 100.0% 1.4%

(>30)-to-gross loan
portfolio
Portfolio at risk(>90)- 0.0% 100.0% 1.1%

to-gross loan
portfolio
Write off-to-average 0.1% 0.0% 0.5%

Risk coverage ratio 306.3% 53.2% 146.4%

(adjusted loan loss
at risk >30 days)
RSP
30 days

90 days

(balance sheet)
Loan Portfolio 37,224 - 31,742 43,161 112,127

written off during
year

portfolio
weighted avg.

(>30)-to-gross loan
portfolio

to-gross loan
portfolio


(adjusted loan loss
Annexures
at risk >30 days)
Section 5


Portfolio at risk > 719,215 384,524 461,720 1,565,459
30 days
Portfolio at risk > 334,590 308,278 430,693 1,073,562

90 days
Loan loss reserve 1,882,585 562,898 369,436 2,814,919

(balance sheet)
Loan Portfolio 919,119 116,072 112,127 1,147,319

written off during
year

portfolio
Portfolio at risk 0.8% 1.4% 2.9% 1.2%

(>30)-to-gross loan
portfolio
Portfolio at risk(>90)- 0.4% 1.1% 2.7% 0.8%

to-gross loan
portfolio
Write off-to-average 1.3% 0.5% 0.7% 1.0%

Risk coverage ratio 261.8% 146.4% 80.0% 179.8%

(adjusted loan loss
at risk >30 days)
Annexures
Section 5

Annexures
Section 5

AIII - Social
Performance
Indicators 2016
MFBs
Social Goals
KBL TMFB FMFBP FINCA MMFB
1.1 Target market Clients living in rural P P P P P
areas
Clients living in urban

areas
P P P P P
Women P P P P P
Adolescents and youth
(below 18)
None of the above
Ubank POMFB NRSP APMBL

Bank
Clients living in rural
areas
P P P
areas
P P P P
Women P P P P
Annexures
(below 18)
None of the above

Section 5


1.2 Development goals Increased access to P P P P P
financial services
Poverty reduction P P P P P
Employment
generation
P P P P
Development of start-
up enterprises
P P
Growth of existing
businesses
P P P P P
Improvement of adult
education
Youth opportunities P
Children's schooling P
Health improvement P
Gender equality
and women's
P
empowerment
Water and sanitation P

Housing P P
None of the above

Bank
Increased access to
financial services
P P P P
Poverty reduction P P P P
Employment
generation
P P
up enterprises
P P P
Growth of existing
businesses
P P P P
education
Gender equality
and women's
P P P P
empowerment
Water and sanitation
Housing
None of the above

1.3 Poverty level Very poor clients
Annexures
Poor clients P P P
Low income clients P P P P
No specific poverty
target
P
Section 5


Bank
Very poor clients
Poor clients P P
No specific poverty
target

1.4 Does MFP measure Yes P P P P
poverty
No P
Unknown

Bank
Yes P P
No P P
Unknown

1.5 Poverty measurement Grameen Progress out P
tool of Poverty Index (PPI)
USAID Poverty
Assessment Tool (PAT)
Per capita household

expenditure
P
income
P
Participatory Wealth
Ranking (PWR)
Housing index
Food security index
Means test
Own proxy poverty

index
P P P
None of the above P
Bank
Grameen Progress out
of Poverty Index (PPI)
USAID Poverty

expenditure
P
Annexures

income
P
Ranking (PWR)
Section 5

Housing index
Food security index
Means test
Own proxy poverty

index
P
None of the above P P
Governance and HR
2.1 Board orientation of Yes P P P P
social mission
No P
Unknown

Bank
Yes P P P P
No
Unknown
2.2 SPM champion/ Yes P P

committee at Board
No P P P
Unknown

Bank
Yes P
No P P P
Unknown

2.3 Board experience in SPM Yes P P P P
No P
Unknown

Annexures
Bank
Yes P P P
No
Section 5
Unknown P


2.4 Staff incentives related Number of clients P P P P
to SP
Quality of interaction
with clients based
P
on client feedback
mechanism
Quality of social data

collected
Portfolio quality P P P P P
None of the above

Bank
Number of clients P P P P
with clients based
on client feedback
mechanism

collected
Portfolio quality P P P P
None of the above

2.5 How number of clients is Total number of clients P P P P P
incentivized
Number of new clients P P P

Client retention P
None of the above

Bank
Total number of clients P P P P
Client retention P P P
None of the above

2.6 HR policies related to SP Social protection P P P P P
(medical insurance
and/or pension
contribution)
Safety policy P P
Anti-harassment policy P P P P P
Non-discrimination P P P P P
Annexures
policy
Grievance resolution
policy
P P P P P
None of the above
Section 5


Bank
Social protection
(medical insurance
P P P P
and/or pension
contribution)
Safety policy P P P
Anti-harassment policy P P P
Non-discrimination
policy
P P P
policy
P P P
None of the above
Products and Services

3.1 Types of credit products Income generating P P P P P
loans
Non-income
generating loans
P P P
Does not offer credit
products

Bank
Income generating
loans
P P P P
Non-income
generating loans
P P
products

3.2 Types of income Microenterprise loans P P P P P
generating loans
SME loans P
Agriculture/livestock
loans
P P P P P
Express loans P P P P
None of the above

Bank
Microenterprise loans P P P P
Annexures
SME loans P P P
loans
P P P
Express loans
Section 5
None of the above


3.3 Types of non-income Education loans P
generating loans
Emergency loans P P P
Housing loans P P
Other household
needs/consumption
P P P
None of the above P
Bank
Education loans P
Emergency loans P
Housing loans
Other household
needs/consumption
P P

3.4 Types of savings Compulsory sacings P
products accounts
Voluntary savings
accounts
P P P P P
Does not offer savings
accounts

Bank
Compulsory sacings
accounts
Voluntary savings
accounts
P P P P
accounts

3.5 Types of voluntary Demand deposit P P P P P
savings products accounts
Time deposit accounts P P P P P

None of the above

Bank
Demand deposit
accounts
P P P P
Time deposit accounts P P P P
None of the above
Annexures

3.6 Compulory insurance Yes P P P P
Section 5
required

No P
Unknown

Bank
Yes P P P P
No
Unknown

3.7 Types of compulory Credit life insurance P P P P
insurance required
Life/accident insurance P P
Agriculture insurance P P P
None of the above P
Bank
Credit life insurance P P P P
Life/accident insurance P
Agriculture insurance P P
None of the above

3.8 Voluntary insurance Yes P P P
offered
No P P
Unknown

Bank
Yes P
No P P P
Unknown

3.9 Types of voluntary Credit life insurance
insurance offered
Agriculture insurance P
Health insurance P P P
Annexures
House insurance
Workplace insurance

Section 5


Bank
Credit life insurance
Life/accident insurance
Agriculture insurance
Health insurance P
House insurance
Workplace insurance
None of the above P P P

3.10 Other financial services
offered
Yes P P P P P
No
Unknown

Bank
Yes P P P
No P
Unknown

offered
Debit/credit card P P P P
Mobile/branchless
banking services
P P P
Savings facilitation
services
P P
Remittance/money
transfer services
P P P P P
Payment services P P P
Microleasing
Scholarship/
educational grants
None of the above

Bank
Debit/credit card P P P
Mobile/branchless
banking services
P P
services
P P P
Remittance/money P P
Annexures
transfer services
Payment services P P
Microleasing
Scholarship/
Section 5
educational grants

None of the above P

3.12 Enterprise services Yes
offered
No P P P P P
Unknown

Bank
Yes
No P P P P
Unknown

3.13 Types of enterprise Enterprise skills
services offered development
Business development
services
None of the above P P P P P

Bank
Enterprise skills
development
services
None of the above P P P P

3.14 Women’s empowerment Yes
services
No P P P P P
Unknown

Bank
Yes
No P P P P
Unknown

Annexures
3.15 Types of women’s Leadership training for

empowerment services women
offered
Women's rights
education/gender
issues training
Section 5

Counseling/legal
services for female
victims of violence

Bank
Leadership training for
women
Women's rights
education/gender
issues training
Counseling/legal
services for female
victims of violence

3.16 Education services
offered
Yes P P P
No P P
Unknown

Bank
Yes P
No P P P
Unknown

3.17 Types of education
services offered
Financial literacy
education
P P
Basic health/nutrition
education
P
Child and youth
education
Occupational health
and safety in the
workplace education

Bank
Financial literacy
education
P
education
Child and youth

education
Occupational health
Annexures
and safety in the

workplace education

Section 5


3.18 Health services offered Yes
No P P P P P
Unknown

Bank
Yes
No P P P P
Unknown

3.19 Types of health services Basic medical services
offered
Special medical
services for women
and children

Bank
Basic medical services
Special medical
services for women
and children
Client Protection
4.1 Do policies support good Yes P P P P P
repayment capacity
analysis
No
Partially
Unknown

Bank
Yes P P P P
No
Partially
Unknown
Annexures
Section 5


4.2 Does internal audit Yes P P P P P
verify compliance with
policies No
Partially
Unknown

Bank
Yes P P P P
No
Partially
Unknown

4.3 The institution fully Yes P P P P
discloses to the clients
all prices, installments, No
terms, and conditions
of all financial products,
including all charges
Partially P
and fees, associated Unknown
prices, penalties, linked
products, third party Ubank POMFB NRSP APMBL
fees, and whether these
can change over time. Bank
Yes P P P P
No
Partially
Unknown

4.4 The institution clearly Yes P P P P
presents to clients
the total amount that No
the client pays for the
product, regardless
of local regulations
Partially P
(including in the absence Unknown
of industry-wide pricing
transparency initiative). Ubank POMFB NRSP APMBL
Bank
Yes P P P
No
Partially P
Unknown
Annexures
Section 5


spells out in a Code of
Conduct (i.e., in Code of No
Conduct, Code of Ethics,
Book of Employee Rules)
the specific standards
Partially P
of professional conduct Unknown
that are expected of all
employees involved in Ubank POMFB NRSP APMBL
collections (including
third party staff). Bank
Yes P P P P
No
Partially
Unknown

4.6 The institution Yes P P P P
sanctions cases of
violations of the Code of No
Conduct or collections
policies (identified by
management, internal
Partially P
audit or an efficient Unknown
complaint mechanism)
according to set rules. Ubank POMFB NRSP APMBL
Bank
Yes P P P
No P
Partially
Unknown

4.7 The institution’s Yes P P P P P
policies include how
to handle complaints. No
They include how to
inform clients about the
complaint mechanism.
Partially P
The institution’s Unknown
clients receive a timely
resolution of their Ubank POMFB NRSP APMBL
complaints.
Bank
Yes P P P P
No
Partially
Unknown
Annexures
Section 5


contracts include a
data privacy clause, No
describing how and
when data can be shared
(in addition to credit
Partially P
bureau information). Unknown

Bank
Yes P P P P
No
Partially
Unknown

4.9 How interest rate of Declining balance P P P
most representative interest method
credit product is stated
Flat interest method P P
Bank
Declining balance
interest method
P P P
Flat interest method P
Environment
5.1 Environmental policies Awareness raising on P
in place environmental impacts
Clauses in loan
contracts requiring
P P
clients to improve
environmental
practices/mitigate
environmental risks
Tools to evaluate
environmental risks of
P P
clients' activities
Specific loans linked

to environmentally
P P
friendly products and/
or practices
None of the above P

Bank
Annexures
Awareness raising on
environmental impacts
P
Section 5


Clauses in loan
contracts requiring
P P
clients to improve
environmental
practices/mitigate
environmental risks
Tools to evaluate
P P
clients' activities

to environmentally
or practices
None of the above P

5.2 Types of environmentally Products related to P
friendly products and/or renewable energy (e.g.
practices offered solar panels, biogas
digesters etc)
Products related to
energy efficiency (e.g.
P
insulation, improved
cooking stove etc)
Products related
to environmentally
friendly practices
(e.g. organic farming,
recycling, waste
management etc)

Bank
Products related to
renewable energy (e.g.
P
solar panels, biogas
digesters etc)
Products related to
cooking stove etc)
Products related
to environmentally
friendly practices
recycling, waste
management etc)

Annexures
Section 5

MFIs
Social Goals
AGAHE Akhuwat BEDF CSC FFO
areas

areas
P P P P P
Women P P P P P
(below 18)
None of the above
JWS Kashf MOJAZ OCT RCDP

Founda-
tion
areas
P P P P
areas
P P P P P
Women P P P P P
below 18)
P
None of the above
SSF SVDP OLP BRAC Micro-op-

tions
areas
P P P P P
areas
P P P
Women P P P P
(below 18)
P
None of the above
SRDO SWWS ASA-P SAATH VDO

areas
P P P P
areas
P P P
Women P P P P
(below 18)
P
None of the above
DSP
Clients living in rural P
Annexures
areas

areas
P
Women P
Section 5
(below 18)

None of the above

1.2 Development goals Increased access to P P P P
financial services
Employment
generation
P P P P
up enterprises
P P
Growth of existing
businesses
P P P P P
education
Youth opportunities P P
Children's schooling
Health improvement P P
Gender equality
and women's
P P P P
empowerment
Housing P
None of the above

Founda-
tion
Increased access to
financial services
P P P P P
Employment
generation
P P P P
up enterprises
P P
Growth of existing
businesses
P P P P
education
P
Gender equality
and women's
P P P P P
empowerment
Housing
None of the above

Annexures

tions
Increased access to P P P P P
Section 5
financial services

Poverty reduction P P P P
Employment
generation
P P P P P
up enterprises
P P P
Growth of existing
businesses
P P P P P
education
P
Youth opportunities
Health improvement
Gender equality
and women's
P P P
empowerment

Housing
None of the above

Increased access to
financial services
P P P
Employment
generation
P P P P
up enterprises
P
Growth of existing
businesses
P P P P
education
Health improvement
Gender equality
and women's
P P P P
empowerment

Housing
None of the above
DSP
Increased access to
financial services
P
Poverty reduction P
Employment
generation
P
Annexures
up enterprises
Growth of existing
businesses
P
Section 5
education

Youth opportunities
Health improvement
Gender equality
and women's
P
empowerment
Housing
None of the above

1.3 Poverty level Very poor clients P P
Poor clients P P P P P
No specific poverty
target

Founda-
tion
Very poor clients P
Poor clients P P P
Low income clients P P P P P
No specific poverty
target

tions
Very poor clients P P
Poor clients P P P P
Low income clients P P P P P
No specific poverty
target

Very poor clients
No specific poverty
target
DSP
Very poor clients
Poor clients P
Low income clients P
Annexures
No specific poverty
target
Section 5


1.4 Does MFP measure Yes P P P P
poverty
No P
Unknown

Founda-
tion
Yes P P P P P
No
Unknown

tions
Yes P P P P P
No
Unknown

Yes P P P P P
No
Unknown
DSP
Yes P
No
Unknown

1.5 Poverty level Grameen Progress out
USAID Poverty

expenditure

income
Ranking (PWR)
Housing index
Food security index
Means test
Own proxy poverty

index

Annexures
Founda-
tion
P P P
USAID Poverty
Section 5


expenditure

income
Ranking (PWR)
P
Housing index
Food security index
Means test
Own proxy poverty

index
P P P
None of the above

tions
USAID Poverty

expenditure
P P P
income
P P
Ranking (PWR)
Housing index P
Food security index
Means test
Own proxy poverty

index
P P
None of the above

P
USAID Poverty
P
expenditure
P
income
P P P P
Ranking (PWR)
P
Housing index P
Food security index P
Means test
Own proxy poverty

index
None of the above
DSP
Annexures
USAID Poverty

expenditure
Section 5


income
Ranking (PWR)
Housing index
Food security index
Means test
Own proxy poverty

index
P
None of the above
Governance and HR
2.1 Board orientation of Yes P P P P P
social mission
No
Unknown

Founda-
tion
Yes P P P P P
No
Unknown

tions
Yes P P P P
No P
Unknown

Yes P P P P P
No
Unknown
DSP
Yes
No P
Unknown
Annexures

committee at Board
No P P P
Section 5
Unknown


Founda-
tion
Yes P P P
No P P
Unknown

tions
Yes P P P
No P P
Unknown

Yes P P P P P
No
Unknown
DSP
Yes P
No
Unknown

2.3 Board experience in SPM Yes P P P P
No
Unknown P
Founda-
tion
Yes P P P P
No P
Unknown

tions
Yes P P P P
No P
Unknown

Yes P P P P P
No
Unknown
Annexures
DSP
Yes
No P
Unknown
Section 5


to SP
with clients based
P
on client feedback
mechanism

collected
P
Portfolio quality P P P
None of the above P
Founda-
tion
with clients based
P P P
on client feedback
mechanism

collected
P P
None of the above

tions
with clients based
P
on client feedback
mechanism

collected
P
None of the above

Number of clients P P
with clients based
P P
on client feedback
mechanism

collected
P P
Portfolio quality P P P P
None of the above P
DSP
Number of clients
with clients based
on client feedback
mechanism
Annexures

collected
Portfolio quality
None of the above P

Section 5


2.5 How number of clients is Total number of clients P P
incentivized
Number of new clients P

Client retention P
Founda-
tion
Total number of clients P
Client retention P P P P
None of the above P
tions
Total number of clients P P
Client retention P
None of the above

Total number of clients P P
Client retention P P P
None of the above P
DSP
Total number of clients
Number of new clients
Client retention
None of the above P

2.6 HR policies related to SP Social protection P P P P P
(medical insurance
and/or pension
contribution)
Safety policy P P
Non-discrimination
policy
P P P P
policy
P P P P P
Annexures
None of the above

Section 5


Founda-
tion
Social protection
(medical insurance
P P P P P
and/or pension
contribution)
Safety policy P P P P
Non-discrimination
policy
P P P P
policy
P P P P P
None of the above

tions
Social protection
(medical insurance
P P P P
and/or pension
contribution)
Safety policy P P P
Non-discrimination
policy
P P P P
policy
P P P P
None of the above

Social protection
(medical insurance
P P P
and/or pension
contribution)
Safety policy P P
Anti-harassment policy P P P P
Non-discrimination
policy
P P P P P
policy
P P P P
None of the above
DSP
Social protection
(medical insurance
P
and/or pension
contribution)
Safety policy P
Anti-harassment policy P
Non-discrimination
policy
P
policy
P
Annexures
None of the above

Section 5


loans
Non-income
generating loans
P
products

Founda-
tion
Income generating
loans
P P P P P
Non-income
generating loans
P P
products

tions
Income generating
loans
P P P P P
Non-income
generating loans

products

Income generating
loans
P P P P P
Non-income
generating loans
P
products
DSP
Income generating
loans
P
Non-income
generating loans

products

3.2 Types of income Microenterprise loans P P P P P
generating loans
SME loans
loans
P P P P
Express loans
None of the above

Annexures

Founda-
tion
Microenterprise loans P P P P P
Section 5
SME loans P P P

loans
P P P
Express loans
None of the above

tions
SME loans P P P P
loans
P P P P P
Express loans
None of the above

SME loans P P
loans
P P P P
Express loans
None of the above
DSP
Microenterprise loans P
SME loans
loans
P
Express loans
None of the above

generating loans
Emergency loans P
Housing loans P
Other household
needs/consumption

Founda-
tion
Education loans P
Emergency loans P P P
Housing loans
Other household
needs/consumption
P P
Annexures

tions
Section 5
Education loans

Emergency loans
Housing loans
Other household
needs/consumption

Education loans P P
Emergency loans
Housing loans
Other household
needs/consumption

DSP
Education loans
Emergency loans
Housing loans
Other household
needs/consumption
None of the above P

3.4 Types of savings Compulsory savings
products accounts
Voluntary savings
accounts

accounts
P P P P P
Founda-
tion
Compulsory savings
accounts
Voluntary savings
accounts
P
accounts
P P P P
tions
Compulsory savings
accounts
P
Voluntary savings
accounts

accounts
P P P P
Compulsory savings
accounts
Annexures
Voluntary savings
accounts
P P
accounts
P P P
Section 5
DSP

Compulsory savings
accounts
Voluntary savings
accounts

accounts
P

3.5 Types of voluntary Demand deposit
Time deposit accounts

Founda-
tion
Demand deposit
accounts

tions
Demand deposit
accounts

Demand deposit
accounts
P
Time deposit accounts P
DSP
Demand deposit
accounts
None of the above P

3.6 Compulory insurance Yes P P P
required
No P P
Unknown

Founda-
tion
Annexures
Yes P P P P
No P
Unknown
Section 5


tions
Yes P P P P
No
Unknown Unknown

Yes P P P
No P P
Unknown
DSP
Yes P
No
Unknown

3.7 Types of compulory Credit life insurance P P
insurance required

Founda-
tion
None of the above P

tions
Life/accident insurance P P
None of the above

Credit life insurance P P P
Agriculture insurance P P
DSP
Annexures
Credit life insurance P

Section 5
None of the above


3.8 Voluntary insurance Yes P
offered
No P P P P
Unknown

Founda-
tion
Yes P P
No P P P
Unknown

tions
Yes P
No P P P P
Unknown

Yes P P
No P P P
Unknown
DSP
Yes
No P
Unknown

insurance offered
Life/accident
insurance
P
Health insurance
House insurance
Workplace insurance

Founda-
tion
Credit life insurance P P
Life/accident
insurance
Annexures
Health insurance P P
House insurance
Workplace insurance
Section 5
"


tions
Credit life insurance P
Life/accident
insurance
P
Health insurance P
House insurance
Workplace insurance

Credit life insurance P P
Life/accident
insurance
P P
Health insurance P
House insurance
Workplace insurance

DSP
Credit life insurance
Life/accident
insurance
Health insurance
House insurance
Workplace insurance
None of the above P

"

offered
Yes P P
No P P P
Unknown

Founda-
tion
Yes P P
No P P P
Unknown
Annexures

tions
Yes P P
Section 5
No P P P

Unknown

Yes P P P
No P P
Unknown
DSP
Yes P
No
Unknown

3.11 Types of other financial Debit/credit card
services offered
Mobile/branchless
banking services
P
services
Remittance/money
transfer services
Payment services
Microleasing
Scholarship/
educational grants
P
Founda-
tion
Debit/credit card
Mobile/branchless
banking services
P
services
Remittance/money
transfer services
Payment services
Microleasing
Scholarship/
educational grants
P P
tions
Debit/credit card
Mobile/branchless
banking services
P P
Annexures
services
Remittance/money
transfer services
Payment services
Microleasing
Section 5

Scholarship/
educational grants

Debit/credit card
Mobile/branchless
banking services
services
Remittance/money
transfer services
Payment services
Microleasing P P
Scholarship/
educational grants

DSP
Debit/credit card
Mobile/branchless
banking services
P
services
Remittance/money
transfer services
Payment services
Microleasing
Scholarship/
educational grants
None of the above

3.12 Enterprise services
offered
Yes P P P P
No P
Unknown

Founda-
tion
Yes P P P P P
No
Unknown

tions
Yes P P
No P P P
Annexures
Unknown

Yes P P P
Section 5
No P

Unknown P
DSP
Yes P
No
Unknown

3.13 Types of enterprise
services offered
Enterprise skills
development
P P P P
services
P P P
None of the above P
Founda-
tion
Enterprise skills
development
P P P P P
services
P P P
None of the above

tions
Enterprise skills
development
P P
services
P
Enterprise skills
development
P P P P
services
P P P
DSP
Enterprise skills
development
P
services
None of the above

3.14 Women’s empowerment
services
Yes P P P P
No P
Annexures
Unknown

Founda-
tion
Yes P P P P
Section 5

No P
Unknown

tions
Yes P P
No P P
Unknown P
Yes P P
No P P P
Unknown
DSP
Yes P
No
Unknown

3.15 Types of women’s
empowerment services
women
P P P
offered
Women's rights
education/gender
P P P P
issues training
Counseling/legal
services for female
P
victims of violence
None of the above P

Founda-
tion
women
P P P P
Women's rights
education/gender
P P
issues training
Counseling/legal
services for female
P
victims of violence
None of the above P

tions
women
P
Women's rights
education/gender
P P
issues training
Annexures
Counseling/legal
services for female
victims of violence

Section 5


women
P P P
Women's rights
education/gender
P P P
issues training
Counseling/legal
services for female
P P P
victims of violence

DSP
women
P
Women's rights
education/gender
issues training
Counseling/legal
services for female
victims of violence
None of the above

offered
Yes P P
No P P P
Unknown

Founda-
tion
Yes P P P
No P
Unknown

tions
Yes P P P
No P P
Unknown

Yes P P P P
No P
Unknown
DSP
Yes
No
Unknown
Annexures
Section 5


services offered
Financial literacy
education
P P
education
P
Child and youth
education
Occupational health
and safety in the
workplace education

Founda-
tion
Financial literacy
education
P P P
education
P P
Child and youth
education
P
Occupational health
and safety in the
P
workplace education

tions
Financial literacy
education
P P
education
P
Child and youth
education
Occupational health
and safety in the
workplace education

Financial literacy
education
P P P P
education
P P P
Child and youth
education
P P P
Occupational health
and safety in the
workplace education
None of the above P

DSP
Financial literacy
education
P
Annexures
education
Child and youth

education
Occupational health
and safety in the
workplace education
Section 5

None of the above

3.18 Health services offered Yes P
No P P P P
Unknown

Founda-
tion
Yes P P
No P P P
Unknown

tions
Yes P P
No P P P
Unknown

Yes P P
No P P
Unknown P
DSP
Yes
No
Unknown P

3.19 Types of health services
offered
Basic medical services P
Special medical
services for women
and children

Founda-
tion
Basic medical services P P
Special medical
services for women
P
and children

Annexures

tions
Section 5

Special medical
services for women
and children

Special medical
services for women
P P
and children
None of the above P P v
DSP
Basic medical services
Special medical
services for women
and children
None of the above P
Client Protection
4.1 Do policies support good Yes P P P P P
repayment capacity
analysis
No
Partially
Unknown

Founda-
tion
Yes P P P P P
No
Partially
Unknown

tions
Yes P P P P
No
Partially P
Unknown

Yes P P P P P
Annexures
No
Partially
Unknown
Section 5
DSP

Yes P
No
Partially
Unknown

4.2 Does internal audit Yes P P P P P
policies
No
Partially
Unknown

Founda-
tion
Yes P P P P P
No
Partially
Unknown

tions
Yes P P P P P
No
Partially
Unknown

Yes P P P P P
No
Partially
Unknown DSP
Yes P
No
Partially
Unknown

4.3 The institution fully Yes P P P P P
of all financial products, Partially
Annexures

products, third party
can change over time. JWS Kashf MOJAZ OCT RCDP
Founda-
tion
Section 5

Yes P P P P P
No
Partially
Unknown

tions
Yes P P P P P
No
Partially
Unknown

Yes P P P P P
No
Partially
Unknown
DSP
Yes P
No
Partially
Unknown

4.4 The institution clearly Yes P P P
presents to clients
the total amount that No
the client pays for the
product, regardless Partially
of local regulations
(including in the absence
of industry-wide pricing
Unknown P P
transparency initiative). JWS Kashf MOJAZ OCT RCDP
Founda-
tion
Yes P P P P P
No
Partially
Unknown

tions
Yes P P P P
No
Partially P
Unknown
Annexures

Yes P P P
No
Partially
Section 5

Unknown
DSP
Yes P
No
Partially
Unknown

Book of Employee Rules)
Partially P
employees involved in JWS Kashf MOJAZ OCT RCDP
third party staff). Founda-
tion
Yes P P P P P
No
Partially
Unknown

tions
Yes P P P P P
No
Partially
Unknown

Yes P P P P P
No
Partially
Unknown
DSP
Yes P
No
Partially
Unknown
Annexures
Section 5


4.6 The institution Yes P P P P
sanctions cases of
violations of the Code of No
Conduct or collections
policies (identified by
management, internal
Partially P
audit or an efficient Unknown
complaint mechanism)
according to set rules. JWS Kashf MOJAZ OCT RCDP
Founda-
tion
Yes P P P P P
No
Partially
Unknown

tions
Yes P P P P P
No
Partially
Unknown

Yes P P P P
No
Partially
Unknown
DSP
Yes P
No
Partially
Unknown

policies include how
to handle complaints. No
They include how to
inform clients about the Partially
complaint mechanism.
The institution’s Unknown
clients receive a timely
resolution of their JWS Kashf MOJAZ OCT RCDP
complaints.
Founda-
tion
Yes P P P P P
No
Partially
Annexures
Unknown

tions
Yes P P P P P
Section 5

No
Partially
Unknown

Yes P P P P P
No
Partially
Unknown
DSP
Yes P
No
Partially
Unknown

4.8 The institution’s Yes P P P P
contracts include a
data privacy clause,
describing how and
No P
when data can be shared Partially
(in addition to credit
bureau information). Unknown

Founda-
tion
Yes P P P P
No P
Partially
Unknown

tions
Yes P P P P
No
Partially
Unknown P
Yes P P P P P
No
Partially
Unknown
DSP
Yes P
Annexures
No
Partially
Unknown
Section 5


4.9 How interest rate of Declining balance
most representative interest method
Flat interest method P P P P
Founda-
tion
Declining balance
interest method
P P P
Flat interest method P P P
tions
Declining balance
interest method
P P
Flat interest method P P P
Declining balance
interest method
P
Flat interest method P P P P
DSP
Declining balance
interest method
P
Flat interest method
Environment
5.1 Environmental policies Awareness raising on P P P P P
in place environmental impacts
Clauses in loan
contracts requiring
P P P P
clients to improve
environmental
practices/mitigate
environmental risks
Tools to evaluate
P
clients' activities

to environmentally
P P
or practices
None of the above

Founda-
tion
Annexures
P P P P
Section 5

Clauses in loan
contracts requiring
P P P P
clients to improve
environmental
practices/mitigate
environmental risks
Tools to evaluate
P P
clients' activities

to environmentally
P P
or practices
None of the above

tions
P P P
Clauses in loan
contracts requiring
P P P
clients to improve
environmental
practices/mitigate
environmental risks
Tools to evaluate
P P
clients' activities

to environmentally
P P
or practices

P P P P P
Clauses in loan
contracts requiring
P P P P
clients to improve
environmental
practices/mitigate
environmental risks
Tools to evaluate
P P P P
clients' activities

to environmentally
P P
or practices
None of the above
DSP
Clauses in loan
contracts requiring
clients to improve
environmental
practices/mitigate
environmental risks
Tools to evaluate
Annexures
clients' activities

to environmentally
or practices
Section 5
None of the above P


5.2 Types of environmentally Products related to
friendly products and/or renewable energy (e.g.
digesters etc)
Products related to
cooking stove etc)
Products related
to environmentally
P P
friendly practices
recycling, waste
management etc)

Founda-
tion
Products related to
P P P
digesters etc)
Products related to
P
cooking stove etc)
Products related
to environmentally
P
friendly practices
recycling, waste
management etc)

tions
Products related to
P P
digesters etc)
Products related to
P
cooking stove etc)
Products related
to environmentally
P P
friendly practices
recycling, waste
management etc)

Products related to
P
digesters etc)
Products related to
cooking stove etc)
Annexures
Products related
to environmentally
P P P
friendly practices
recycling, waste
management etc)
Section 5


DSP
Products related to
digesters etc)
Products related to
cooking stove etc)
Products related
to environmentally
friendly practices
recycling, waste
management etc)
None of the above P

Annexures
Section 5

RSPs
Social Goals
NRSP TMF PRSP GBTI SRSO
areas

areas
P P P P
Women P P P P
(below 18)
P
None of the above

12 Development goals Increased access to P P P P P
financial services
Employment
generation
P P
up enterprises
P P P
Growth of existing
businesses
P P P
education
Youth opportunities P P
Health improvement P P
Gender equality
and women's
P P P
empowerment
Water and sanitation P P

Housing P
None of the above

1.3 Poverty level Very poor clients P P
No specific poverty
Annexures
target
Section 5


1.4 Does MFP measure Yes P P P
poverty
No P P
Unknown

1.5 Poverty measurement Grameen Progress out
tool of Poverty Index (PPI)
USAID Poverty

expenditure
P
income
P
Ranking (PWR)
P P
Housing index
Food security index
Means test
Own proxy poverty

index
P
Governance and HR
2.1 Board orientation of Yes P P P P
social mission
No P
Unknown

committee at Board
No P P
Unknown P
Annexures

2.3 Board experience in SPM Yes P P P P P
No
Unknown
Section 5


to SP
Quality of nteraction
with clients based
P
on client feedback
mechanism

collected
P P
None of the above

2.5 How number of clients is Total number of clients P P P P
incentivized

Client retention P P
None of the above P

2.6 HR policies related to SP Social protection P P P P
(medical insurance
and/or pension
contribution)
Safety policy P P
Anti-harassment policy P P P P
Non-discrimination
policy
P P P P
policy
P P P P
None of the above

loans
Non-income
generating loans
P P
products
Annexures
Section 5


3.2 Types of income generat- Microenterprise loans P P P P P
ing loans
SME loans
loans
P P P P P
Express loans P
None of the above

generating loans
Emergency loans P
Housing loans P
Other household
needs/consumption
P P

3.4 Types of savings Compulsory sacings
products accounts
Voluntary savings
accounts

accounts
P P P P P

3.5 Types of voluntary Demand deposit

3.6 Compulory insurance Yes P P P P P
required
No
Unknown

3.7 Types of compulory Credit life insurance P P
Annexures
insurance required
Life/accident insur-
ance
P P
Section 5
None of the above


3.8 Voluntary insurance Yes P
offered
No P P P P
Unknown

insurance offered
Health insurance
House insurance
Workplace insurance

offered
Yes P P
No P P P
Unknown

3.11 Types of other financial Debit/credit card
services offered
Mobile/branchless
banking services
P
services
P
Remittance/money
transfer services
Payment services
Microleasing
Scholarship/education-
al grants

3.12 Enterprise services
offered
Yes P P P P
Annexures
No P
Unknown
Section 5


3.13 Types of enterprise
services offered
Enterprise skills devel-
opment
P P P P
services
P P
None of the above P

3.14 Women’s empowerment
services
Yes P P P P
No P
Unknown

3.15 Types of women’s
empowerment services
women
P P P
offered
Women's rights edu-

cation/gender issues
P P P
training
Counseling/legal ser-
vices for female victims
of violence
None of the above P

offered
Yes P P P P
No P
Unknown

services offered
Financial literacy
education
P P P
education
P P P
Child and youth
education
P P
Occupational health
and safety in the work-
place education
None of the above P

Annexures

3.18 Health services offered Yes P P P
No P P
Section 5
Unknown


3.19 Types of health services
offered
Basic medical services P P P
Special medical ser-
vices for women and
P
children
Client Protection
4.1 Do policies support good
repayment capacity
Yes P P P P P
analysis
No
partially
Unknown

4.2 Does internal audit
Yes P P P P
policies
No P
partially
Unknown

4.3 The institution fully
Yes P P P P P
of all financial products, partially
products, third party
can change over time.
Annexures
Section 5


4.4 The institution clearly
presents to clients the
Yes P P P P P
total amount that the cli- No
ent pays for the product,
regardless of local regu- partially
lations (including in the
absence of industry-wide Unknown
pricing transparency
initiative).

4.5 The institution clearly
Yes P P P P P
Book of Employee Rules) partially
employees involved in
third party staff).

4.6 The institution sanctions
cases of violations of
Yes P P P P P
the Code of Conduct No
or collections policies
(identified by manage- partially
ment, internal audit or
an efficient complaint Unknown
mechanism) according to
set rules.

4.7 The institution’s policies
include how to handle
Yes P P P P P
complaints. They include No
how to inform clients
about the complaint partially
mechanism. The institu-
tion’s clients receive a Unknown
timely resolution of their
complaints.

4.8 The institution’s
contracts include a
Yes P P P P P
data privacy clause, de- No
scribing how and when
data can be shared (in partially
addition to credit bureau
information). Unknown
Annexures

4.9 How interest rate of
most representative
Declining balance
interest method
P P P
Flat interest method P P
Section 5

Environment
5.1 Environmental policies
in place
P P P P P
Clauses in loan con-
tracts requiring clients
P P
to imrove environmen-
tal practices/mitigate
environmental risks
Tools to evaluate
P P
clients' activities

to environmentally
P
or practices
None of the above

5.2 Types of environmentally
friendly products and/or
Products related to
P P
digesters etc)
Products related to
cooking stove etc)
Products related to en-

vironmentally friendly
P P
practices (e.g. organic
farming, recycling,
waste management
etc)
None of the above P
Annexures
Section 5

Annexure B
Regional
Benchmarks 2016
Outreach Africa Asia EAP27 ECA28 LAC29 MENA30

Number of MFIs 193 196 136 136 347 27
Gross Loan 8,490 18,794 15,064 9,900 38,909 1,353

Portfolio (in USD
million)
Number of active 5,780 66,929 16,258 3,083 22,500 2,148

borrowers (in
'000)
Deposits (in USD 9,213 6,886 7,687 7,664 27,331 251

million)
Number of 27,029 55,912 17,483 7,572 30,230 735

depositors (in
'000)
Average loan 616 246 924 2,160 1,579 630

balance per
borrower (in USD)
Average loan 66% 19% 65% 65% 32% 18%

balance per
borrower / GNI
per capita
Funding
Structure
Assets (in USD 13,874 21,991 18,132 15,367 47,555 1,996
million)
Debt to equity 4.8 3.7 4.1 5.7 5.1 1.7

ratio
Annexures
Capital /asset 17% 21% 20% 14% 16% 37%

ratio
Gross loan 59% 85% 83% 63% 79% 68%

portfolio to total
assets
Section 5

Outreach Africa Asia EAP27 ECA28 LAC29 MENA30

Effeciency
Operating 13% 9% 8% 10% 14% 15%
expense / loan
portfolio
Operating 8% 8% 6% 6% 11% 10%

expense / assets
Cost per borrower 128 20 69 286 227 86

(in USD)
Profitability
Return on assets 2.1% 4.2% 1.9% 0.6% 2.3% 2.9%
Return on equity 12.0% 20.2% 9.6% 3.9% 14.2% 8.0%
Operational self 116% 130% 120% 104% 117% 119%

sufficiency
Risk Profile
Portfolio at risk > 3.6% 1.8% 1.3% 6.1% 4.6% 3.6%
30 days
Portfolio at risk > 2.7% 1.6% 0.9% 5.1% 3.7% 2.8%

90 days
Write-off ratio 0.4% 0.5% 0.5% 1.1% 2.8% 1.5%
Annexures
Section 5
27
East Asia and the Pacific
28
Eastern Europe and Central Asia
29
Latin America and the Caribbean
30
Middle East and North Africa

Annexure C
Sources of Data
(2016)
Microfinance Banks (MFBs)

ADVANS Pakistan Microfinance Bank Ltd (ADVANS)
• ADVANS provided PMN its audited accounts. The numbers reported in the PMR match these
reports. Deloitte Yousuf Adil audited the annual accounts of ADVANS for the year ending at 31st
December 2016.
• The financial statements have been presented as per the requirements of the State Bank of Pakistan.
• The related party transactions have been properly disclosed in notes to the financial statements.
• The grant income has been properly disclosed in financial statements and there is 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).
APNA Microfinance Bank Ltd (AMFB)

• AMFB provided PMN its audited accounts. The numbers reported in the PMR match these reports.
RSM Avais Hyder Liaquat Noman audited the annual accounts of AMFB for the year ending at 31st
December 2016.
Annexures
• The auditors have drawn attention to the existence of material uncertainty in the financial
statements which may cast significant doubt about the bank’s ability to continue as going concern.
Section 5
• The following numbers have been taken from AMFB’s MIS: i). rural-urban clients; ii). male-female

FINCA Microfinance Bank Ltd (FINCA)

• FINCA provided PMN its audited accounts. The numbers reported in the PMR match these reports.
Deloitte Yousuf Adil audited the annual accounts of FINCA for the year ending at 31st December
2016.
• The following numbers have been taken from FINCA’s MIS: i). rural-urban clients; ii). male-female
Khushhali Bank Ltd (KBL)

• KBL provided PMN its audited accounts. The numbers reported in the PMR match these reports.
BDO Ebrahim & Co. audited the annual accounts of KBL for the year ending at 31st December
2016.
• The grant income has been properly disclosed in financial statements and there is a proper
disclosure on grants in notes to the financial statements.
• 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 (FMFB)

• FMFB provided PMN its audited accounts. The numbers reported in the PMR match these reports.
EY Ford Rhodes audited the annual accounts of FMFBL for the year ending at 31st December 2016.
• The following numbers have been taken from the 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).
National Rural Support Programme Microfinance Bank

(NRSP-B)
• NRSP-B provided PMN its audited accounts. The numbers reported in the PMR match these
reports. Deloitte Yousuf Adil audited the annual accounts of NRSP-B for the year ending at 31st
December 2016.
Annexures

Section 5

Mobilink Microfinance Bank Ltd (MMFB)

• MMFB provided PMN its audited accounts. The numbers reported in the PMR match these reports.
A.F Fergurson & Co. audited the annual accounts of MMFB for the year ending at 31st December
2016.
Telenor Microfinance Bank Ltd (TMFB)

• TMFB provided PMN its audited accounts. The numbers reported in the PMR match these reports.
KPMG Taseer Hadi and Co. audited the annual accounts of TMFB for the year ending at 31st
December 2016.
U Microfinance Bank Ltd (U-bank)

• U-bank provided PMN its audited accounts. The numbers reported in the PMR match these reports.
Deloitte Yousuf Adil audited the annual accounts of FINCA for the year ending at 31st December
2016.
Microfinance Institution (MFI)

ASA Pakistan limited (ASA-P)
Annexures
• ASA-P provided PMN its audited accounts. The numbers reported in the PMR match these reports.
Ernst and Young Ford Rhodes has audited the annual accounts of ASA-P for the year ending at 31st
December 2016.
• ASA-P prepares its financial statements under the historical cost convention and in conformity
with accepted accounting practices.
Section 5
• All necessary adjustments to ASA-P data have been made in order to remove subsidies.
• 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 its reviewed accounts. The numbers reported in the PMR match these
reports. Grant Thornton Anjum Rahman has reviewed the annual accounts of Agahe for the year
ending at 31st December 2016.
• 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.
• The grant income has been properly disclosed in financial statements.
Akhuwat
• Akhuwat provided PMN its audited accounts. The numbers reported in the PMR match these
reports. Deloitte Yousuf Adil has audited the annual accounts of Akhuwat for the year ending at
30th June 2016.
• Akhuwat prepares its financial statements under the historical cost convention and in conformity
• All necessary adjustments to data have been made in order to remove subsidies.
• The following numbers have been taken from the organization’s MIS: i). rural-urban clients; and ii).
male-female clients;
Al-Mehran Rural Development Organization (AMRDO)

• AMRDO provided PMN its audited accounts. The numbers reported in the PMR match these
reports. BDO Ebrahim & Co. has audited the annual accounts of AMRDO for the year ending at
30th June 2016.
• AMRDO prepares its financial statements under the historical cost convention, in conformity with
BRAC-Pakistan
• BRAC-Pakistan provided PMN its audited accounts. The numbers reported in the PMR match these
reports. Junaidy Shoaib Asad (Morison KSi) has audited the annual accounts of BRAC-Pakistan for
the year ending at 31st December 2016.
• BRAC prepares its financial statements under the historical cost convention and in conformity with
accepted accounting policies.
Annexures
Community Support Concern (CSC)

• CSC provided PMN its audited accounts. The numbers reported in the PMR match these reports.
Section 5
Riaz Ahmad & Co. audited the annual accounts of CSC for the year ending at 30th June 2016.
• All necessary adjustments to CSC data have been made in order to remove subsidies.

• CSC prepares its financial statements under the historical cost convention and in conformity with
• 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.
Development Action for Mobilization and Emancipation

(DAMEN)
• DAMEN provided PMN its audited accounts. The numbers reported in the PMR match these
reports. A.F Ferguson and Co. audited the annual accounts for DAMEN for the year ending at 30th
June 2016.
• 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
• The grant income has been properly disclosed in financial statements. Additionally, there is proper
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
Farmers Friend Organization (FFO)

• FFO provided PMN 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 2016.
• 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
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.
Ghazi Barotha Taraqiati Idara (GBTI)

• GBTI provided PMN 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
2016.
• GBTI prepares its financial statements under the historical cost convention and in conformity with
Annexures
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.
Section 5

Jinnah Welfare Society (JWS)

• JWS provided PMN 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 2016.
• JWS prepares its financial statements under the historical cost convention and in conformity with
• 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).
Kashf Foundation (KF)

• KF provided PMN 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
2016.
• All necessary adjustments to KF data have been made in order to remove subsidies.
• 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
Micro Options (MO)

• MO provided PMN its audited accounts. The numbers reported in the PMR match these reports.
Mohisn and Co. has audited the annual accounts of MO for the year ending at 31st December 2016.
• MO prepares its financial statements under the historical cost convention, in conformity with
• The following numbers have been taken from MO’s MIS: i). rural-urban clients; ii). male-female
Organization for Participatory Development (OPD)

• OPD provided PMN its audited accounts. The numbers reported in the PMR match these reports.
Junaidy Shoaib Asad has audited the annual accounts of OPD for the year ending at 30th June 2016.
• OPD prepares its financial statements under the historical cost convention, in conformity with
Annexures
Orangi Charitable Trust (OCT)

• OCT provided PMN its audited accounts. The numbers reported in the PMR match these reports.
Section 5
H.A.M.D & Co. has audited the annual accounts of OCT for the year ending at 30th June 2016.
• OCT prepares its financial statements under the historical cost convention, in conformity with


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.
Organization for Social Development Initiative (OSDI)

• OSDI provided PMN its audited accounts. The numbers reported in the PMR match these reports.
• OSDI prepares its financial statements under the historical cost convention, in conformity with
• The following numbers have been taken from MO’s MIS: i). rural-urban clients; ii). male-female
Rural Community Development Program (RCDP)

• RCDP provided PMN its audited accounts. The numbers reported in the PMR match these reports.
• RCDP prepares its financial statements under the historical cost convention and in conformity with
male-female clients; iii). Number of staff; iv). Number of credit officers; and v). Number of branches
SAFCO Support Fund (SAFCO)

• SAFCO provided PMN its audited accounts. The numbers reported in the PMR match these reports.
Deloitte Yousuf Adil audited the annual accounts for SAFCO for the year ending at 30th June 2016.
• 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
male-female clients; iii). Number of staff; and iv). Number of credit officers.
Annexures

Section 5

Saath Development Society (SDS)

• SDS provided PMN its audited accounts. The numbers reported in the PMR match these reports.
Moochhala Gangat & Co. has audited the annual accounts of SDS for the year ending at 30th June
2016.
• SDS prepares its financial statements under the historical cost convention, in conformity with
Shadab Rural Development Organization (SRDO)

• SRDO provided PMN its audited accounts. The numbers reported in the PMR match these reports.
Junaidy Shoaib Asad has audited the annual accounts of SRDO for the year ending at 30th June
2016.
• SRDO prepares its financial statements under the historical cost convention, in conformity with
Sindh Rural Support Organization (SRSO)

• SRSO provided PMN its audited accounts. The numbers reported in the PMR match these reports.
EY Ford Rhodes has audited the annual accounts of SRSO for the year ending at 30th June 2016.
• SRSO prepares its financial statements under the historical cost convention, in conformity with
• The related party transactions have been properly disclosed in notes to the financial
Soon Valley Development Program (SVDP)

• SVDP provided PMN its audited accounts. The numbers reported in the PMR match these reports.
Horwath Hussain Chaudhury and Co. has audited the annual accounts of SVDP for the year ending
at 30th June 2016.
• SVDP prepares its financial statements under the historical cost convention, in conformity with
Villagers Development Organization (VDO)

Annexures
• VDO provided PMN its audited accounts. The numbers reported in the PMR match these reports.
Moochhala Gangat and Co. has audited the annual accounts of VDO for the year ending at 30th
June 2016.
Section 5
• VDO prepares its financial statements under the historical cost convention, in conformity with

Rural Support Programme (RSP)

National Rural Development Program (NRSP)
• NRSP provided PMN its audited accounts. The numbers reported in the PMR match these reports.
EY Ford Rhodes has audited the annual accounts of NRSP for the year ending at 30th June 2016.
• NRSP prepares its financial statements under the historical cost convention, in conformity with
Punjab Rural Support Programme (PRSP)

• PRSP has provided its audited accounts for the reporting period to PMN. A.F Ferguson and Co.
audited the annual accounts for PRSP for the year ending at 30th June 2016.
• All necessary adjustments to PRSP data have been made in order to remove subsidies.
• PRSP prepares its financial statements under the historical cost convention, in conformity with
Thardeep Microfinance Foundation (TMF)

• TMF has provided its audited accounts to PMN. Grant Thornton (Anjum Rahman) audited the
annual accounts for TMF for the year ending at 30th June 2016.
• All necessary adjustments to TMF data have been made in order to remove subsidies.
• TMF prepares its financial statements under the historical cost convention in conformity with
Annexures
Section 5

Annexures
Section 5

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.,
Annexures
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.
Section 5

Calculation of inflation adjustment
Inflation adjustment revenue

Net Fixed Assets (Prior Year) X Average Annual Inflation Rate (Current Financial Year)
Inflation adjustment expense

Equity (Prior Year) X Average Annual Inflation Rate (Current Year)
Net inflation adjustment expense

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.
Care is taken 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
Annexures
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
Section 5
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:
Annexures
Multiply the PAR age categories by the following reserve factors:

PAR up to 89 days no provisioning
PAR 91 – 180 x 0.50
PAR 181 – 360 x 1.00
Renegotiated loans x 0.50
Section 5

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.
Annexures
Section 5

Annexure E
Terms and
Definitions
Age
Number of years an organization has been functioning as a microfinance provider (MFP).
Active Saving Account Balance

It is the average balance of savings per account (not per depositor).
Adjustment Expense
Total adjustment cost related to inflation, subsidized cost of borrowing, loan loss provisioning and in-
kind subsidies.
Adjusted Financial Expense Ratio

It 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 Expense
Adjusted Average Total Assets
Adjusted Operating Expense

Also 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
Annexures
NOTE: Imputed salaries should be used instead of salaries actually received by such persons, thus 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
Section 5

Formula:
Personnel Expense + Administrative Expense
Adjusted Operating Expense Ratio

Formula:
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 less loans overdue > (30 or 60 or 90) Days
Adjusted Gross Loan Portfolio
Adjusted Cost per Borrower

It accounts for 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:
Average Number of Active Borrowers
Adjusted Cost per Loan

Formula:
Average Number of Active Loans
Adjusted Financial Expense

It includes actual cost of borrowing and shadow cost of subsidized funding.
Adjusted Financial Expense on Borrowing

The 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 Expense
Adjusted Loan Loss Provision Expense

Loan 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.

It includes actual operational expenses and in-kind subsidy adjustments.
Annexures
Adjusted Operating Expense Ratio

It indicates efficiency of an MFP’s loan portfolio.
Formula:
Section 5
Average Gross Loan Portfolio

Adjusted Personnel Expense

Includes actual personnel expenses (salaries and benefits), and in-kind subsidy adjustments.
Adjusted Personnel Expense Ratio

Formula:
Adjusted Personnel Expense
Adjusted Profit Margin

Formula:
Adjusted Net Operating Income
Adjusted Financial Revenue
Adjusted Return on Assets

Formula:
Adjusted Net Operating Income, net of taxes
Adjusted Return on Equity

Formula:
Adjusted Net Operating Income, net of taxes
Average Total Equity
Adjusted Total Expense

Includes 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 of opening and closing balance of Gross Loan Portfolio (GLP).
Average Loan Balance per Active Borrower

Indicates average loan balance outstanding.
Average Loan Balance per Active Borrower to Per Capita Income

Used to measure depth of outreach. The lower the ratio the more poverty-focused the MFP.
Average Number of Active Borrowers

It is average of opening and closing balance of active borrowers.
Formula:
[Active Borrowers (Opening Balance) + Active Borrowers (Closing Balance)]
2
Average Number of Active Loans

Average of opening and closing balance of active loans
Annexures
Average Outstanding Balance

It indicates the average balance of loans outstanding.
Formula:
Section 5
Adjusted Gross Loan Portfolio

Adjusted Number of Loans Outstanding

Average Outstanding Balance to Per Capita Income

It is a measure of depth of outreach. The lower the ratio the more poverty-focused the MFP.
Formula:
Average Outstanding Balance
Per Capita Income
Average Saving Balance per Saver

It indicates average amount of saving balance per saver.

It is average of opening and closing balance of total assets.
Average Total Equity

It is average of opening and closing balance of total equity.
Borrowers per Loan Officer

It is a measure of loan officer productivity. It indicates the number of borrowers managed by a loan
officer.
Formula:
Number of Active Borrowers
Number of Loan Officers
Borrowers per Staff

It is a measure of staff productivity. It indicates the number of borrowers managed by the staff on
average.
Formula:
Number of Total Personnel
Commercial Liabilities
It 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 Ratio

It indicates efficiency of an MFP’s loan portfolio.
Formula:
All liabilities with “market” price
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 Ratio

It is inverse of the advance-to-deposit ratio.
Formula:
Deposits
Annexures
Deposit-to-Total Asset Ratio

Indicates the percentage of assets financed through deposits.
Formula:
Deposits
Section 5
Total Assets

Equity-to-Asset Ratio
This 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 Equity
Total Assets
Financial Expense
This is total of financial expense on liabilities and deposits.
Financial Revenue
This is the total revenue from loan portfolio and other financial assets, as well as other financial revenue
from financial services.
Financial Revenue from Other Financial Assets

This is net gains on other financial assets.
Financial Revenue from Loan Portfolio

This is total interest, fees and commission on loan portfolio.
Financial Revenue Ratio

Indicates the efficiency with which an MFP is utilizing its assets to earn income from them.
Formula:
Financial Revenue
Financial Self-Sufficiency
Formula:
Financial Revenue
Adjusted (Financial Expense + Net Loan Loss Provision Expense + Operating Expense +
Inflation Adjustment)

It 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 Ratio

Indicates the efficiency of assets deployed in high yield instruments and core business of an MFP.
Formula:
Total Assets
Inflation Adjustment Expense31

Annexures
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.
Section 5
31
PMN adjusts for the effect of inflation on an MFP’s equity and its non-monetary assets - essentially fixed assets - on its balance sheet.

Inflation Rate
Latest annualized consumer price index (CPI) as reported by the State Bank of Pakistan.
Liabilities-to-Equity Ratio (debt-equity ratio)

Formula:
Total Liabilities
Total Equity
Loan Loss Provision Expense

It is the sum of loan loss provision expense and recovery on loan loss provision.
Loans per Loan Officer

Formula:
Number of Active Loans
Number of Loan Officers
Loans per Staff

Formula:
Number of Personnel
Net Adjusted Loan Loss Provision Expense32

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 borrowers with loan amount outstanding.

The 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 Borrowers

Number of women borrowers with loan amount outstanding.
Number of Active Women Borrowers to total Active Borrowers

It indicates percentage of women borrower to total active borrowers.
Number of Loans Outstanding

It 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 Savers
It is the number of depositors maintaining voluntary demand deposit and time deposit accounts with
Annexures
an MFP.
Section 5
32
PMN applies a standard write-off and loan loss provisioning to all MFPs, and adjusts, where necessary, to bring them to the minimum threshold.

Number of Saving Accounts

One 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 Savers

It is the number of women savers with voluntary demand deposit and time deposit accounts.
Offices
The 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 Expense
Total of Personnel Expense and Administrative Expense.
Operational Self-Sufficiency
Formula:
Financial Revenue
(Financial Expense + Net Loan Loss Provision Expense + Operating Expense)
Per Capita Income

Average income per person.
Percentage of Women Savers to Total Savers

The percentage of women in the total saving portfolio.
Personnel
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 Ratio

The higher the indicator the more lean the head office structure of the organization. This indictor is used
to measure organizational efficiency.
Formula:
Loan Officers
Total Staff
Risk Coverage Ratio

Indicates the provision created by an MFP against its credit risk.
Formula:
PAR > 30 Days
Saving Outstanding
Total value of demand deposit and time deposit accounts.
Annexures
Savers per Staff

Formula:
Number of Savers
Number of Personnel
Section 5
Loan Loss Provision Expense

The sum of loan loss provision expense and recovery on loan loss provision.

Loans per Loan Officer

Formula:
PAR > 30 Days
Total Assets
Total 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 Equity
Equity 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 Liabilities
Liabilities 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 Officers

The 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 Year

The value of loans written off during the year.
Write-Off Rate
Formula:
Loans written off during the year
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 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)
Annexures
Section 5

FINANCIAL SERVICES FOR ALL
Pakistan Microﬁnance Network
3rd Floor, Mandir Square, Block 12-C/2, G-8 Markaz, Islamabad, Pakistan.
TEL. +92 51 226 6215-17, +92 51 229 2231 FAX. +92 51 226 6218
www.pmn.org.pk

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Microfinance Review 2018

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ANNUAL ASSESSMENT OF

THE MICROFINANCE INDUSTRY

FINANCIAL SERVICES FOR ALL

Mr. Ghalib Nishtar

Syed Samar Husnain

Mr. Blain Stephens

Mr. Yasir Ashfaq

Mr. Azfar Jamal

Mr. Masood Safdar Gill

Mr. Ali Basharat

Mr. Miqdad Haider

Ms. Saba Abbas

Ms. Saquiba Aziz

AC&MFD Agriculture and Microfinance Division

iii Annual Assessment of the Microfinance Industry

GLP Gross Loan Portfolio

NADRA National Database and Registration Authority

Annual Assessment of the Microfinance Industry iv

NGO Non-Governmental Organization

v Annual Assessment of the Microfinance Industry

Year 2012 2013 2014 2015 2016

Annual Assessment of the Microfinance Industry vi

The Year in Review

Financial Performance Review

vii Annual Assessment of the Microfinance Industry

Challenges and Opportunities

Annual Assessment of the Microfinance Industry viii

1 Annual Assessment of the Microfinance Industry

The Year in Review

Annual Assessment of the Microfinance Industry 2

Macroeconomy and Microfinance

3 Annual Assessment of the Microfinance Industry

Exhibit 1.1: Discount rate, KIBOR and CPI Trend

Consumer Price Inflation (Average) 6 - months KIBOR Discount Rate

2012 2013 2014 2015 2016

practitioners. expansion seen during fiscal year 2015. All the

Annual Assessment of the Microfinance Industry 4

Policy and Regulatory

Following amendments in the Non-Bank Moreover, to facilitate small borrowers and

5 Annual Assessment of the Microfinance Industry

agriculture & livestock sector6. There remains, FY 2016.

Annual Assessment of the Microfinance Industry 6

Client Protection and outlined.

Social Performance International Lending

procedures to clients’ needs.

7 Annual Assessment of the Microfinance Industry

Table 1.1: Micro-enterprise Lending19

Year 2013 2014 2015 2016

Number of Loans 136 2,185 12,612 32,958

Annual Assessment of the Microfinance Industry 8

9 Annual Assessment of the Microfinance Industry

The Year in Review

Annual Assessment of the Microfinance Industry 10

11 Annual Assessment of the Microfinance Industry

Annual Assessment of the Microfinance Industry 12

Rural Support Programme

13 Annual Assessment of the Microfinance Industry

Exhibit 2.1: Distribution of Respondents by Peer Groups

Scale and Outreach

The industry in terms of outreach remained

Annual Assessment of the Microfinance Industry 14

Exhibit 2.2: Growth in Number of Active Borrowers and GLP

GLP Active borrowers