Press Release

VIS Reaffirms Entity Ratings of Mobilink Microfinance Bank Limited

Karachi, May 07, 2024: VIS Credit Rating Company Limited has reaffirmed the entity ratings of Mobilink Microfinance Bank Limited (‘MMBL’ or the ‘Bank’) at ‘A/A-1’ (Single A/ A-One). Medium to long term rating of ‘A' indicates good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. Short-term rating of 'A-1' indicates High certainty of timely payment; Liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on May 08, 2023.

Mobilink Microfinance Bank Limited (MMBL) was established in Pakistan on November 29, 2010, as a public limited company under the Companies Ordinance, 1984. It received its microfinance operations license from the State Bank of Pakistan (SBP) on September 12, 2011, enabling nationwide operations. MMBL primarily focuses on providing microfinance banking and associated services to underserved communities under the Microfinance Institution Ordinance, 2001. Additionally, it offers Branchless Banking Services through an agreement with Pakistan Mobile Communications Limited (PMCL), a related entity, under SBP's Branchless Banking license.

The ratings assigned to Mobilink Microfinance Bank Limited (MMBL) are based on its ownership structure, with complete ownership held by VEON Microfinance Holding B.V. - a leading global telecom group, and its association with Pakistan's largest cellular operator, Jazz (formerly Mobilink). These ratings take into account the implicit support available from the sponsor, both financial and technological, which strengthens the Bank's market presence through synergies. MMBL's business model incorporates a combination of conventional micro-credit services and branchless banking operations. Leveraging the sponsor's network and brand name, particularly through JazzCash, MMBL has experienced growth in its branchless banking domain, expanding primarily through mobile-wallet accounts.

Going forward, MMBL aims to sustain growth primarily through expanding deposit outreach, with a particular emphasis on those acquired via digital platforms. Ratings are supported by Bank’s presence in the digital sphere, which provides cost-effective funding for growth and efficiency in lending operations. Primary concerns include the emerging trends in asset quality and loan portfolio. Increasing business volumes and margins become imperative to absorb this high cost of risk. Nevertheless, assigned ratings are based on the continued containment of the rising cost of risk within the Bank’s risk absorption capacity, underscored by improving earnings generation, and overall maintained liquidity and capital buffers.

For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.




Applicable Rating Criteria:

Micro-Finance Banks
https://docs.vis.com.pk/docs/MicroFinance-Oct-2023.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

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