Press Release

VIS Maintains Ratings of HBL Microfinance Bank Limited at ‘A+/A-1’

Karachi, April 30, 2022: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings assigned to HBL Microfinance Bank Limited (HBL MfB) (formerly The First MicroFinanceBank Limited (FMFB)) at ‘A+/A-1’ (Single A Plus/A-One). The medium to long-term rating of ‘A+’ denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-1’ denotes high certainty of timely payment, liquidity factors are excellent and supported by good fundamental protection factors. Outlook on the rating has been revised from ‘Rating Watch - Developing’ to ‘Stable’ on account of recovery of majority of rollover portfolio under SBP’s relief program. The previous rating action was announced on April 30, 2021.

The assigned ratings take into account strong ownership structure, as majority shareholding of the Bank is held by Habib Bank Limited (HBL) and the Aga Khan Development Network. The Bank has changed its name and rebranded itself to HBL Microfinance Bank Ltd. (HBL MfB) from “The First MicroFinanceBank Ltd.” in January 2022. The rebranded HBL MfB is expected to build upon the strong group association with existing customers and facilitate the growth of outreach and footprint. The Bank secures 15.1% market share amongst the microfinance banks as at end-Dec`21 in terms of GLP. Majority of NPL pertained to deferred/rescheduled portfolio under the SBP relief package for Covid-19 and since the Bank has recovered major portion, stress on asset quality is expected to further ease-off during the ongoing year. The Bank will continue its growth momentum in FY22, while continuing to focus on disbursements of higher-ticket size housing and MSME loans.

Bottom-line of the Bank was supported by higher net markup income owing to growth in advances portfolio and continued booking of markup on rollover portfolio. Markup spread, however, decreased mainly due to increase in secured housing lending carrying relatively lower markup rate vis-à-vis other core products and also lower yield on investment portfolio. Over half of the incremental deposits were invested in government securities and bank placements in order to improve liquidity and capitalization indicators, which remain adequate in relation to total deposits and borrowings. Despite increase in risk weighted assets, improvement in CAR was led by equity injection of Rs. 2.0b from HBL and healthy profits generation during the outgoing year. The Bank is in the process of issuing right shares amounting to Rs. 1b. The same is in the process of regulatory approval. The Bank already has the statutory approval to issue further right shares amounting to Rs. 1b in 2023. The additional capital injection will continue to support the CAR and growth plans of the Bank, going forward.

The ratings continue to be underpinned to sustained performance indicators with improvements in asset quality and profitability, going forward.

For further information on this rating announcement, please contact Syed Fahim Haider at 042-35723411-13 (Ext: 8006) or the undersigned at 021-35311861-70 (Ext. 201) or email at

Faryal Ahmad Faheem
Deputy CEO

Applicable rating criterion: Micro Finance Banks (June 2019)

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