Press Release

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

Karachi, April 28, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of 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 assigned ratings is ‘Stable’. The previous rating action was announced on April 30, 2022.

The ratings assigned to HBL MfB incorporate its strong ownership profile, as majority shareholding is vested with Habib Bank Limited (HBL) and the Aga Khan Development Network. The Bank changed its name and rebranded itself to HBL Microfinance Bank Ltd from “The First MicroFinanceBank Ltd.” in January 2022. The rebranding along with equity injection by the Parent Bank has further cemented the strong group association with existing customers and facilitated the growth of market footprint and outreach. Therefore, the market share of the Bank in terms of GLP in the overall microfinance sector increased to 17.9% (FY21: 15.1%) by end of the outgoing year. Moreover, the Bank has also become the leading microcredit services provider in the country in the ongoing year. The Bank is expected to continue its growth momentum in the ongoing year with focus on disbursements of higher-ticket size housing and MSME loans. In addition, the asset quality indicators improved during the rating review period. However, going forward, the maintenance of profitability metrics is expected to remain challenging owing to weak economic indicators especially inflation sizably impacting micro-credit borrowers’ repayment ability, high cost of funds amid ever-increasing policy rate situation exerting pressure on spreads and higher operational costs due to inflationary impacts.

The liquidity position of the Bank is sound as evidenced from sizable liquid assets to total deposits and borrowings carried on the books. The ratings take into account high concentration and low granularity of deposit portfolio in comparison to market peers. However, satisfactory Advances-to-Deposits ratio and sound long-standing customer relations with the major depositors mitigate the concentration and withdrawal risks to some extent. In line with equity injection in the outgoing year despite sizable microcredit portfolio growth, the Bank’s capital adequacy ratio is compliant with the minimum regulatory requirement. Going forward, the ratings will be dependent on maintenance of market share and infection ratios along with improvement in profitability metrics.

For further information on this rating announcement, please contact Ms. Maham Qasim at 042-35723411-13 (Ext. 8010) and/or the undersigned at 021-35311861-64 (Ext. 306) or email at

Sara Ahmad

Applicable rating criterion: Micro Finance Banks (June 2019)

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