Press Release

VIS Credit Rating Assigns Initial Entity Ratings to Mobilink Microfinance Bank Limited

Karachi, May 08, 2023: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘A/A-1’ (Single A/ A-One) to Mobilink Microfinance Bank Limited (MMBL). The medium to long-term rating of ‘A’ signifies good credit quality; protection factors are adequate; however the 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 ratings assigned to MMBL reflect the Bank’s strong ownership profile with complete shareholding vested with a leading global telecom group, VEON, along with association with Pakistan’s largest cellular operator, Jazz, formerly known as Mobilink. The ratings draw comfort from implicit support available from the sponsor on both financial and technical fronts; the same has resulted in synergies strengthening the Bank's market footprint and outreach. The business model entails a mix of conventional micro-credit services and branchless banking (BB) operations.
The leveraging on the sponsors' network and brand name, JazzCash, has provided growth impetus to BB domain with expansion carried out through platform of mobile-wallet accounts. Therefore, the market share of the Bank in the overall microfinance sector in terms of gross loan portfolio increased to 12.0% (FY21: 9.8%) by end of the outgoing year. Further, the ratings incorporate fair asset quality indicators, albeit exhibiting slight increase on a timeline on gross and incremental basis, in line with implementation of IFRS-9 resulting in additional provisioning buffers maintained resulting in negative net infection. On the flip side, triggering of a non-repayment event from recently restructured flood impacted portfolio primarily pertaining to unsecured-bullet lending, can marginally impact infection ratios going forward. The ratings factor in strong liquidity profile emanating from adequate liquid assets to deposits and borrowings held coupled with low concentration risk and sizable granularity of deposit base. Further, liquidity risk arising from maturity mismatch is also mitigated through granularity of deposit base primarily constituting of individual depositors.
MMBL’s spreads are one of the highest amongst peer banks owing to significant zero-cost deposits available in line with BB operations. However, the Operating Self-Sufficiency and overall profitability indicators largely remained unchanged during the outgoing year despite sizable uptick in net markup income on account of increased provisioning and operating expenses. In addition, ratings remain constrained on account of pressure on capital adequacy with no room for growth available for the Bank as no equity injection plan is in the pipeline. Going forward, the ratings will remain sensitive to maintenance of market share and liquidity position while improving capitalization of the Bank.

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 Ahmed

Applicable rating criterion: Micro Finance Banks (June 2019)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2023 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .