Microfinance sector registers modest growth

LAHORE: Microfinance sector of Pakistan has registered modest growth during the second quarter ended June 30, 2018 with 6.6 percent growth in overall gross loan portfolio (GLP) to Rs239 billion from the previous quarter of Rs224 billion.

According to MicroWatch, a quarterly update on microfinance outreach in Pakistan released by Pakistan Microfinance Network, total active microfinance increased by 3.6 percent, reaching 6.4 million with Telenor Microfinance Bank Limited (TMFB), Kashf Foundation (KF) and The First MicrofinanceBank Limited (FMFB) contributing the most to this increase.

The overall industry penetration increased to 31.5 percent as compared to 30.4 percent last quarter, indicating an upsurge in outreach. The number of branches for the industry also increased by two percent as Ubank, NRSP-B, Sindh Microfinance Bank (SMFB), Akhuwat and Damen expanded their operations, which took the total to 3,948 branches nationwide.

Akhuwat and Kushhali Microfinance Bank Limited (KBL) maintained their market leaders’ positions in terms of active borrowers and GLP respectively. Akhuwat dominates the market with 15 percent of the total market share in terms of active borrowers, which stood at 965,000, while KBL continues to hold 15.6 percent of the total market share in terms of GLP portfolio of over Rs37 billion.

Additionally, the number of loans disbursed increased by 8.7 percent during the quarter, while the value of disbursements reached Rs88.9 billion showing an increase of 18.7 percent. This increase was also contributed by KBL, with National Rural Support Program (NRSP), TMFB, FINCA and Akhuwat also contributing to the portfolio by recording a sizeable rise in the number of disbursements and their value.

In terms of Peer Groups, each managed to sustain their respective market shares of active borrowers and GLP. Micro Finance Banks (MFBs) continue to dominate the market with 45 percent of active borrowers and 68 percent of the GLP, while Micro Finance Institutions (MFIs) maintain a 34 percent share of active borrowers and a 19 percent share in GLP.

Similarly, Rural Support Programs (RSPs) also maintained their 18 percent share in active borrowers and 11 percent of GLP. Akhuwat continues to have the largest geographic footprint in the sector with a presence in 85 districts.

Female borrowers continued to maintain their dominant share of the sector in terms of active borrowers with 54 percent, while GLP attributable to them remains 36 percent. However, the quarter also witnessed a 10 percent decline in the number of active savers, which fell to 25.8 million from 28.6 million.

The decline in the active savers compared to the last quarter was due to a fall in M-Wallets, primarily of TMFB, which witnessed 44 percent decrease after remaining inactive for a considerable period. Conversely the value of savings has increased by 10 percent, surpassing Rs209 billion.

This surge in savings was led by TMFB with an increase of over Rs8 billion. Other contributors to this increase were Ubank, FMFB and Apna Microfinance Bank (AMFB), which cumulatively added Rs6.6 billion.

Mobilink Microfinance Bank Limited (MMFB) remained the largest provider of micro-savings in terms of active savers, despite a decrease, with 13.4 million accounts and a market share of 52 percent, as compared to 13.7 million savers with a market share of 48 percent previously.

Further, KBL also remained the largest provider in terms of value of savings with over Rs47.6 billion and a market share of 22.8 percent. Besides, the female savers increased to 23 percent from 21 percent while holding 16 percent of the value of savings reported.

Furthermore, the policy holders increased by one percent, surpassing 8 million as compared to 7.9 million previously. This increase has led to a rise in the amount insured by 4.8 percent, crossing Rs227 billion compared to Rs217 billion in the last quarter.

The policy holders by peer group witnessed a change with the market share of MFIs increasing by two percent at the expense of MFBs which brings the market share of MFIs to 48 percent, MFBs 35 percent and RSPs to 17 percent. MFBs continue to maintain 50 percent of the total sum insured, MFIs 35 percent and RSPs 15 percent during this quarter.

The share of policy holders attributable to credit life increased by three percent, reaching 54 percent where as 46 percent was attributable to health insurance. KF remained the largest provider of micro-insurance in terms of policy holders with 2.3 million, followed by NRSP with 1.1 million and Akhuwat with 965,000. KF was also the largest provider of micro-insurance in terms of sum insured with Rs56.6 billion with KBL and NRSP following behind with Rs43.5 billion and Rs31.2 billion, respectively.