Mobilink Microfinance Bank Bolstered by Capital Injection Amid Economic Challenges

KARACHI: Mobilink Microfinance Bank Limited (MMBL) has been supported by a significant capital injection from its majority shareholder, VEON Microfinance Holding B.V., in a strategic move to strengthen its financial standing amid challenging economic conditions. The Pakistan Credit Rating Agency Limited (PACRA) has maintained the bank’s rating, highlighting its affiliation with global telecom giant Veon and Jazz, Pakistan’s largest cellular operator, as a critical factor in its resilience.

The microfinance sector has faced substantial challenges due to rising non-performing loans (NPLs) amidst an economic landscape characterized by inflation, high interest rates, and asset quality concerns. These factors have increased credit risk, particularly affecting vulnerable sectors such as agriculture and livestock, and have strained borrowers’ repayment capacities. In response, MMBL has increased its credit loss provisions, reporting expected credit losses (ECLs) of PKR 10.7 billion for the first half of 2025, with substantial provisions related to its nano-lending portfolio.

To address these challenges, VEON Microfinance Holding has injected USD 35 million into MMBL, aiming to enhance the bank’s equity, support its micro, small, and medium enterprise (MSME) and digital lending portfolios, and facilitate ongoing investments in digital transformation. Of this amount, USD 15 million was injected in 2024, with an additional USD 5 million in September 2025. The remaining USD 15 million is anticipated by the end of 2025.

MMBL’s business model emphasizes both core and branchless banking, leveraging JazzCash’s network and brand to accelerate growth. As of the first half of 2025, the bank held a 16% market share in terms of gross loan portfolio. The bank’s net markup income increased to PKR 25.5 billion, driven by a 25% expansion in its nano loans portfolio.

Despite these efforts, the bank’s net profitability slightly declined to PKR 902 million during the first half of 2025. The bank’s equity stood at PKR 10.3 billion, with a capital adequacy ratio (CAR) of 17%, including a Tier I CAR of 12.4%, emphasizing the need to maintain the CAR above the regulatory threshold in the future.

MMBL’s ratings hinge on its ability to effectively manage emerging risks to preserve its business and financial risk profile, as highlighted by PACRA.