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Karachi: VIS Credit Rating Company Limited has reaffirmed the entity ratings of Mobilink Microfinance Bank Limited (MMBL) at ‘A/A1’, indicating good credit quality and a strong likelihood of timely repayment of short-term obligations. The outlook for these ratings remains stable, with the previous rating action noted on May 7, 2024.
As a leading player in Pakistan’s microfinance sector, Mobilink Microfinance Bank commands a 21.1% market share in deposits. The bank’s growth is supported by VEON Microfinance Holding B.V. and is driven by a strategic shift towards digital lending, specifically focusing on lower-ticket Nano loans. This strategy has enabled the bank to expand its customer base while mitigating risks.
However, the rise in non-performing loans poses a challenge to MMBL’s asset quality, leading to increased provisioning that impacts profitability. Operational costs have also risen due to expanded service partnerships, though early 2025 earnings show signs of normalization. The bank’s resilience is evident in its maintained capitalization and a diversified funding profile, predominantly sourced from deposits. Investments in government securities further ensure liquidity and buffer against stress.
MMBL’s future plans include developing an in-house digital lending platform and transitioning towards Islamic banking, both crucial for long-term sustainability. Nonetheless, maintaining credit risk control and restoring profitability remain critical for sustaining its ratings, alongside ensuring strong liquidity and capital reserves.