KARACHI: The number of active microfinance borrowers crossed the nine million mark for the first time at the end of October-December 2022, up 3.6 per cent from the preceding quarter.

“The microfinance industry showed signs of growth as it recovers from the impact of the 2022 flood crisis,” said Abdullah Saeed of the Pakistan Microfinance Network (PMN) in the latest quarterly update on the microfinance industry.

“By the end of quarter-4, credit and saving microfinance indicators depicted a steady growth trajectory in the post-flood era,” he said.

The penetration rate — which shows the share of the relevant population that has used microfinance products at least once in their lifetime — stood at 22.7pc at the end of December 2022 versus 22pc at the end of September 2022.

This means more than seven in every 10 potential customers in the country still can’t access microfinance.

A year-on-year comparison isn’t possible given that the latest rate is based on a potential market size of 40m customers, roughly twice of the previously held estimate.

The quarterly disbursement of microfinance loans increased 19.3pc to Rs167.6 billion in October-December 2022. Early delinquencies — borrowers missing loan payments — decreased from 5.9pc to

5.6pc over the quarter under review as loan repayments resumed with the gradual subsiding of the flood crisis.

The increase in disbursements came alongside a 4.5pc jump in the gross loan portfolio (GLP), which amounted to Rs491.2bn. Loan disbursements are fresh credit extended in the quarter while the GLP accounts for the entire outstanding principal owed by existing clients.

GLP increased Rs98.6bn or 25.1pc on a year-on-year basis.

The portfolio of microfinance banks was Rs379bn while that of non-bank microfinance companies remained at Rs111bn. Customers of microfinance banks comprised 65.5pc of the client base while the share of non-bank microfinance companies remained 35.5pc at the end of 2022.

In terms of the market share and lending portfolios, Khushhali Bank led with an 18pc share and a lending portfolio of Rs89bn. It was closely followed by HBL Microfinance Bank, which held a market share of 17.9pc and a GLP of Rs87bn.

In terms of active borrowers, Mobilink Microfinance Bank led with a market share of 28.2pc and a borrower base of 2.6m. A distant second was Khushhali Bank with a market share of 8.1pc and a borrower base of 0.73m.

Among the non-bank microfinance companies, National Rural Support Programme led with active borrowers of 0.72m, followed by Akhuwat Islamic Microfinance and Kashf Foundation with 0.69m and 0.64m customers, respectively.

Akhuwat Islamic Microfinance led with a GLP of Rs30.7bn, followed by Kashf Foundation and National Rural Support Programme with portfolios of Rs22bn each.

The savers’ base increased 4.7pc to 93m at the end of the quarter under review.

Telenor Microfinance Bank led this growth by adding 2.8m depositors to its savers’ portfolio. Mobilink Microfinance Bank and Telenor Microfinance Bank continued their dominance with a total of 77m active savers.

The value of savings also depicted an increase of 14.4pc quarter-on-quarter to Rs514bn at the end of October-December.

Khushhali Bank and HBL Microfinance Bank retained their leading positions with a market share of 22.6pc and 21.7pc, respectively. They held aggregate savings of Rs227bn at the end of 2022.

Published in Dawn, April 2nd, 2023