PACRA Maintains Entity Ratings of FINCA Microfinance Bank Limited

Lahore, November 06, 2018 (PPI-OT): The ratings reflect association of the bank with a global microfinance organization – FINCA International. This affiliation supports FINCA Microfinance Bank in terms of building a wholesome strategy and also in establishing robust systems and controls. FINCA is a mid-tier player in Pakistan’s microfinance sector (June’18: ~7% share in total gross loan portfolio and ~10% share in total microfinance deposits). The bank intends to build a stable and diverse deposit base. Given that the current deposit landscape is very competitive, building a granular (as well as low cost) deposit base is challenging.

To achieve the stated objective the bank optimizes on increasing its branchless banking (BB) business. The bank is eyeing tier II capital in the form of subordinated loan to strengthen its capital base. Liquidity profile remained relatively stretched. FINCA’s paramount focus remains on digitizing its operations and strengthening its technological infrastructure to expand its outreach.

In this regard, the bank is upgrading its MIS and developing variant digital products to serve diversified market segments, including corporates. Digital banking mix is currently small. Asset health dwindled slightly to ~1.4%. Strong banking practices with extended branch network acclaims FINCA’s efforts to provide long term solutions to their customers. The ratings are dependent upon the bank’s ability to sustain its profitability while building up market position. Successful establishment of foothold in digital banking remains critical amidst stiff competition.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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