Pakistan Microfinance sector: Gross loan range increases to 39.3%

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Pakistan Microfinance sectorAt the end of year 2015, the gross loan portfolio of Pakistan microfinance sector reached Rs93 billion that is 39.3% on year on year basis.

According to the stats released via the Pakistan Microfinance Network (PMN), there has been a growth of 48.7% in the value of savings, increasing the number of savers to 68.3% in 2015.

An increase of 9.5% gross loan portfolio has been recorded on quarter on quarter basis in Oct-Dec according to data from PMN.

Based in the nature of business and their regulatory structure, the microfinance sector has been divided into groups, such as microfinance banks (10), microfinance institutions (16), rural support programmes (6) and others (16).

Microfinance banks’ peer group active borrowers and gross loan portfolio increased 5% and 13.5% respectively, contributing in the quarterly growth in microcredit outreach, according to the PMN.

On a quarter on quarter basis, the number of active borrowers went up to 3.4% and the largest contributor was Akhuwat that financed 42,000 new clients in manufacturing sector. Khushhali Bank (KBL) and APNA Bank (AMFB) have been the largest contributors to annual increase in gross loan portfolio. It expanded its outreach in the quarter to cover 78 districts as opposed to 72 districts in the preceding quarter, the PMN said.

In order to minimise default risks and control loan processing costs Microfinance providers use two lending methodologies, individual and group. Reflecting a growing preference of individual lending to group lending, the share of individual lending methodology increased from 34% to 41% in the last three months of 2015. The sector-wide ‘portfolio at risk’ declined from 1.6% to 1.4% in Oct-Dec on a quarterly basis as a result of write-offs by microfinance banks.

The number of active savers grew 4.5% whereas the value of savings posted considerable growth of 21% on a quarter-on-quarter basis. Microfinance banks being sole contributors gave Rs11.1 billion worth of deposits in Oct-Dec. KBL witnessed the greatest increase in the value of deposits (Rs4.4 billion), followed by AMFB (Rs2.3 billion).

Waseela Bank witnessed the greatest increase in the number of depositors (39%) mainly on the back of its branchless banking platform. The average deposit balance of the microfinance banks’ peer group increased 18% in the last quarter from Rs5,000 to Rs5,900. Among the non-bank microfinance providers, only National Rural Support Programme (NRSP) witnessed a significant increase in the number of active savers (343,000) in Sindh and Punjab.

Micro-insurance also exhibited growth in the fourth quarter of 2015. The number of policyholders increased 4% while the sum insured depicted an increase of 6% quarter on quarter. The penetration rate of the microfinance sector increased only marginally from 13.3% to 13.7% in Oct-Dec. However, the total number of branches grew by 200 mainly in the region of Punjab and Sindh due to an increase in the outlets of Akhuwat (88), AMFB (39) and NRSP (28), the PMN said.

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