Mi­cro­fi­nance sec­tor GLP crosses Rs 90 bil­lion mark by 2015-end

The Pak Banker - - FRONT PAGE - Muham­mad Yasir

Mi­cro­fi­nance bank's in­creas­ing pen­e­tra­tion in the lo­cal mar­ket wit­nessed a fruit­ful re­sult in the out­go­ing year of 2015 as the pen­e­tra­tion of the sec­tor surged to 13.7 per­cent with Gross Loan Port­fo­lio (GLP) record a colos­sal ad­di­tion of Rs 26.23 bil­lion to cross the mark of Rs 90 bil­lion.

Ac­cord­ing to sta­tis­tics of Pak­istan Mi­cro­fi­nance Net­work (PMN), the over­all GLP of the mi­cro­fi­nance sec­tor in­creased to Rs 92.991 bil­lion by end of 2015 from Rs66.761 bil­lion recorded by end of 2014-end.

All in­di­ca­tors wit­nessed pos­i­tive growth with dif­fer­ent rates de­pict­ing trend of the in­dus­try and its cus­tomers get­ting in­volved in the bank­ing sys­tem at mi­cro level.

In 2015, the num­ber of ac­tive savers in­creased to 13.95 mil­lion from 8.75 mil­lion show­ing a growth of 5.2 mil­lion.

On the con­trary, the growth of ac­tive bor­row­ers was very lim­ited by 0.63 mil­lion to stand at 3.75 mil­lion from 2014 to 2015.

The num­ber of pol­icy hold­ers on the net­work of mi­cro­fi­nance bank in­creased by nearly one mil­lion to 4.75 mil­lion in the same year. The amount un­der sum in­sured also grew mas­sively by Rs 21 bil­lion to Rs 81.3 bil­lion by end of 2015.

The num­ber of branches or point of sales in­creased to 2,960 across the coun­try from 2,538 in the year 2015.

Ac­cord­ing to PMN, in the fourth quar­ter of cal­en­dar year 2015 wit­nessed growth in all key in­di­ca­tors with the gross loan port­fo­lio of the sec­tor in­creas­ing by 9.5% to cross Rs 90 bil­lion. The growth in mi­cro­cre­dit out­reach was pri­mar­ily fu­eled by the MFB peer group whose ac­tive bor­row­ers and GLP in­creased by 5.0% and 13.5% re­spec­tively.

Khush­hali Bank (KBL) and APNA Bank (AMFB) were the largest con­trib­u­tors to GLP - both banks in­creas­ing their loan books by Rs 1.6 bil­lion and 1.3 bil­lion re­spec­tively. The in­crease by KBL can be at­trib­uted to larger loan sizes driven by their MSME prod­uct line. AMFB, on the other hand, ini­ti­ated op­er­a­tions in eleven new dis­tricts of Pun­jab, along with a fo­cus on in­creas­ing loan sizes. In terms of ac­tive bor­row­ers, the largest con­tri­bu­tion came from Akhuwat which fi­nanced 42,000 new clients - pri­mar­ily in the ser­vices and man­u­fac­tur­ing sec­tor - and ex­panded its out­reach to cover 78 dis­tricts as com­pared to 72 dis­tricts in the pre­vi­ous quar­ter. Dur­ing the same quar­ter, the share of in­di­vid­ual lend­ing method­ol­ogy in­creased from 34% to 41%, de­pict­ing a grow­ing pref­er­ence of in­di­vid­ual lend­ing over group lend­ing.

The sec­tor PAR (>30 days) de­clined from 1.6% to 1.4% in the cur­rent quar­ter as a re­sult of write-offs by MFBs.

In terms of sav­ings, the value of sav­ings posted con­sid­er­able growth of 21%, whereas, the num­ber of ac­tive savers grew mod­estly by 4.5%. MFBs were the sole con­trib­u­tors to the value of sav­ings by adding Rs 11.1 bil­lion worth of de­posits in the cur­rent quar­ter.

The av­er­age de­posit bal­ance of the MFB peer group also in­creased by 18% in the cur­rent quar­ter - from Rs 5,000 to Rs 5,900. Waseela Bank (WMFB) wit­nessed the great­est in­crease in the num­ber of de­pos­i­tors (by 39%), mainly driven by its branch­less bank­ing plat­form. Among the non-bank MFPs, only NRSP wit­nessed a sig­nif­i­cant in­crease in ac­tive savers by adding 343,000 new savers in the provinces of Sindh and Pun­jab.

Mi­cro-in­sur­ance also ex­hib­ited a pos­i­tive trend in the fourth quar­ter of 2015 - pol­icy hold­ers in­creased by 4% while the sum in­sured de­picted an in­crease of 6%. Con­tri­bu­tion to mi­cro-in­sur­ance was, again, dom­i­nated by the MFB peer group, as most banks of­fer built-in mi­cro-in­sur­ance prod­uct to ev­ery credit client. KBL was the largest con­trib­u­tor to mi­cro-in­sur­ance among MFBs whose pol­icy hold­ers in­creased by 23,400 and sum in­sured by Rs 1.9 bil­lion. Among MFIs, Akhuwat wit­nessed the great­est in­crease in both, pol­icy hold­ers (by 42,000) and sum in­sured (by Rs 0.9 bil­lion).

The sec­tor con­tin­ues to be dom­i­nated by only two types of in­sur­ance poli­cies; health and credit life, each main­tain­ing a mar­ket share of 49% and 50% re­spec­tively.

The pen­e­tra­tion rate of the sec­tor in­creased only marginally from 13.3% to 13.7% in the cur­rent quar­ter. How­ever, the to­tal num­ber of branches in­creased by 200 (pri­mar­ily in the re­gion of Pun­jab and Sindh) due to an in­crease in out­lets by Akhuwat (88), AMFB (39) and NRSP (28).

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