Pakistan’s Largest Conventional Bank is Expected to Enter the Microfinance Sector

Friday, March 20, 2015

Habib Bank (HBL) is expected to enter the microfinance banking segment by acquiring Pakistan’s second largest microfinance bank in terms of the value of savings, according to a regulatory filing by the country’s biggest commercial bank on Thursday.

“HBL intends to look at acquiring significant shareholding in First Microfinance Bank, which already has a base and presence in the microfinance sector all over Pakistan,” HBL said in the notice while choosing not to disclose the amount of investment it is willing to commit.

However, under the statement of material facts that it published a fortnight ago along with its annual report for 2014, HBL disclosed that it is committed to investing a maximum amount of Rs2 billion in acquiring First Microfinance Bank ‘by way of equity’ over the next three years.

Pakistan’s largest conventional bank with total assets of over Rs1.7 trillion, HBL operated nearly 1,600 branches at the end of 2014.

Although financial statements of First Microfinance Bank are not available publicly, centralised databank for the microfinance banking industry shows its total value of savings at the end of 2014 was Rs8.7 billion with a market share of 20.1%. Its gross loan portfolio was over Rs5 billion, which made it the fifth largest provider of microcredit with a market share of 7.6%.

HBL intends to obtain a “majority shareholding” in First Microfinance Bank, reads the ‘special resolution’ that will be proposed at the 73rd annual general meeting of HBL shareholders on March 27.

Source: The Express Tribune (link opens in a new window)

financial inclusion, microfinance