Pakistan: Microfinance Banks Deposits Fall by 13.9pc
Karachi, Pakistan, August, 13 2011 -
The deposits of Microfinance Banks (MFBs) fell by 13.9 percent Quarter on Quarter (QoQ) to Rs8.9 billion in the Jan-Mar quarter from Rs10.338 billion in the previous quarter, said State Bank of Pakistan’s (SBP) quarterly report on Mincrofinance.
“A few MFBs booked one-month term deposit receipts (TDRs) in Dec-2010, which matured in January 2011,” the report said. “The volatility of deposits has been largely causing the negative fluctuation in the assets base of the MFBs in recent quarters.”
The deposit base, however, increased 28.4 percent Year on Year (YoY) from Rs6.93 billion in March 2010.
The central bank said MFBs are entering into larger loan size slowly, but persistently. This trend continued during Jan-Mar quarter as their advances increased by 6.9 percent despite a marginal decline of one percent in the number of borrowers.
The decline was seen as Khushhalibank Limited and First Microfinance Bank Limited had to curtail growth in certain flood-affected areas. At the same time, two district MFBs, and Pak Oman MFB continued to reduce their already thin credit portfolio owing to their internal problems.
The negative trends in Non-Performing Loans (NPLs) were also attributable to the same set of factorsóportfolios of KBL and FMFB were hit in flood-affected areas whereas two district MFBs and POMFB contributed to NPLs due to their internal weaknesses.
On the positive side, there are evidences of recoveries in rescheduled loans in many flood-affected areas. The NPLs of MFBs increased by 165 percent YoY to Rs568.59 million at end-March 2011 compared with Rs214.32 million in the corresponding quarter of last year.
Three small MFBs experienced double-digit Portfolio at Risk (PAR) ratio during the quarter, though they have a relatively small portion of the overall portfolio, the SBP said.
The NPLs may see further increase as some of the bullet loans in flood-affected areas were to mature in the second quarter of 2011, it added.
After adjusting the outliers (floods and weak MFBs) effects, the portfolio quality remains positive, the report said.
Equity reduction during the quarter was contributed by almost all MFBs. An important development during the quarter was the commencement of NRSP MFB which is expected to significantly enhance the market share of MFBs in forthcoming quarters, said the central bank.