MICROCAPITAL STORY: First MicroFinanceBank and Pakistan Post Agree to Collaborate

First MicroFinanceBank Limited (FMBL), the first NGO turned microfinance institution in Pakistan, and Pakistan Post, the premier national postal communication service, officially agreed to work together on October 2, 2007. Prime Minister of Pakistan, Shaukat Aziz, and other prominent figures from government and business attended the signing ceremony. This public-private partnership is a milestone for microfinance in the country because it has the potential to address the issue of inaccessibility to poor clients. First MicroFinanceBank will use its 82 branches, combined with the 4,000 sub-offices of the Pakistan Post, to provide financial services to clients in urban areas, as well as remote rural areas. The participants estimate that this partnership will result in disbursement of PKR 15 billion (USD 247 million) to millions of clients in the next three to five years.

According to the Microfinance Informantion Exchan ge (MIX Market), in December 2006 First MicroFinanceBank Limited had a gross loan portfolio of USD 11 million, total assets of USD 27.7 million, and a debt-to-equity ratio of 133.75 percent. Their return on assets was 0.45 percent and their return on equity was 1.01 percent. In 2006, the Consultative Group to Assist the Poor awarded FMBL one of the coveted Financial Transparency Awards for the second year in a row.

According to the Performance Indicators Report 2005 (PIR-2005) which was issued by the Pakistan Microfinance Network (PMN), a network made up of microfinance banks, commercial banks, leasing companies, and NGOs, the total amount of assets in the Pakistan microfinance market in 2005 was just under USD 13.4 million. The PIR-2005 also reported USD 2 million in commercial liabilities, a 2:1 debt-to-equity ratio, and a gross loan portfolio of USD 5.7 million. Currently, 20 microfinance providers in Pakistan report to the Microfinance Information eXchange (MIX Market). These institutions report a combined total of 854,000 active borrowers and a loan portfolio of USD 153.9 million.

Additional Resources:

Subscription only: “Poverty alleviation: First Microfinance Bank, Pakistan Post Ink Agreement.” Business Recorder: October 3, 2007. Accessed via Factiva on October 3, 2007 (subscription only).

First MicroFinanceBank Limited (FMBL)

Pakistan Post

MicroCapital.org article, September 19, 2007: “State Bank of Pakistan (SBP) Issues Guidelines for Islamic Microfinance Services”

Pakistan Microfinance Network (PMN)

Pakistan Microfinance Network: Perfomance Indicators Report

Aga Khan Development Network Press Release: “CGAP Award for The First MicroFinanceBank Ltd., Pakistan”

MIX Market: “Profile for FMBL- Pakistan”

MIX Market: “Pakistan”

Bloomberg.com: Currency Calculator