Islamabad May 2 2022: In line with sponsor commitments Telenor Microfinance Bank (TMB) received equity injections, which allowed the Bank to maintain its CAR above 18%.
Recently, TMB’s Board has approved a capital plan for injecting USD 71 million during the period 2022-24.
Subsequent to the year end, key shareholders have already made part of the planned equity infusion i.e. USD 22 million (Rs. 3.9 billion) in Q1’2022. As per management, the sponsors remain committed to ensure the Bank complies with minimum CAR requirement.
As per the Bank’s strategy plan, profitability indicators are projected to improve going forward, which will be achieved by a mix of higher NIM and BB segment revenues. Furthermore, overall provisioning burden is likely to be much lower going forward, given that significant amount of provisions have already been taken and credit quality of the portfolio is notably better, as can be ascertained from the improvement in yield on advances noted in Q1’2022. The assigned rating remains dependent on materialization of revenue growth in line with projections.
TMB’s profitability indicators remained under pressure in 2021 mainly due to industry wide challenges on the Covid relief portfolio and new IBFT pricing regime. Nevertheless, over the years, TMB’s Branchless Banking (BB) segment, which operates under the brand name ‘Easypaisa’ (EP), has posted notable growth in terms of Monthly Active Users (MAUs). TMB’s BB segment gives the Bank the ability to attract low cost retail deposits, which is viewed positively. Furthermore, with customer incentives being rolled back in 2021, BB segment profitability position has depicted improvement on a timeline, a trend which is projected to continue going forward.
