MICROCAPITAL BRIEF: Habib Bank of Pakistan to Acquire Control of “First Microfinance Bank” in Stages for Approximately $19m

microfinance bank pakistan

Habib Bank, a Pakistan-based commercial bank, has unveiled plans to acquire a controlling stake in First Microfinance Bank Limited-Pakistan (FMFB-P), a Pakistani microbank, via a series of equity investments over the next three years. Habib will devote up to PKR 2 billion (USD 19 million) to this investment, with the intention of gaining a majority stake in the company. The State Bank of Pakistan (SBP) reportedly has approved the plan. Switzerland’s Aga Khan Agency for Microfinance (AKAM) owns about 20 percent of the shares of both Habib and FMFB-P [1]. AKAM is a member of the Aga Khan Development Network, a Switzerland-based NGO engaged in a range of efforts such as improving the environment, urban development and education.

As of December 2013, FMFB-P reported total assets of USD 90 million, a gross loan portfolio of USD 33 million with 129,987 active borrowers, total deposits of USD 74 million via 263,437 depositors, return on assets of 1.61 percent and return on equity of 13.72 percent. In 2014, Habib had PKR 1.8 trillion (USD 16.4 billion) in total assets, return on assets of 1.78 percent and return on equity of 20 percent.

By Jeff Pierce, Research Associate

About Habib Bank of Pakistan

Habib Bank of Pakistan is a commercial bank that was founded in 1947 and is headquartered in Karachi, Pakistan. It operates 1,540 branches and is present in 25 countries. In 2014, Habib had PKR 1.8 trillion (USD 16.4 billion) in total assets, return on assets of 1.78 percent and return on equity of 20 percent.

About First Microfinance Bank Limited-Pakistan (FMFB-P)

First MicroFinance Bank Limited Pakistan (FMFB-P) is a microfinance institution (MFI) based in Islamabad. It is owned by the Aga Khan Development Network, a group of private development institutions that work in sub-Saharan Africa, Central and South Asia, and the Middle East. As of 22015, another holding of the Aga Khan Network, Habib Bank, is seeking to acquire a majority

interest in FMFB-P. FMFB-P was founded in 2002 and offers loans, savings, insurance and fund transfer services. As of December 2013, FMFB-P reported total assets of USD 90 million, a gross loan portfolio of USD 33 million outstanding to 129,987 active borrowers, total deposits of USD 74 million via 263,437 depositors, return on assets of 1.61 percent and return on equity of 13.72 percent.

About Aga Khan Agency for Microfinance (AKAM)

AKAM is a non-profit international development agency that is part of the Aga Khan Development Network (AKDN), a group of development agencies with mandates that include the environment, health, education, architecture, culture, microfinance, rural development, disaster reduction, the promotion of private sector enterprise and the revitalization of historic cities. AKAM was established in 2005 under Swiss law and is headquartered in Geneva. AKAM’s objectives include reducing poverty and the vulnerability of poor populations as well as reducing economic and social exclusion. The agency is governed by an independent board of directors, and His Highness the Aga Khan (the 49th Imam of the Ismaili branch of the Shia Islamic faith) serves as the board’s Chairman.

About State Bank of Pakistan (SBP)

Established in 1956, the State Bank of Pakistan (SBP) is the nation’s central banking authority. SBP is responsible for the following primary functions: to regulate and supervise the nation’s financial system, to carry out monetary policy and to manage public debt. In addition, SBP performs the following non-traditional functions: developing the financial framework of the country, providing credit to priority sectors and furthering the Islamization of the banking system. As of June 30, 2013, SBP reported total assets worth PKR 4,040 trillion (USD 41.2 billion). SBP regulates and supervises 38 banks, 10 microfinance institutions and five development finance institutions.

Sources and Additional Resources:

MicroCapital Universe Profile: Habib Bank of Pakistan

MicroCapital Universe Profile: First Microfinance Bank Limited-Pakistan (FMFB-P)

MicroCapital Universe Profile: Aga Khan Agency for Microfinance (AKAM)

Source: www.microcapital.org

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