The credit services offered by FMFB Pakistan have enabled this family in Multan, Punjab to expand its bangle making business and increase its household income.During 2010, the main focus of the First MicroFinance Bank Pakistan (FMFB-P) remained consolidation. A challenging macro-economic environment and natural disasters such as unprecedented floods were some of the contributing factors that forced the microfinance sector to slow down.
FMFB-P is now focusing on achieving operational sustainability and mitigating operational risks. To do this, eight unprofitable branches were closed or merged while one branch was opened in Sargodha in November 2010. The year-end total number of branches stood at 147 as compared to 157 in December 2009. These locations include 83 FMFB-P branches and 64 Pakistan Post Office (PPO) outlets.
Unprecedented floods hit Pakistan in July 2010 and caused large-scale devastation to life and property in Gilgit, Baltistan, Chitral, Khyber Pakhtunkhwa, South Punjab and Sindh, which affected the repayment capacity of the borrowers.
More than 17,000 clients who had an outstanding loan amount of US$ 3.4 million were affected (excluding the Chitral Region, the total number of affected borrowers was close to 15,000 with an outstanding portfolio of US$ 3 million).
FMFB-P field teams were mobilised to determine the extent of the portfolio at risk. Estimates of the damage caused by floods were finalised in September 2010. Subsequently, the management started developing a loan rescheduling package to provide relief to the flood affected borrowers. The package is to be deployed selectively to avoid damage to current portfolio and minimise losses from the affected portfolio.
The Chitral Region, with five branches, was affected by the Malakand Relief Package, which is a waiver on loans by the Government of Pakistan. The State Bank of Pakistan issued two relief packages offering waivers on agricultural loans and mark up differential relief to the banks and customers.
This difficult situation has caused FMFB-P to face financial losses though the clients have been told that the initial waiver of loans was not applicable to microfinance banks. FMFB-P finished the year with 166,927 outstanding loans valued at US$ 29.5 million and 35 percent of FMFB-P’s total beneficiaries were women. More than 217,000 individuals deposited over US$ 45 million with the bank.
FMFB-P has also made advancements in terms of monitoring and research of its social performance. FMFB-P completed a project in partnership with Harvard University, Kennedy School of Government, to develop a set of standard social indicators both to segment poverty and to monitor the impact of the bank’s services on the lives of the poor. The project helped to develop a poverty scorecard that will help sharpen the FMFB-P’s ability to formulate need-specific services.
One of FMFB-P’s goals is to reach more clients in remote areas. The village group financial services (VGFS) are tailored group loans offered to rural clients to help promote home based industry and enable women to earn a supplementary income for their families.
More than 70 percent of the population of Pakistan resides in the rural areas. VGFS meet the specific requirements of the rural poor and this loan product is able to reach out to the unbanked population of Pakistan.
Cash-flow based lending ensures that borrowers do not face financial burdens. The bank’s collaboration with the PPO gives FMFB-P access to the remote populations through PPO’s extensive network of 4,000 offices throughout Pakistan. This has enabled the bank to ensure delivery of its products to the remote poor in a cost effective manner.
| FMFB PAKISTAN
|Microfinance Loans Disbursed: Value (US$ '000s)||40,329||56,663||48,579|
|Microfinance Loans Disbursed: Number||207,874||273,733||210,552|
|Microfinance Portfolio Outstanding: Value (US$ '000s)||26,815||33,298||29,495|
|Microfinance Portfolio Outstanding: Number||171,795||206,644||166,927|
|Average Microfinance Loan Size (US$ unit)||156||161||177|
|Percentage of Women Borrowers||33%||25%||35%|
|Portfolio at Risk (%)||1.3%||3.3%||12.3%|
|Number of IndividualSavers||144,898||189,878||217,006|
|Value of IndividualDeposits (US$ ‘000)||26,488||40,26||45,413|
|Number of Staff||1,175||1,135||1,121|
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