KARACHI: The amount of microfinance loans given out stayed the same from January to March, after increasing by almost 20% in the previous three-month period.
The latest data from the Pakistan Microfinance Network (PMN) shows that the amount of microloans given out in the first quarter of 2022 was Rs134.7 billion, which is up 0.1% from the October-December quarter of 2021. But the rise was 30.6% from one year to the next.
The gross loan portfolio (GLP) grew by 6.3% to Rs417.2bn, while disbursements didn’t change at all from quarter to quarter. Loan disbursements are new loans given out during the three-month period, while GLP is responsible for all of the outstanding principal that clients owe.
Analysts from PMN said that the growth of GLP was mostly due to the microfinance bank peer group, with Mobilink Microfinance Bank Ltd at the top of the list because of how much digital credit was used and how much it reached out to customers.
Over the past year, the number of outstanding microloans went up by 22.5 percent.
The high-base effect seems to have caused the growth in new loans to stop growing each quarter. The sowing of wheat in the last three months of every year led to a one-fifth rise in microloans from October to December 2021. During the January–March quarter, the loan-giving process was not sped up by a change in the seasons.
During the three months under review, the microfinance industry gave out 5.2 million loans, which is 10.5% more than the previous quarter.
There were 8.2 million active borrowers at the end of the January-March quarter, 0.9 percent more than at the end of the October-December quarter.
From January to March, the average loan size was Rs 25,629, which was 9.4% less than the previous quarter’s average loan size of Rs 28,292. The sharp drop in the average ticket size is due to the fact that the number of loans has gone up while the number of new loans has not (denominator).
But on an annual basis, the average loan size went up by 2.4% from January to March. The State Bank of Pakistan has now given permission for small business loans of up to Rs3 million to be given out by microfinance banks. This is likely to lead to more loans being given out each quarter and a bigger average loan size overall. Unlike in the past, microfinance banks now actively finance tractors and other commercial vehicles and offer long-term loans for affordable housing.
Early delinquencies, which are loans that are more than 30 days late, went from 5.8 percent at the end of December to 4.2 percent at the end of March. In the last quarter, the percentage of microfinance clients in rural areas increased from 65 percent to 70 percent.
As for microsavings, the number of active savers stayed at 84.2 million, which is up 7% quarterly and 25% annually.
At the end of January-March, the value of savings was Rs429.5bn, which was up 1.7% from the previous quarter. Because of mobile wallets, Mobilink Microfinance Bank Ltd. and Telenor Microfinance Bank Ltd. were able to get more people to save money.
The microfinance penetration rate, which shows what percentage of the population has used microfinance products at least once, was 40% at the end of March, up from 37% a year earlier. This means that six out of every ten people in the country who could use microfinance still can’t get it.