Press Release

VIS Reaffirms Entity Ratings of Halan Microfinance Bank Limited

Karachi, April 30, 2025: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Halan Microfinance Bank Limited (‘Halan’ or the ‘Bank’) at 'BBB/A3' (Triple B/A Three). Medium to long term rating of 'BBB' indicates adequate credit quality; protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur in the economy. Short term rating of 'A3' indicates fair likelihood of timely repayment of short-term debt obligations with satisfactory liquidity factors. Outlook on the assigned ratings remains ‘Positive.’ Previous rating action was announced on April 30, 2024.

Halan was established in Pakistan on April 17, 2012. The Bank previously operated as a subsidiary of Advans S.A. Sicar, based in Luxembourg, which held 99.99% of the Bank's share capital (Dec’23: 99.99%). On August 04, 2023, Advans S.A. Sicar, entered into a share sales agreement with MNT-Halan Pak B.V., a company registered in the Netherlands, for the sale of 100% of Advans Pakistan's shares. The SBP approved this arrangement on October 23, 2023, resulting in a change of the Bank's parent entity. On March 20, 2024, MNT-Halan Pak B.V. acquired the entire shareholding of Advans Pakistan Microfinance Bank Limited. Moreover, Halan submitted its application for the national license to the State Bank of Pakistan (SBP) in the last quarter of 2024. In this regard, the first meeting with the SBP was held in the last week of April 2025. The national license is expected to be issued in Q2’25.

The ratings assigned to Halan takes into consideration the Bank’s transition following a change in ownership, coupled with ongoing strategic reorientation and operational strengthening, and as such reflect the international experience of its new owners in microfinance. The Bank has adopted a cautious approach to lending, realigned its credit policies, and made strides in digitizing loan processing and collections to bolster asset quality. While the transformation phase has led to consolidation in the borrower base and a slowdown in credit growth, it has also improved credit risk management and portfolio monitoring.

With fresh capital infusion in 2024 and Q1’25, the Bank’s capital adequacy stands reinforced and above the regulatory environment. Furthermore, an additional capital infusion is expected by April 2025. A higher level of provisioning under IFRS-9 has diminished the impact of NPLs identified over the last 3 years, and the latent risk in the existing portfolio. Liquidity has improved notably given enhanced deposit mobilization and with increased investment in government securities, as credit extension is yet to pick pace. However, the deposit base exhibits significant and increasing concentration, which can pose liquidity constraints in case of unexpected calls on liquidity, limiting the Bank’s growth potential in the near-term. The Bank is addressing these concerns through active engagement with large-ticket depositors and plans to diversify via digital and retail channels.

Going forward, plans include national expansion, product diversification, and the development of Islamic banking capabilities. These initiatives, along with further capital commitments from the sponsor, are expected to support growth, improve financial sustainability, and promote broader financial inclusion. The ratings are contingent upon the successful execution of the Bank’s strategic plan, including sustained improvement in asset quality, enhancement in profitability metrics, maintenance of adequate capitalization, and continued sponsor support in the form of timely capital injections till needed.

For further information on this rating announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.

Applicable Rating Criteria:
Micro-Finance Banks
https://docs.vis.com.pk/docs/MicroFinance-Oct-2023.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2025 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .