Bank Targets Growth With IPO Following Financial Recovery
ABHI Microfinance Bank Limited is preparing for a public listing on the Pakistan Stock Exchange (PSX) after staging a significant financial turnaround under its new ownership.
Formerly operating as FINCA Microfinance Bank, the institution was acquired in early 2025 by ABHI Private Limited and TPL Corp Limited. The planned initial public offering (IPO) is expected to strengthen the bank’s capital base and support future lending growth.
Nationwide Network Supports Digital and Branch Banking
Established in 2008 as a licensed deposit-taking microfinance bank, ABHI operates a network of 114 branches across more than 108 cities, covering all provinces, Islamabad, Gilgit-Baltistan and Azad Jammu & Kashmir.
The bank provides micro-credit, savings, deposit and payment services to low-income individuals, salaried employees, micro-entrepreneurs and small businesses through a combination of physical branches and digital banking channels.
Pakistan’s microfinance banks account for approximately 77 percent of the country’s total microfinance gross loan portfolio. Unlike many non-bank microfinance institutions that depend on donor funding or wholesale financing, ABHI primarily relies on customer deposits.
Profitability Improves After Ownership Change
Following the acquisition, management focused on improving asset quality, reducing costs and strengthening the balance sheet.
The strategy delivered a notable turnaround in profitability:
- Net loss of Rs1.73 billion in 2023
- Net loss of Rs1.75 billion in 2024
- Net profit of Rs1.02 billion in 2025
- Net profit of Rs1.50 billion during the first half of 2026
The bank’s equity position also improved significantly, moving from a deficit of Rs397 million at the end of 2025 to a surplus of Rs3.11 billion by June 2026.
Meanwhile, its capital adequacy ratio improved from negative 20.28 percent to negative 6.26 percent, although it remains below regulatory requirements.
Gold-Backed Financing Drives Lending Strategy
Gold-backed financing has become the cornerstone of ABHI’s lending model and is expected to account for around 87 to 89 percent of its average gross loan portfolio in the near term.
The secured financing portfolio is projected to generate yields of around 38 percent, while management aims to keep the portfolio-at-risk ratio near 2 percent.
The remainder of the loan book consists of unsecured branch lending and digital earned wage access (EWA) products linked to payroll financing.
The State Bank of Pakistan has granted the bank a five-year exemption, valid until November 2029, allowing gold-backed financing to exceed the normal regulatory cap of 35 percent of the loan portfolio.
In addition, regulatory relief on the minimum 15 percent capital adequacy ratio remains in place until October 2027, providing the bank with additional time to strengthen its capital position.
IPO Aims to Strengthen Capital Base
ABHI Microfinance Bank plans to raise approximately Rs1.98 billion through its IPO at the floor price.
The additional capital is expected to support future loan growth while improving regulatory capital ratios.
Despite the recent financial recovery, the bank’s capital adequacy ratio remains negative, highlighting the importance of fresh equity to support sustainable expansion.
Investors to Assess Growth Prospects and Risks
While the turnaround has significantly improved the bank’s financial position, investors will closely monitor several key risks.
The microfinance sector remains sensitive to inflation, economic conditions, borrower repayment capacity and potential changes in regulatory treatment of gold-backed financing once existing exemptions expire.
The draft prospectus has been published on the Pakistan Stock Exchange website for public comments until August 10, after which investors will closely watch the book-building process and the bank’s ability to maintain profitability while expanding its lending operations.