JWS Pakistan

CREDIT RATING REPORT | Mar-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
28-Mar-25 BBB A3 Stable Maintain -
28-Mar-24 BBB A3 Stable Maintain -
28-Mar-23 BBB A3 Stable Maintain -
28-Mar-22 BBB A3 Stable Upgrade -
14-Sep-21 BBB- A3 Positive Maintain YES
About the Entity

JWS Pakistan was incorporated in 2015 as a Public Company Limited by Guarantee under Section 42 of the Companies Ordinance, 1984 (now the Companies Act, 2017). It is also licensed by the SECP under the Non-Banking Finance Companies Rules, 2003. The overall control of the Institution vests with an eight-member Board of Directors. Ms. Sabiha Shaheen is the Chairperson of the Board. Mr. Qazi Shoaib Alam Farooqi is the CEO and founding member of the Institution, who brings with him a wealth of experience, of more than two decades in the industry.

Rating Rationale

JWS Pakistan (JWSP or "the Company") is a Non-Banking Microfinance Company regulated by the Securities & Exchange Commission of Pakistan (SECP) under Section 42 of the Companies Act, 2017, with the status of a "Company Limited by Guarantee." Since its inception in 2015, JWSP has steadily expanded its presence across the Upper and Central regions of Punjab, Pakistan’s largest province. Today, the company operates 111 branches across 24 districts. As a not-for-profit organization, JWSP is dedicated to community development, with a strong emphasis on women’s empowerment. By providing microloans to aspiring female entrepreneurs—who make up 99% of its borrower base—the company enables them to establish and grow small businesses, fostering economic independence and social progress. Previously, the sector's performance was negatively impacted by various macroeconomic challenges, including high inflation and elevated policy rates, which collectively eroded individuals' purchasing power. However, in the first half of FY25, the sector has shown signs of recovery, driven by declining inflation and borrowing rates, leading to improved consumer sentiment. This recovery is reflected in the sector’s Portfolio at Risk (PAR) > 30 days, which improved to 1.57% in 1HFY25, down from 2.8% in 1HFY24. The sector’s progress is also evident in JWSP’s Gross Loan Portfolio (GLP), which grew to PKR 6,423mln as of December 2024, compared to PKR 6,033mln in FY24. The Company’s active borrower base has reached ~176,544 borrowers. As a result, the company's markup income increased to PKR 2,859mln in FY24, up from PKR 2,138mln in FY23, contributing to a profit after tax of PKR 318mln in FY24, compared to PKR 281mln in FY23. The loan portfolio remains primarily concentrated in the enterprise segment, reflecting the company's strategic focus on business financing. Additionally, prudent receivables management and an efficient recovery process have helped maintain a stable infection ratio of ~1%, reinforcing the company's commitment to asset quality sustainability as a top priority. Additionally, opportunities for technological advancement remain, presenting a pathway for operational enhancement. The company relies on diverse sources of funding, predominantly, the PMIC. It has also strengthened its funding base during the last year by garnering funds from international sources which shall fuel growth in the future. The reduction in policy rates has facilitated more stable lending conditions, though prudent risk management remains essential to mitigate potential fluctuations in Non-Performing Loans (NPLs). JWSP's Board remains actively engaged in strategic decision-making and steering the company’s direction while adhering to best practices in corporate governance. Backed by a stable and experienced senior management team, the company operates with well-defined reporting structures as per a formalized organogram, ensuring effective oversight and a robust monitoring framework.

Key Rating Drivers

The ratings are dependent on the Institution's ability to sustain positive performance indicators amidst growth in business volumes. Further, ratings also incorporate vulnerability of the business due to limited geographical presence and a modest market share. The ratings will monitor expansion of the business and efficacy of its risk mitigation mechanism.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

JWS Pakistan

rating analysis

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Profile
Structure

JWS Pakistan (herein referred to as “JWSP” or *‘the Institution™) was incorporated on 28 December 2015 as a company limited by guarantee under Section 42 of the Companies Ordinance, 1984 (now the Companies Act, 2017). The Institution is licensed to provide Investment Finance Services under the Non-Banking Finance Companies (NBFC) Rules, 2003


Background

In 1992, the Jinnah Welfare Society was incorporated as an NGO, with Mr. Qazi Shoaib Alam Farooqi (the CEO) and Mr. Muhammad Jamil Anjum (the CFO) as the founding members of the NGO. In 2015, a separate entity called JWS Pakistan was spun off from the NGO for exclusive services of microfinance in nature


Operations

JWSP operates with over 111 branches, in the upper and central Punjab region. Financial products offered by JWSP relate to segments such as Agriculture, Livestock, Personal and Enterprise. Group lending constitutes 98% of the portfolio. The registered office of the Institution is located in Gujranwala


Ownership
Ownership Structure

The control vests with members rather than shareholders. Members do not hold any shareholding but they have provided a guarantee of a specified nominal amount as required under the Companies Act 2017 for companies limited by guarantee.


Stability

Since its inception in 2015, the Company has demonstrated growth by maintaining a stable position within the Microfinance Institutions (MFIs) sector. This stability has been achieved through prudent financial management, strategic planning, and a commitment to its core mission. Moreover, a comprehensive succession plan is in place to ensure the continuity of leadership and operational effectiveness.


Business Acumen

The members of JWSP possess a diverse set of skills and experience, providing sanguine oversight over the Institution's strategic direction.


Financial Strength

The likelihood of JWSP receiving financial support from its members is limited, given its registration as a not-for-profit organization under section 42 of the Companies Ordinance 1984 (now Companies Act, 2017). This status restricts the Foundation's ability to solicit direct financial contributions from members. However, the Foundation's robust financial management practices, diversified revenue streams, and strategic approach have reinforced its financial stability. As an alternative to equity funding, JWSP can raise money through debt capital and donations from local and foreign institutions.


Governance
Board Structure

The Board of Directors consists of 8 directors, three of which are independent. Directors are elected from the list of members.


Members’ Profile

The directors are equipped with experience in financial services. Ms. Sabiha Shaheen, the Chairperson of the Board, has a Master's Degree in Philosophy from Punjab University. With 24 years of experience, she specializes in community development, institutional strengthening, and youth mobilization.


Board Effectiveness

The presence of experienced directors with diversified backgrounds brings competency to the board’s strategic direction and, therefore, augments well for the governance of JWSP. There are six sub-committees of the board, namely: (i) Audit Committee (ii) Procurement Committee (iii) HR Committee (iv) Asset Disposal Committee (v) Grievance Committee (vi) Risk Committee. Quarterly meetings of the committees are also conducted.


Transparency

Ilyas Saeed and Company Chartered Accountants, a QCR-rated firm (Category A as per SBP Panel), expressed an unqualified opinion on the financial statements for the year ended June'24. An  inhouse internal audit department is in place, which reports to the audit committee on a quarterly basis. Furthermore, to enhance the objectivity and integrity, it's suggested to have an outsourced external Audit function with reputable firm.


Management
Organizational Structure

The organizational structure is simple and effective. There are six functional departments housed in the Head Office. The overall Institution structure includes branches reporting to the area and regional offices, which ultimately report to the Head Office.


Management Team

Mr. Qazi Shoaib Alam Farooqi, the CEO and Founding Member, has experience of almost three decades in the industry. He earned a postgraduate degree in Political Science from the University of Punjab. After completing his education, he laid down the foundation of the Jinnah Welfare Society (NGO) to serve the underprivileged communities of rural areas in Punjab. Other members of the management possess adequate experience from diverse backgrounds.


Effectiveness

Department heads ensure sound department performance, via a systematic decision-making process, regularly meeting the CEO to discuss material matters.


MIS

An in-house developed MIS called the MCOS is used. It consists of three modules: (i) Financial Management System (ii) Credit Management System & Risk Management (iii) Human Resource Management. The system has an inbuilt processing and approval capability.


Risk Management framework

The Institution has well-established standard operating procedures and multiple layers of checks and balances to ensure smooth business operations. This standardization of operations bodes well for transparency in business processes. Further room for enhancement in the risk framework still exists.


Technology Infrastructure

The microfinance industry has experienced rapid advancement of technology in recent periods, and it is now necessary for existing players to have a strong technology infrastructure to sustain their market share. The Institution is continuously investing to increase automation in the processes. It is currently working to integrate its processes so real-time access to all outstanding balances and receipts is available. Room for improvement and growth exists in this domain.


Business Risk
Industry Dynamics

As of CY24, the microfinance industry, including MFIs, MFBs & RSPs, in Pakistan saw a 9.4% growth in Gross Loan Portfolio (GLP), reaching ~ PKR 597.6bln (CY23: PKR 546bln; FY22: PKR 491.2bln). Out of which, the NBMFI's and RSP's loan portfolio stands at around 23% with a GLP worth ~ PKR 137.4bln (CY23: 120.1bln) with an active borrower base of ~3.1 mln( CY23: 3mln). The portfolio at risk (PAR) > 30 days improved to 1.57% (CY23: 2.80%) due to recoveries in flood-impacted areas. The average loan size increased to ~ PKR 44,762 (CY23: PKR 38,777), indicating the sector’s expansion.


Relative Position

NBMFI's GLP stand at ~ PKR 137.4bln, out of which JWSP holds a ~4.6% market share based upon its outstanding GLP PKR 6,423mln as of Dec'24, positioning it as a small-tier player in the microfinance sector.


Revenue

JWSP’s gross interest income for 6MFY25 was PKR 1,619mn (FY24: PKR 2,859mn; FY23: PKR 2,138mn). Net markup income stood at PKR 1,013mn (FY24: PKR 1,691mn; FY23: PKR 1,275mn), while markup expenses reached PKR 606mn (FY24: PKR 1,168mn; FY23: PKR 862mn).


Profitability

As of 6MFY25, Earning assets constituted 94% of the total asset base (FY24: 95%; FY23: 93%). Bottom-line profitability improved to PKR 315mln (FY24: PKR 318mn; FY23: PKR 281mn), supported by non-markup income of PKR 159mn (FY24: PKR 267mn; FY23: PKR 396mn). Non-markup expenses increased to PKR 797mln (FY24: PKR 1,547mln; FY23: PKR 1,333mln).


Sustainability

In the medium-term horizon (5 years), JWSP aims to transition into a profit entity, ultimately incorporating as a Microfinance Bank. The institution is integrating digitalization, introducing tablets for client dealings. Although JWSP holds nationwide licensing, expansion efforts remain focused on Punjab, targeting cities like Sargodha and Jhang, where market penetration is more viable.


Financial Risk
Credit Risk

The GLP reached to PKR 6,423mln in 6MFY25 (FY24: PKR 6,033mln; FY23: PKR 5,397mln), reflecting a 6.9% increase. During 6MFY25, NPLs stood at PKR 94mln (FY24: PKR 66mln; FY23: PKR 52mln), while the infection ratio remained steady at 1% (FY24: 1%; FY23: 1%).


Market Risk

JWSP’s financial assets remain primarily short-term investments, classified as financial assets at amortized cost. But the quantum is very modest as compare to the size of total borrowings. Thus, It is suggested to enhance the investment portfolio by at least 20% of its total borrowings. This liquidity buffer will help JWSP to reduce the overall exposure of market risk.


Funding

JWSP’s funding mix includes long-term loans from PMIC,Blue Orchard, Symbiotics SA, and Habib Bank Limited. Debt stood at PKR 6,457 million as of 6MFY25 (FY24: PKR 6,310 million; FY23: PKR 4,694 million).


Cashflows & Coverages

As of 6MFY25,the liquidity ratio (Liquid Assets/Borrowings) for JWSP is recorded at 34.31% (FY24: 35.24%; FY23: 17.70%), reflecting an improvement on YOY basis. Liquid assets stands at PKR 2,216 mln (FY24: PKR 2,224mln, FY23: PKR 831mln)


Capital Adequacy

Unlike the State Bank of Pakistan (SBP), which mandates Microfinance Banks (MFBs) to maintain a Capital Adequacy Ratio (CAR) of 15%, the Securities and Exchange Commission of Pakistan (SECP) has no minimum requirement for Microfinance Institutions (MFIs). During the first half of FY25, the Company has demonstrated modest equity growth, with equity standing at ~PKR1,821mln, up from ~PKR 1,505mln in FY24. In 1HFY25, the Company's equity to Gross Loan Portfolio (GLP) ratio stood at ~28.3%, compared to 24.9% in FY24 (FY23: 22.13%).
 
 

Mar-25

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JWS Pakistan

financial summary

(PKR mln)

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Dec-24
6M		 Jun-24
12M		 Jun-23
12M		 Jun-22
12M
Management Audited Audited Audited
A. BALANCE SHEET
1. Total Finances - net 6,423 6,033 5,397 4,393
2. Investments 88 88 80 188
3. Other Earning Assets 2,128 2,136 751 585
4. Non-Earning Assets 557 464 444 432
5. Non-Performing Finances-net (232) (239) (221) (212)
Total Assets 8,964 8,481 6,451 5,386
6. Deposits 0 0 0 0
7. Borrowings 6,457 6,310 4,694 4,141
8. Other Liabilities (Non-Interest Bearing) 686 666 570 334
Total Liabilities 7,143 6,976 5,264 4,475
Equity 1,821 1,505 1,187 911
B. INCOME STATEMENT
1. Mark Up Earned 1,619 2,859 2,138 1,381
2. Mark Up Expensed (606) (1,168) (862) (436)
3. Non Mark Up Income 159 267 396 158
Total Income 1,172 1,958 1,671 1,103
4. Non-Mark Up Expenses (797) (1,547) (1,333) (790)
5. Provisions/Write offs/Reversals (59) (93) (57) (187)
Pre-Tax Profit 315 318 281 126
6. Taxes 0 0 0 0
Profit After Tax 315 318 281 126
C. RATIO ANALYSIS
1. Performance
Portfolio Yield 51.3% 49.5% 43.4% 38.8%
Minimum Lending Rate 46.4% 48.6% 46.0% 38.4%
Operational Self Sufficiency (OSS) 110.7% 101.8% 99.0% 104.4%
Return on Equity 37.9% 23.6% 26.8% 14.8%
Cost per Borrower Ratio 9,585.3 9,297.1 8,752.2 7,238.2
2. Capital Adequacy
Net NPL/Equity -12.7% -15.9% -18.6% -23.3%
Equity / Total Assets (D+E+F) 20.3% 17.7% 18.4% 16.9%
Tier I Capital / Risk Weighted Assets 20.2% 17.3% 17.6% 16.6%
Capital Adequacy Ratio N/A N/A N/A N/A
Capital Formation Rate [(Profit After Tax - Cash Dividend ) / Equity] 41.9% 26.8% 30.9% 16.0%
3. Funding & Liquidity
Liquid Assets as a % of Deposits & Short term Borrowings 70.2% 75.9% 40.2% 53.2%
Demand Deposit Coverage Ratio N/A N/A N/A N/A
Liquid Assets/Top 20 Depositors N/A N/A N/A N/A
Funding Diversification (Deposits/(Deposits+Borrowings+Grants)) 0.0% 0.0% 0.0% 0.0%
Net Advances to Deposits Ratio N/A N/A N/A N/A
4. Credit Risk
Top 20 Advances / Advances 0.0% 0.0% 0.0% 0.1%
PAR 30 Ratio 1.4% 1.1% 1.0% 0.2%
Write Off Ratio 0.0% 0.3% 0.3% 1.8%
True Infection Ratio 1.4% 1.3% 1.2% 1.6%
Risk Coverage Ratio (PAR 30) 345.5% 460.9% 526.2% 2885.6%

Mar-25

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JWS Pakistan

rating scale

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Mar-25

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JWS Pakistan

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
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      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
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