Karachi: In a press release issued on October 23, the PTCL Group vehemently dismissed all allegations and speculations surrounding the financial well-being of its wholly-owned subsidiary, U Microfinance Bank (Ubank). The leading ICT services provider in Pakistan reiterated that Ubank possessed a robust and resilient capital base.
This development unfolded in response to the viral online conjectures about the financial stability of both UBank and UPaisa, with claims of their capital reserves teetering into the negative. Social media rumours exacerbated the situation, prompting depositors to withdraw their funds.
The genesis of these speculations can be traced back to the abrupt departure of Kabeer Naqvi, the former President and CEO of UBank, on October 18. Shortly thereafter, on October 19, Essa Al Taheri was announced as the acting President and CEO of UBank. Al Taheri has been associated with Ubank as a member of the board of directors.
In light of the ongoing developments, UBank and PTCL group addressed the ongoing speculations. Al Taheri stated, “We want to address recent rumours circulating on various platforms, regarding UPaisa & U Microfinance Bank’s capital base. These claims are entirely baseless and unfounded. Ubank has a strong and committed management team and enjoys complete support from its investors, partners, stakeholders and customers as the bank continues to strive for growth and excellence.”
Similarly, PTCL Group stated that the teams at Ubank would continue to make progress, innovate, and endeavor to achieve the bank’s core mission of financial inclusion for all segments of Pakistani society.
Hatem Bamatraf, the president and CEO of and chairman of the board of directors at U Microfinance Bank, said, “Ubank has always enjoyed strong backing from PTCL Group. The bank has demonstrated impressive financial performance and positive growth trajectory; therefore, I would like to reiterate that PTCL Group firmly stands with the bank and reassures the investors, customers and shareholders of its continued support. Currently, we don’t foresee the need of any equity injection in the bank but are fully committed to meet any future growth requirements.”
Ubank came into existence in 2012. According to the press release, the bank has steadily enhanced its profitability as an institution over the years, while significantly increasing its presence across multiple urban, as well as rural regions of Pakistan.
“Ubank and its wide network of 350+ branches is a testament to the bank’s commitment to reaching the unbanked population at the last mile while providing viable financial products and services to its customers,” the press release stated.
The bank has a paid-up capital of Rs 4 billion, Rs 1 billion as additional Tier-1 capital and Rs1.2 Billion as Tier-2 capital from PTCL. In addition to this, the bank has also raised Rs 1 billion in additional Tier-1 capital from the market.
According to the press release, given the strong capital base, diversified revenue engines and portfolio, coupled with unprecedented growth, Ubank remains credible with a long-term credit rating of A+ awarded to it by PACRA Credit Rating Agency and VIS Credit Rating Company. Both the rating agencies in Pakistan have reported Ubank to have a ‘Stable’ outlook, recognizing the bank’s sustainable business strategic initiatives.
While the PTCL Group has clarified Ubank’s capital position, it’s noteworthy that the microfinance bank has not yet released its latest financial statements. Nor has the group or the microfinance bank given any explanation on why the reports have been delayed. The most recent available financial statements for UBank date back to the first quarter of 2023, with no subsequent statements issued.
U Microfinance Bank simply needs to confirm whether a Rs 8,000 million hit for credit loss provisioning taken as reported or not? All other statements are just fluff.