Telenor Microfinance Bank reports Rs16.3bn loss for 2019 | #employeefraud | #recruitment | #corporatesecurity | #businesssecurity | #

KARACHI: Telenor Microfinance Bank on Wednesday, released its financial statements for the year ending December 31, 2019 announcing a loss after tax of Rs16.35 billion.

According to the financials, the bank’s loss after tax fell from Rs2.51 billion in 2018 to Rs16.35 billion for the year ending December 2019. The bank also reported a revenue of Rs18 billion for 2019.

The bank’s loss per share for the year clocked in at Rs45.25, which is a fall from the loss per share of Rs9.64 during the same period of the previous year.

A part of the loss came from fall in the net interest income which fell from Rs6.1 billion in 2018 to Rs5.6 billion in 2019.

Moreover, during the financial year ended in December 2019, the bank had to set aside a hefty Rs8.81 billion as provisions against non-performing loans, compared to the Rs1.36 billion set aside in 2018. 

This led to the net interest income after provisions to report a loss of Rs3.25 billion in 2019, compared to the income of Rs4.73 billion earned in 2018. 

Meanwhile, the total non-interest income stayed relatively stable at Rs8.5 billion, compared to Rs8.386 billion in 2018. 

However, non-interest expenses shot up, from Rs15.24 billion in 2018, to Rs21.06 billion in 2019. Most of this was due to rise in administrative expenses, which stood at Rs20.8 billion in 2019, compared to Rs14.94 billion in 2018. 

What happened?

In explaining what led to the net loss of Rs16.3 billion, Telenor Microfinance Bank blamed the provision of around Rs8 billion it had to set aside for fraud in the bank, due to an investigation in the bank’s branches that has been ongoing since at least October 2019. 

“While a major part of the net loss is attributed to investments in expanding the digital payments business, the other contributor is credit impairment loss, for which a provision of Rs8.9 billion was made by taking into account expected losses and credit irregularities that also include fraud,” the bank said in a press release.

The bank further explained that in September 2019, irregularities were identified in the loan portfolio, that also included cases of collusion to commit fraud between employees and people outside the bank.

Telenor Microfinance Bank said the fraud was immediately reported to the State Bank of Pakistan (SBP) and a detailed investigation was launched. 

“This is unacceptable to Telenor Microfinance Bank,” the bank said. 

In its press release, the bank also emphasised that the bank took steps to completely strengthen its risk structure and revamp compliance policies, including training and awareness sessions. 

“By following best practices of transparency and confidentiality, actions were also taken against involved employees, ranging from warning letters and terminations to reporting the matter to the law enforcement agencies for further investigation,” the bank revealed. 

In a previous correspondence with Profit over employee terminations, the bank’s spokesperson maintained that the matter was still under investigation, and therefore exact figures could not be given about how many employees were terminated, or how many branches were affected or the size of the suspected fraud. 

Growth indicators

The press release also noted that the bank handled transactions of almost Rs1 trillion through its agent network and served over 10 million customers through its various channels. 

Additionally, the bank’s depositor base grew by 86 per cent to 17.18 million in 2019.

In particular, the bank’s Easypaisa wallet grew substantially, from 3.3 million users in 2018 to 6.4 million mobile wallet users in 2019. Users of the Easypaisa App increased by about 300 per cent to over 2 million, which is the highest number of users of any financial app in Pakistan. The bank invested Rs8 billion in 2019 to further build its payment and lending platform. 

“2019 also saw an increase of 34 per cent in the total value processed per transfer from Mobile Accounts which depicts that customers are adopting money transfer through mobile accounts, as compared to the traditional method of transferring money over the counter,” the bank noted. 

President and Telenor Microfinance Bank CEO and President Mudassar Aqil said: “With the capital injection by our shareholder of $70 million in November, 2019, we are stable and on strong financial footing. We have implemented robust internal controls and risk management policies to further streamline our branch banking business.” 


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