Institute - of - Business - Management: Tameer Microfinance Bank: A Case Study On Strategy and Competitiveness

INSTITUTE | OF | BUSINESS | MANAGEMENT
MAN-405
September 2010
Under the supervision of Prof. Javaid Ahmed, IoBM

Yasir Maqbool – HBL
TAMEER MICROFINANCE BANK:

A CASE STUDY on STRATEGY and COMPETITIVENESS1
INDUSTRY OVERVIEW
The microfinance market in Pakistan is small by international standards2. It has so far

been limited by a narrow range of products and a focus on credit, ignoring the potential of
savings, insurance and leasing. The sector needs scaling up, product and market
diversification in order to ensure greater sustainability (and possibly profitability),
effectiveness and risk management. One factor that may facilitate the growth of
Microfinance Institutions (MFIs) is the ability to learn from the informal financial markets.
The microfinance sector in Bangladesh is one of the world’s largest. Bangladeshi MFIs
are best known for their pioneering, large-scale microfinance services. The study of
informal financial markets can help microfinance institutions in understanding their market,
developing their core niche, exploring the options for cross-subsidization between markets
and in developing viable and demand-driven products and practices. This can help the
sector outgrow its current small outreach to a more sustainable size.
At the same time, it is important to note that Pakistan’s microfinance industry has followed
a conventional route and has taken some significant initiatives to set on course the
development agenda for microfinance. Moving away from the traditional reliance on
nationalized banks to finance small farmers (which were seen as the primary universe in
terms of being eligible for micro-credit) and the few NGOs which provided a range of
special rural support or special urban slum targeted programs, Pakistan has now entered
This case was written under supervision of Mr. Javaid Ahmed, Chair, Department of Management of the
Institute of Business Management (IoBM), by Yasir Maqbool, Manager Compliance at HBL, IoBM Alumni. It
is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective
handling of a management situation.
Copyright © 2010 President and Fellows of the Institute of Business Management. To order copies or request
permission to reproduce materials, call the Dean’s office, CBM. No part of this publication may be reproduced,
stored in a retrievable system, used in a spreadsheet, or transmitted in any form or by any means --- electronic,
mechanical, recording or otherwise without the written permission of the Institute of Business Management.
1This case study is based on publically available information and data collected in 2009 for the post
graduate Strategic Management Research Project on Tameer Microfinance Bank Ltd.
2The size of microfinance sector of Bangladesh is US$ 15 million, Indonesia is US$ 10 million, Pakistan US$
1 million.
Page 1 of 41
Tameer Microfinance Bank: Case Study
a new phase of microfinance development. The country has witnessed a wave of

experimental programs. Sequentially, some sponsors promoted a number of foundations
e.g. the Kashf Foundation Program modeled along the Grameen Bank of Bangladesh, the
Taraqi Foundation and the Damen Foundation. Other major initiatives include setting up
of donor led apex arrangements such as the Pakistan Poverty Alleviation Fund (PPAF)
and the Microfinance Sector Development Program (MSDP) which promotes the
development of the microfinance policy framework while funding select institutions through
foreign exchange credit lines. Subsequently, State Bank of Pakistan took a more holistic
approach towards the development of the microfinance industry by developing the (i)
policy, legal and regulatory framework of the microfinance industry, and (ii) promoting
diversity and sustainability in the microfinance business. All such businesses are licensed
and supervised by the State Bank of Pakistan and have to comply with Prudential
Regulations for Microfinance Banks (MFBs). Today, along with the traditional NGO based
programs, Pakistan has about six MFBs of which 2 have been in operation for around 4-
5 years whereas four have been recently licensed.
There is a formally recognized Pakistan Microfinance Network (PMN), which is self-

regulated. PMN members are a mix of the banks, leasing companies and focused financial
services agencies along with the conventional NGOs that offer services to special
segments of the society and community. The six Microfinance Banks (MFBs) are:
1. The First Micro Finance Bank Limited

2. Khushhali Bank
3. Network Micro Finance Bank Limited
4. Pak Oman Micro Finance Bank
5. Rozgar Micro Finance Bank
6. Tameer Micro Finance Bank Limited
It is estimated that 40 Microfinance Institutions (MFIs) operate in Pakistan out of which 19

institutions are members of PMN which capture almost 99% of the MFIs market. Today,
this network offers over 400 outlets of which 308 are branches of PMN members, besides
which there are 92 MFIs with 145 service centers. Cumulatively the outstanding loans of
these institutions are no more that Rs 3 billion and deposits of Rs 6.6 billion of which the
bulk is so far intermediated through PMN members. Unlike some countries, Pakistan has
lifted prohibitions and limitations on the participation of foreign equity holders (or founders
/ members in case of NGOs), borrowing from foreign sources, and employment of non-
citizens in management or technical positions. This should go a long way to help set up
businesses on modern lines and will also bring with it the necessary experience and
technological support for this industry.
Industry Concerns
Of principal concern is the low coverage of Microfinance services. The Microfinance

institutional framework currently supports barely 600,000 active borrowers. Existing
coverage of the formal microfinance sector is only 10% of the estimated 6 million
households in need of Microfinance. The requirements clearly are above these norms as
currently one fourth of the population of Pakistan is below the poverty line.
Another feature is the high concentration across institutions, in lending and among clients.
Khushhali Bank and PMN provide the bulk of the services given their edge in starting
business early on but these institutions have only provided lending facilities without
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adequately tapping the deposit base of their clients. Also, their lending profiles reflect a
degree of concentration in select regions and sectors. As of March 2006, 41% of loans
distributed by the MFBs are for agri-inputs, 24% for livestock, 26% for small enterprises
and 9% for other purposes. This is because Khushhali Bank which accounts for the bulk
of this business is rural focused. An analysis of gender-wise loans granted reveals that
84% of borrowers are male. Average loan size of MFBs is Rs 9,300.
The microfinance business further faces difficulty in accessing alternative sources of

investment—particularly equity investment which is a world wide problem.
Knowing how to conduct micro-businesses is an additional challenge in Pakistan given its

low financial and accounting literacy.
The Expectations
The newly licensed institutions will not only help in diversifying the institutional risk and
provide better coverage, but also introduce the much needed competition in this area.
SBP has further developed the legal framework for microfinance institutions. MFIs are
governed and regulated by the MFIs Ordinance, 2001, the promulgation of which resulted
in a paradigm shift in the microfinance industry, and has laid the foundation for the
systematic growth of the sector. Microfinance is now seen as a major tool for eradicating
poverty. MFIs’ paid up capital requirements are lower than commercial banks at Rs 250
million. To promote flexibility and innovation, SBP has adopted international standards in
establishing requirements for capital adequacy, maximum loan size, credit and operational
risks, KYC norms etc.
1.1. THREAT OF NEW ENTRANTS
The threat of new entrants is high because of low barriers to entry. A microfinance bank
must obtain a license from the State Bank of Pakistan as per the requirements of the
Microfinance ordinance 2001. The license to operate at a district level can be obtained
for PKR 100 million; the license to operate at a provincial level can be obtained for PKR
250 million and the license to operate at the national level can be obtained for PKR 500
million. The upfront capital requirement in the form of license is comparatively low as the
requirement for an Islamic bank license is $ 100 million under the new guidelines of the
SBP3. Under the new guidelines for Microfinance banks commercial banks can also open
a microfinance bank as their subsidiary. For commercial banks it would not be difficult to
obtain the license for a microfinance bank.
The second barrier to entry is in the form of management. There are no set rules of the
game in the microfinance sector of Pakistan. Also, no microfinance bank in Pakistan has
human resources trained for the microfinance sector on its tap. Almost all of the MFBs 4
hire commercial and corporate bankers to run microfinance banks. Hence, this barrier is
also not a matter of worry for commercial banks upon their entrance in to the microfinance
sector.
3 State Bank of Pakistan

4 Microfinance Banks
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The third barrier to entry is the capital required for opening branches. The capital
requirement for branches is nominal because MFBs as well as other commercial and
Islamic banks normally rent branches. For a microfinance banks renting branches does
not involve a significant investment and the amount of rent is also very nominal; the main
reason behind this fact is the target areas of MFBs which are normally suburbs.
Response of Existing MFBs & MFIs:
The existing MFBs & MFIs5 do not demonstrate strong retaliation to a new comer. Most of
the MFIs are NGOs6 and the rest are NRSPs7. There are only six MFBs and each with
diverse vision & mission. The focuses of these banks are poverty alleviation with the
exception of Tameer Microfinance Bank. Hence any bank entering microfinance sector
with the aim of becoming a commercially sustainable microfinance bank will not
experience considerable retaliation from existing MFIs & MFBs.
1.2. BARGAINING POWER OF CUSTOMERS
The bargaining power of customers is low because there are only six microfinance banks
& 40 MFIs and the total outreach is 730,960 customers8 up till June 2006. The total size
of microfinance market is approximately 15 million people and the current penetration rate
is about 4-5%. Commercial banks do not lend to the target market of Microfinance sector.
Each customer has a small ticket loan. The customers are not highly sensitive to the
interest rate charged by the MFBs and they only worry about the monthly installment. Also
they have a little choice because the substitute to microfinance loans is loans from local
money lenders who charge interest rates ranging between 100-150%.
1.3. THREAT OF SUBSTITUTES9
Microfinance services are provided by informal, semi-formal and formal sources and
institutions. Semi-formal and formal sources are part of Microfinance sector of Pakistan.
Hence, the substitute is microfinancing provided by informal sources.
Informal sources of microfinance account for approximately 83% of the credit supply and
are provided by moneylenders, shopkeepers, traders, middlemen, family and friends for
consumption and production purposes. Every village or suburban area has at least one
informal committee that collects regular savings and offers loans to members in a similar
management arrangement to ROSCAS (Rotating Savings and Credit Associations).
Compared to the other sources of microfinancing, interest rates from informal sources are
much higher, ranging from 50% to 120% per annum.
The threat of substitutes is low because the substitute to microfinance loans is loans from
local money lenders at an interest rate ranging from 100-150%. The effective interest rate
on microfinance loans ranges between 25-35%. Hence a customer incurs significant costs
in switching to a substitute. Hence, customers are not likely to substitute.
5 Microfinance Institutions
6 Non-governmental organizations
7 National Rural Support programs
8
Microwatch October 2006
9
Source: Pakistan Country Profile, BWTP Asia Resource Centre for Microfinance (www.microfinancegateway.org)
Page 4 of 41
1.4. BARGAINING POWER OF SUPPLIERS
For a microfinance bank, there are three sources of funds:
 Deposits: According to the guidelines of SBP for microfinance banks, a

microfinance bank can receive deposits from anyone and of any amount.
 Bilateral Lending: The sources include International Finance Corporation (IFC),
KFW (A development bank in Germany) etc.
 Capital Markets: The MFBs raise funds through Term-Finance Certificates
(TFCs).
Normally, a microfinance bank has to raise deposits from people not included in the
microfinance markets by offering attractive returns on deposits. The interest rates are
usually 1-1.5% more than what a commercial bank offer to its depositors. Hence,
depositors exercise stronger bargaining power over microfinance banks. The situation is
identical in capital markets and in bilateral lending where suppliers enjoy significant power
over MFBs.
Hence, the bargaining power of suppliers is significant for MFBs. Unlike MFBs, MFIs have
rather favorable situation because most of MFIs are partner in government’s poverty
alleviation programs and NRSPs and receive funding from the government of Pakistan,
the World Bank and the Asian Development Bank. MFIs do not face considerable
bargaining power from suppliers.
1.5. RIVALRY AMONG EXISTING COMPETITORS
The rivalry among existing competitors is low because the competitors are diversified
rather than specialized. As discussed earlier, most of the MFIs are NGOs and the rest
are NRSPs. There are only six MFBs and each with diverse vision & mission. The focuses
of these banks are poverty alleviation with the exception of Tameer Microfinance Bank.
The other determinants are:
 The industry is growing rapidly and according to Microwatch’s October 2006 issue
the growth rate between June 2005 and June 2006 was 32%.
 The fixed costs of business are a relatively low portion of total costs.
 There are significant product differences among competitors.
None of the players in the microfinance sector has launched any offensive move against
competitors and the real competition has not been surfaced till now.
The industry is attractive because the Threat of new entrants is high, the Bargaining power
of buyers is low, the Threat of substitutes is low, the Bargaining power of suppliers is high
and the Rivalry among existing competitors is low.
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2. EXTERNAL ENVIRONMENT
2.1. POLITICAL ENVIRONMENT
Regulations
The MFIs Ordinance 2001 was promulgated by the Government of Pakistan to support
the development of the microfinance sector by introducing the concept of microfinance
banks. Under this ordinance, microfinance banks created with the necessary amount of
capital, can offer microfinance services, including savings deposits, to the general public.
In addition, the State Bank of Pakistan (BSP) introduced additional prudential regulations
related to microfinance operations. This ordinance and the relevant prudential regulations
of the BSP, regulate the six MFBs and other MFIs.
Regulations are very stringent in some areas as compared to prudential regulations for
commercial banks. For example, All MFBs and MFIs shall maintain equity10 equivalent to
at least 15% of its risk-weighted assets. There is no such privilege of Tier-1, Tier-2 & Tier-
3 capital which commercial banks enjoy in other words no MFB/ MFI can raise
subordinated capital. The maximum amount of loan granted by MFI/MFB cannot exceed
Rs.100, 000. The industry wide average amount of loan is Rs.12, 000. The MFIs / MFBs
are also subject to the Companies Ordinance 2001 as it is mentioned in the Microfinance
Institution Ordinance 2001 that no person, other than a company, shall be established as
a microfinance institution.
Government initiatives
The government, with the lending support of the Asian Development Bank, also supported
the creation of the Khushhali Bank. This was the first retail microfinance bank in Pakistan,
owned by a group of private and public commercial banks. In addition to this project, ADB
support has resulted in the establishment of several funds available to regulated
microfinance banks, such as the Social Development Fund, the Community Investment
Fund, a Risk Mitigation Fund and a Deposit Protection Fund.
2.2. ECONOMIC ENVIRONMENT
Pakistan is a rapidly developing country which has faced a number of challenges on both
political and economic fronts. Despite being a very poor country in 1947, Pakistan's
economic growth rate was better than the global average during the subsequent four
decades, but imprudent policies led to a slowdown in the late 1990s.11 Recently, wide-
ranging economic reforms have resulted in a stronger economic outlook and accelerated
growth especially in the manufacturing and financial services sectors. There has been
great improvement in the foreign exchange position and rapid growth in hard currency
reserves in recent years. The 2005 estimate of foreign debt was close to US$40 billion.
However, this has decreased in recent years with assistance from the International
Monetary Fund (IMF) and significant debt-relief from the United States. Pakistan's gross
domestic product, as measured by purchasing power parity (PPP), is estimated to be
10
Equity” means and includes Paid-up Capital, Share Premium, Reserves and un-appropriated profits of the MFB/MFI
11
Pakistan Studies; Economy (HTML), American Institute of Pakistan Studies
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US$439.7 billion12 while its per capita income (PCI) stands at $2,803.13 Despite clear
progress, reports by the Asian Development Bank, the World Bank and the UN
Development Program place the poverty rate in Pakistan between 23-28 percent.14 The
CIA factbook places the poverty rate at 24% in 2006,15 and notes that levels have fallen
by ten percent since 2001. This shows that still there is a significant percentage of people
who live at below a dollar per day. Pakistan's GDP growth rates have seen a steady
increase over the last 5 years. However, inflationary pressures and a low savings rate,
among other economic factors, could make it difficult to sustain a high growth rate,
according to some analysts.16 17 18 The rate of inflation has been increasing since 2002-
03, touched the highest 9.3% in 2004-05 and stayed above 8% in 2005-06.
The growth of non-agricultural sectors has changed the structure of the economy, and
agriculture now only accounts for roughly 20% of the GDP. The service sector accounts
for 53% of the country's GDP with wholesale and retail trade forming 30% of this sector.
In recent times, the Karachi Stock Exchange has soared, along with most of the world's
emerging markets. Large amounts of foreign investments have been made into several
industries. The top industries in Pakistan are telecom, software, automotive, textiles,
cement, fertilizer, steel, ship building, and more recently, aerospace. Pakistan's annual
exports in 2005 amounted to $15 billion (USD) and are poised to cross $18 billion (USD)
in 2006 and $20 billion (USD) in 2007. In keeping with its rapid economic development in
recent years, Pakistan registered an economic growth rate of 7 percent in the financial
year 2005-06. In its June 2006 Economic Survey, global finance giant Morgan Stanley
listed Pakistan on its list of major emerging markets in the world economy, placing it on a
list of 25 countries displaying continued moderate to strong growth over a sustained period
of time. The report noted "its economy has been growing quickly in recent periods and
corporate direct investors have taken notice". Concurrently, highlighting the strides made
on the economic front in recent times. Moody's Investors Service in December 2006
upgraded Pakistan's credit rating from B2 to B1, noting a "positive outlook". In late March
2007, the Asian Development Bank "Outlook 2007" report predicted that strong growth
would continue in 2007 and 2008 with growth rates of 6.5 to 7 percent, with manufacturing,
exports and consumer expenditure leading the way.
2.3. SOCIAL, CULTURAL & DEMOGRAPHIC ENVIRONMENT
2.3.1. DEMOGRAPHICS
Pakistan has an estimated population of 169,270,617, as of in 2007.19 Pakistan has the

world's sixth largest population, placing it higher than Russia, and lower than Brazil.
Because of Pakistan's high growth rate, it is expected to surpass Brazil in population in
the year 2020. Population projections for Pakistan are relatively difficult because of the
apparent differences in the accuracy of each census and the inconsistencies between
various surveys related to the fertility rate, but it is likely that the rate of growth peaked in
12
Report for Selected Countries and Subjects (PPP) (HTML), International Monetary Fund.
13
Report for Selected Countries and Subjects (PCI) (HTML), International Monetary Fund.
14
World Bank, UNDP question poverty estimates in Pakistan (HTML), OneWorld South Asia.
15
https://www.cia.gov/cia/publications/factbook/geos/pk.html#Econ
16
Concluding Remarks at the Pakistan Development Forum 2006 by John Wall, World Bank Country Director for Pakistan
(html). World Bank.
17
Country-by-Country Growth and Forecasts (HTML). Asian Development Bank.
18
VIEW: Is GDP growth sustainable? — Akmal Hussain (HTML). Daily Times Newspaper.
19
International Data Base U.S. Census Bureau
Page 7 of 41
the 1980s and has since declined significantly.20 The population was estimated at
162,400,00021 on July 1, 2005, with a fertility rate of 34 per thousand, a death rate of 10
per thousand, and the rate of natural increase at 2.4% but according to the Government
of Pakistan’s statistics the growth rate is 1.9%. Pakistan also has a high infant mortality
rate of 70 per thousand births.22 The percentage distribution of the total population is given
below:
According to the economic survey of Pakistan 2005-06, the total labor force comprises of
50.89 million people out of which 3.32 million people are unemployed. The composition of
unemployed labor force is given as under:
The major ethnic groups are further broken down into several smaller ethnic groups -
Punjabis (44.68)% of the population, Pashtuns (15.42%), Sindhis (14.1%), Seraikis
(10.53%), Muhajirs (7.57%), Balochis (3.57%) and others (4.66%).
Pakistan is faced with its ever-largest adolescent population, because of its high levels of
fertility over the last few decades and its very recent fertility decline. The adolescent
population, in the age group of 15-24, as it enters into its reproductive phase embodies
potential population growth for several decades. It constitutes population momentum in
the future that has serious implications for provision of schooling, health services and other
basic amenities of life for the coming decades.
20
Feeney and Alam, 2003
21
Population Reference Bureau's 2005 World Data Sheet
22
International Data Base U.S. Census Bureau
Page 8 of 41
Over one third of Pakistanis are living in poverty. The impact of population growth on
poverty is obvious, since poorer families, especially women and marginalized groups bear
the burden of a large number of children with much fewer resources further adding to the
spiral of poverty and deterioration in the status of women. This large part of the population
is constrained to live in poor housing and sanitation conditions and lack of access to safe
drinking water. In particular, income poverty leads to pressures on food consumption and
adversely affects caloric intakes and increasing malnutrition in poorer families and
contributes to high levels of child and maternal morbidity and mortality. Furthermore, rapid
population growth contributes to environmental degradation and depletion of natural
resources.
Constraints on agricultural productivity contribute to rural poverty and unemployment.

Despite the fact that over 70 percent of all rural households are classified as agricultural,
many do not earn enough income to meet their basic needs. Accompanying such
problems is a marked lack of basic infrastructure and human services. Less than one-third
of the country's 45,000 villages have access to wholesale trading centers through a
network of all-weather roads. Access to education is lower in rural than in urban areas,
fertility rates are slightly higher, and cases of under-nutrition among children are more
widespread. Only 17 percent of the rural population have access to potable water, a full
95 percent obtain some portion of their water supply from groundwater, and only 4 percent
of the population have access to sewerage and drainage facilities. Although these
deficiencies promote disease, hospitals and other health centers are sorely lacking. Not
surprisingly, the rural mortality rates are higher than urban rates. The poor quality of rural
life encourages a heavy movement of migrants from rural to more prosperous urban areas.
Much of the migration has been from the north; particularly from the NWFP to Karachi, but
the large industrial cities of Punjab also draw workers.
2.3.2. SOCIAL
I. Inadequate Access of the Poor to Services
Inadequate access to productive resources and social services has resulted in low
indicators of well-being and lack of employment opportunities. This situation is
compounded in rural areas where access is even more difficult due to inadequate or
complete lack of basic infrastructure. Low skill level and absence of support for human
resource development for the poor prevents them from diversifying their household
income. Government interventions have not yielded the desired impact due to inadequate
emphasis on community-based participatory approaches. Resource availability relative to
the requirements for the social sectors is low. Much of the investment required is for public
services where private sector investments are unlikely. Without these services,
microfinance will have less than the intended impact.
ii. Obstacles for Microfinance Outreach to Women
Social intermediation costs to enhance women's access to microfinance are significantly

higher in Pakistan. In order to reduce these costs, constraints on mobility, social
interaction, and skills development must be addressed on a sustained basis. Although
returns from social intermediation in terms of social capital and demonstrative effects are
high, investments are limited due to high cost. Consequently, the gender orientation of
organizations, products, and delivery mechanisms is insufficient to enhance outreach to
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women. Inadequate social preparation adversely affects group cohesion, the quality of
loan portfolio, and ultimately the sustainability of microfinance operations.
iii. Absence of Risk Mitigation Measures
The disadvantages of the poor households include lack of access to financial services,
unfair terms of participation in the local economy, and vulnerability to economic and
physical downturns. Poor households forego potentially viable technologies, production
choices and income opportunities due to risk aversion. Mechanism’s to mitigate such risks
are not available. In addition poor have no means to secure the safety of their savings,
unless deposited with Commercial banks, to which poor have little access.
2.4. TECHNOLOGICAL ENVIRONMENT
The technology plays the vital role in the success and viability of a Microfinance Institution.
The transactions in a microfinance institution involve small amounts and it is very difficult
for banks to conduct every operation manually. There is a strong need of intranets,
extranets, ATM networks and web presence in order to be successful and commercially
viable. All these steps require a huge investment in the infrastructure and technology. The
rapid pace of technological developments also present a challenge for microfinance
institutions and their investments may become obsolete before they get volume of
transactions necessary to break-even. On the contrary, these institutions cannot achieve
cost efficiencies without investing heavily in compatible technology.
3. IMPACT OF EXTERNAL ENVIRONMENT ON INDUSTRY ATTRACTIVNESS
3.1. IMPACT OF POLITICAL ENVIRONMENT
The political forces
 are increasing the threat of new entrants as the barriers of entry are low as
compared to other banking segments namely commercial banking and Islamic
Banking and the government wants large commercial banks to enter in the
microfinance sector by taking initiatives and designing regulations and programs
accordingly.
 have a potential to increase bargaining power of buyers by taking initiatives
to increase the number of providers of the microfinance services.
 are decreasing the threat of substitutes by making possible increase in the
number of MFIs, MFBs and expansion in the microfinance sector outreach. The
government is also discouraging informal providers of microfinance through its
NRSPs & Poverty alleviation programs.
 are increasing the bargaining power of suppliers by making regulations more
stringent for the MFI in terms of both the quality and quantity of minimum capital
requirements, maintenance of reserves with the SBP etc. The government
support programs only aid NGOs and government MFBs.
 have a potential to increase rivalry among existing competitors. Each MFI
and MFB will try to have the major share of the existing pie in order to remain
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viable. Profitability being the less prioritized objective of the most of the MFIs and
MFBs, the fight will be for the market share.
3.2. IMPACT OF ECONOMIC ENVIRONMENT
The economic forces:
 are increasing the threat of new entrants as there remains a significant portion
of population below the poverty line and the segment just above poverty line is
also expanding resulting in the largest microfinance market inviting the large
commercial banks to enter the microfinance industry.
 have a potential to decrease bargaining power of buyers because the
increase in inflation, decrease in the real income and increase in the number of
unemployed people makes it difficult for them to exercise bargaining power over
few existing MFIs and MFBs.
 are increasing the threat of substitutes because the so-called booming
economy has made the survival of the microfinance target market difficult and in
current situation where both the number of microfinance providers and their
outreach is small, people have no other option but to use informal sources to fulfill
their needs.
 have the potential to increase the bargaining power of suppliers by signaling
the tightening of monetary policy and raising of discount rates. The tightening of
monetary policy will result in more stringent competition for microfinance sector to
get funds in the presence of high ratings commercial banks. The lenders will
provide funds on their own unfavorable terms.
 have a potential to increase rivalry among existing competitors; in tight
economic situation the existing competitors will offer more favorable terms, long
tenor loans to borrowers, more than average rates to depositors to win them from
competitors.
3.3. IMPACT OF DEMOGRAPHIC, CULTURAL & SOCIAL ENVIRONMENT
These forces:
 are increasing the threat of new entrants because the unemployment rates are
high, 3.32 million individual of the labour force are unemployed and the number
of unemployed people is increasing at a significant rate. The population rate is
also increasing at 2.4%. Hence, there is a large portion of microfinance market
still untapped which invites new entrants to enter the microfinance sector.
 are decreasing the bargaining power of buyers as the number of customers
are increasing at a rate infinitely greater than the rate at which the MFIs are
increasing.
 are increasing the threat of substitutes as the size of the microfinance sector
is increasing but the number of MFIs is not adequate to provide services to a
significant portion of the market as a result the number of local money lenders is
increasing to cater this unmatched segment of the microfinance market.
 are increasing the bargaining power of suppliers as MFIs are expanding their
services for which they need more funds but the major sources of funds i.e. capital
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markets and bilateral lending remains limited. Hence, they experience more
bargaining power of suppliers.
 are decreasing the rivalry among existing competitors as the number of
segments within the microfinance sector is broadening. Different banks are
approaching different segments of the microfinance market. Hence, rivalry among
competitors is decreasing.
3.4. IMPACT OF TECHNOLOGICAL ENVIRONMENT
Technological forces:
 are decreasing the threat of new entrants as the technological developments in

operations, accounting, finance, fund management, risk management have
increased the barriers to entry significantly.
 are decreasing the bargaining power of buyers as the technological
advancements in the operations and risk management reduce the likelihood of
loosing microfinance customers to the substitutes.
 are decreasing the threat of substitutes because the local money lenders do
not have the capacity to provide services such as biometric ATMs and online
accounts. Also they do not have capacity to install advance CRM systems.
 are decreasing the bargaining power of suppliers.
 are increasing the rivalry among existing competitors.
4. MAJOR COMPETITORS
4.1. KHUSHHALI BANK LTD.
In August 2000, Khushhali Bank was established as part of the Government of Islamic
Republic of Pakistan's Poverty Reduction Strategy and its Microfinance Sector
Development Program (MSDP) that was developed with the assistance of Asian
Development Bank. It is headquartered in Islamabad and operates under the central
bank's supervision (State Bank of Pakistan) with commercial banks as its shareholders.
Its mandate is to retail microfinance services and act as a catalyst in stabilizing the
country's newly formed microfinance sector.
Khushhali Bank is the country's first major initiative to bridge the demand for microfinance
services. Integral to microfinance services is the intensive and sustained social support
for mobilization, management and development of all clients of the bank and their access
to basic infrastructure services. As a for-profit, commercial microfinance institution, the
objective of Khushhali Bank is to establish a sustainable, scalable pro-poor financial
services platform with retail delivery capacity to reach 600,000 poor households by the
2006, catalyze an enabling environment within which the microfinance sector can develop
in Pakistan, assist the central bank in setting up an appropriate and responsive regulatory
framework within which microfinance institutions can operate on sustainable grounds
thereby expanding outreach to the poor, promote transparency, financial rigor and good
governance as leading indicators of excellence within the microfinance sector in Pakistan.
Page 12 of 41
The Government of Pakistan has obtained a loan of US$ 150 million from the Asian
Development Bank to support the operations of Khushhali Bank and to promote
microfinance sector in Pakistan. Khushhali Bank utilizes a US$ 70m component of this
loan for micro-loans to the poor particularly to women of country's rural and urban areas
and a US$ 10m component has been allocated toward institutional capacity building.
Another US$ 70m component has been allocated to support policy reforms of
microfinance sector in Pakistan.
Under the sector reforms, four endowment funds have been established at the State Bank
of Pakistan to support the poor with periodic contributions from both, the government and
Khushhali Bank to ensure sustained ownership. These measures are construed as a
catalyst for broadening and deepening the country's microfinance market thus contributing
towards poverty alleviation in the country on sustainable basis. These measures include:
Microfinance Social Development Fund – US$ 40 million fund supports social

mobilization activities within poor communities.
Community Investment Fund – US$ 20 million fund supports development of community
infrastructure such as water channels, link roads etc. in particular in the under-serviced
rural areas.
Risk Mitigation Fund – US$ 5 million fund provides risk mitigation cover to micro
borrowers of the Bank.
Deposit Protection Fund – US$ 5 million fund provides protection to micro depositors of
the Bank.
The Khushhali bank's line of products includes short-tenure micro loans ranging up to US$
500 for working capital and asset purchase. It also proactively mobilizes deposits and
provides counseling services to its clients and continues to expand its range of services
to address client needs.
4.2. FIRST MICROFINANCE BANK LTD.
The First Microfinance Bank Ltd (FMFB) is the result of the transformation of the
microfinance program of the Aga Khan Rural Support Program (AKRSP), with more than
twenty years of experience, into a separate, specialised microfinance bank. In 1996, the
AKRSP started to streamline its microfinance program separately, with the objective of
creating a separate entity, capable of mobilising savings. First Microfinance Bank has
benefited from the long experience and transfer of key employees and technologies from
AKRSP. The First Microfinance Bank Ltd was established as a non-listed public limited
company under the provisions of the Companies Ordinance in November 2001 and
licensed as a Microfinance Institution (MFI) under the provisions of the Microfinance
Institutions Ordinance 2001 in January 2002. The main shareholders are the AKRSP
(45.5%), the Aga Khan Fund for Economic Development (30.30%) and the IFC (24.2%).
The bank has formally started operations in February 2002, taking deposits through its
first branch in July 2002.
FMFB is the only licensed private microfinance bank in Pakistan, built on a strong team of
managers, and its adhesion to international best practices. FMFB has a strong MIS and
focus on sustainability. It offers domestic transfers of funds between branches. The bank
currently operates 21 branches, 7 being in the major urban centres of Rawalpindi, Karachi,
Lahore, Hyderabad and Gwadar, and 14 in rural Northern areas. The bank offers a full
range of financial products such as deposits and loans. FMFB offers current accounts,
Page 13 of 41
savings accounts and fixed term deposits (1 month - 2 years) with interest rates varying
from 1 to 3%; only Rs.5 is required to open a saving account. It provides different loan
products adapted to its diverse clientele, in urban and rural regions. FMFB also proposes
additional services, such as cheques operations, micro insurance (with loan and life
coverage) and wire transfers. Following are some of the FMFB products:
 Business Group Loan – Solidarity group lending, Rs.5,000 - 50,000, 15% annual
interest rate.
 Business Committee Loan – Larger solidarity groups, Rs.3,000-50,000, 12% annual
interest rate.
 Individual Loan – Microenterprises. Rs.5,000-100,000, 16% annual interest rate.
 Group Loan – Village banking methodology, rural areas, 10% annual interest rate.
 Urban Group Loan – Solidarity groups (3-10 borrowers), Rs.3,000-50,000, 15%
annual interest rate.
 House Improvement Loan – Rural areas, 5 or more borrowers in village or women
organisations, Rs.1,500-50,000, 15% annual interest rate.
 Employee loan scheme – Low-income employees, Rs.5,000-40,000, 10% annual
interest rate.
FMFB made a US$324,000 profit in 2006. It received a rating of A+/A-1+ from JCR-VIS
Credit Rating Company.
Savings
Loan Portfolio
Deposits ROE / ROA
(US$)
(US$)
11,236,922 15,409,590 2.7% / 1.16%
As of December 31, 2006
5. TAMEER MICROFINANCE BANK LIMITED
VISION
To emerge as a global benchmark for innovative and commercially viable microfinance
solutions to the un-banked for their socio-economic empowerment.
MISSION
To set new standards of excellence in value added microfinance and related services
through innovative technology and a highly skilled/professional staff for customer
convenience and satisfaction.
CORE VALUES
Equal Opportunity, Meritocracy, Innovation, Integrity and Respect
Page 14 of 41
5.1. INTRODUCTION
TAMEER is Microfinance bank set up by a group of highly experienced bankers committed

to go where no (commercial) bank has gone before. It is a private commercial Microfinance
bank licensed by the State Bank of Pakistan under the Microfinance Ordnance 2001.
TAMEER distinguishes itself from other Microfinance Banks by being one of the first
nation-wide, private sectors, non-NGO transformed, commercially sustainable micro-
finance institutions in Pakistan. TAMEER aims to provide dedicated services to the
economically active poor and to be demand driven, client centered and responsive to the
special needs of its customers. It serves low-income, salaried, self-employed and micro
entrepreneurs with a range of financial products designed to allow them to grow their
businesses and produce significant economic multiplier effects throughout the local
economies. It also provides home improvement products and term deposits.
TAMEER’s key characteristic is a professional and core banking competence that would
contribute to the development of micro-finance as a viable and attractive commercial
activity in Pakistan.
5.2. PRODUCTS:
I. Tameer-e-Ghar (Home improvement loan)
Product Name Eligibility

Tameer-e-Ghar (Home improvement Residance in Taiser Town
loan) Government issued allotment letter in
Offered to all Taiser Town customers customer's name
Valid C.N.I.C
Tenor: Documents Required
3- 36 months Valid C.N.I.C.
Allotment letter
Loan Amount Lead time (availability of finance)
Rs. 15,000 – Rs. 100,000 7 – 10 days
Security required Benefits:
2 Guarantors Easy access to a loan with good rates
The chance to improve home
Co-borrowers accepted
Page 15 of 41
II. Tameer-e-Karobar (Business Loan
Product Name Eligibility

Tameer-e-Karobar (Business Loan) Business should be minimum 1 year in
Offered at all branches operation
Valid C.N.I.C
Tenor: Documents Required
12 months Valid C.N.I.C.
Copy of utility bills
Loan Amount Lead time (availability of finance)
Rs. 10,000 – Rs. 100,000 7 – 10 days
Security required Benefits:
2 Guarantors Easy access to a loan with good rates
The chance to improve and increase your
business
Co-borrowers accepted
III. Tameer-e-Bacchat (Savings)
Product Name Benefits:

Tameer-e-Bacchat (Savings) First point of interaction with the bank
Become eligible to avail all other bank
facilities
Secure your savings
Earn interest on deposits
Open Bacchat account with Rs 100 only
Get a Cheque Book
For the first time in Pakistan - use our
voice aided biometric (thumbprint reading)
ATM
No deductions/charges on minimum
balance
IV. Tameer Khazana - Term Deposit Account
Product Name Payment structures

Tameer Khazana - Term Deposit Account Profit payment at maturity
Monthly profit payment*
Upfront profit payment*
Tenor: Payment structures

For 3, 6 & 12 months Profit payment at maturity
Monthly profit payment
Upfront profit payment
Page 16 of 41
5.3. BRANCH NETWORK
Karachi - 14
Hyderabad - 2
Lahore - 2
5.4. THE VALUE FLOW CHAIN
US & IFC/WORLD BILATERAL

OTHER BANK ETC. LENDING
GOVTS.
HEAD
CAPITAL OFFICE
INVESTORS TAMEER
MARKETS
MICROFINANCE
BANK LTD.
BRANCH
INDIVIDUAL DEPOSITORS
DEPOSITORS
INSTITUTIONAL BORROWERS
DEPOSITORS
The value flow chain starts from the suppliers who provide funds to Tameer Bank in the
form of Deposits and Long-term Debts. The deposits are mostly received by branches.
The deposits and other funds are used to provide loans to clients through branches. The
loans and markup are collected on the monthly basis by branches and loans. The deposits
include Demand Deposits and Time Deposits which are repaid to depositors by branches.
The long-term debts are serviced by Head Office of Tameer Bank LTD.
5.5. INTERNAL RESOURCES
Financial Resources
Existing funds
 Cash balances with SBP and NBP

 Deposit in other accounts: This includes individual deposits, institutional deposits
and deposits from corporations, financial institutions and banks.
 TMFBL has obtained an interest based loans of USD 3.7 million equivalent to Rs. 225
millions on 29th December 2006 from IFC. According to loan agreement, the loan is
obtained to provide medium term funding to support the growth of the banks micro
finance portfolio. The interest is payable at LIBOR plus 3% on semi annual basis
commencing from 16th January 2007. The loan is for the period of five years and
principal repayment is in four equal semi annual installments of USD 0.925 millions
starting from 15th July 2010 to 15th January 2012.
Ability to raise funds: The IFC can provide funds to Tameer Bank. Tameer can also
raise funds through another issue of shares.
Page 17 of 41
Human Resources
Existing staffing resources
 The current staff includes top tier corporate and consumer bankers in senior
management. The middle and lower management include highly skilled and
professionally trained employees.
 Class-room focused training lacking field exposure: The focus of training is more
on class-room training than on field training. However, field training is more needed
and appropriate.
Physical Resources
Information Technology
 IT systems.
 Loan-ware.
 Central core operating system: All branches are connected via real-time online
software; all transactions are directly posted in the core operating system.
Branch Network
 Seventeen branches all over Pakistan equipped with real time online systems and
voice aided biometric ATMs. All branches are connected to central core operating
system.
Intangible Resources
Intellectual Property
 TMFBL has a license to operate at the district, province and national level.
Brands
 Tameer-e-Ghar (Home improvement loan)

 Tameer-e-Karobar (Business Loan
 Tameer-e-Bacchat (Savings)
 Tameer Khazana - Term Deposit Account
Reputation of Management: Top tier corporate and consumer bankers in Top

management.
5.6. CORE COMPETENCIES
 Understanding of commercial banking (most employees are from commercial

banks). In other MFBs, very few personnel have experience of commercial banking.
This is one of the factors why most of the MFBs are not able to run their organizations
especially the branch networks profitably. The employees of TMFBL are proficient in
managing Branch networks, ATM networks and in structuring financial products
Page 18 of 41
according to the needs of their customers while keeping in view that they are catering
to the segment which is un-banked but bankable.
 Investment in technology. Central core operating system: All branches are
connected via real-time online software; all transactions are directly posted in the core
operating system. Furthermore, all branches are equipped with voice-aided biometric
ATMs which can support multiple regional languages. No other MFB has biometric
ATM which can support multiple regional languages. The target market of
microfinance sector comprise of mostly illiterate people who cannot use normal ATMs
which require PIN code.
 Front line employees are proficient in income assessment of clients and in
evaluating the “ability” and “willingness to pay” of the clients. This type of
proficiency is not prevalent in the microfinance sector as most of the MFBs are being
operated with a view to serve the nation and eradicate poverty but not with a view to
make profit; though some of them do make profits but most of them are not profitable
these days. As far as recovery is concerned, the attitude of other MFBs are not as
serious as that of the Tameer Bank because Khushhali Bank has been established by
the top commercial banks of Pakistan, it has got support of the Government of
Pakistan and other International programs such as US Aid, the FMFB has been
supported by the AKRSP., Pak Oman microfinance bank is a joint venture of the
governments of Pakistan and Oman. Hence, the proficiency was needed more in case
of Tameer Bank as compared to other banks; Tameer made this competency as its
core-competency by training their employees and imparting the knowledge of their
executives, who are well versed in commercial banking, to their employees so that
they are able to do assessment better than any other MFI.
Added together, these assets have enabled TMFBL to develop a professional bank with
thorough procedures of internal control. They have developed strong credit and risk
procedures, operational guidelines, and (very important) a strong technology
infrastructure (good banking software, database, ATM system, all their branches are
connected to the central system at all times).
5.7. STRATEGIC COST MANAGEMENT PROCESSES
The controlling costs are important in the microfinance sector. The reason is that the cost
of acquiring a loan customer, processing and evaluating a loan application, disbursing the
loan, accepting repayments, monitoring the loan, and going after defaulters is the same
for a PKR 30,000 loan as for a PKR 10 Lakh loan.
Tameer dealt it in two ways:
 Mitigated costs to the extent possible i.e. economized where possible (for instance,
Tameer doesn’t pay much in rent, they have modest offices).
 Strived to achieve scale: By achieving scale, Tameer can be able to spread its fixed
costs over a greater asset base.
The use of technology has played a very important role in reducing the cost as all the
transactions are directly posted in the core operating system. The presence of ATM has
reduced customers at the counter.
Page 19 of 41
5.8. COMPETITIVE ADVANTAGE
The competitive advantage lies in the strong Management, internal controls, technological
infrastructure and human resources.
 No other player has really done anything remarkable in the Missing Middle segment
of Pakistan’s Population i.e. segment above the Poverty line but still un-banked. Hence
Tameer has strong first mover advantage.
 Tameer Bank has the most efficient and state-of-art technological infrastructure. Also
Tameer has Central core operating system which gives it the competitive advantage
in-terms of reduced cycle time, cost-savings and the most efficient MIS in the industry.
 The training makes the front line employees proficient in income assessment of clients
and in evaluating the “ability” and “willingness to pay” of the clients.
FINANCIAL RATIO TRENDS
Liquidity Ratios:
The liquidity ratios of Tameer Bank are quite lower with respect to industry which suggests
that the bank has some limitations to meet its short term obligations. The liquidity ratios
presented in annexure-I indicate that company is facing liquidity problems in some areas
as compared to the industry.
Leverage Ratios:
As compared to Industry, funds are mostly provided by creditors in case of Tameer Bank.
The balance between the Debt and Equity in a firm’s long term capital structure is
comparable to industry.
Activity Ratios:
Activities ratios are not corresponding to the industry activity ratios and are below the
industry levels but keeping in view that FY06 was the first complete operational year, the
performance is satisfactory. The volume of business when compared to the size of its
investments in assets is below the industry average but being a new-comer in the industry
the business volume is sufficient to give it an encouraging start.
Profitability Ratios:
The profitability ratios of the bank are comparable to the industry. The margin available to
cover operating expenses and per rupees of assets is comparable to industry. The
average Net margin of the industry shows 35% loss; the net margin of Tameer is 56%
Loss. Tameer has just completed its first year of operations and it’s a business norm both
in microfinance sector and in commercial banking sector that a bank takes approximately
5 years on average before generating profit. In microfinance sector most of the banks are
still generating losses such as Network Microfinance Bank Ltd., Pak Oman Microfinance
Bank
Page 20 of 41
5.9. STRATEGIC ISSUES FACED BY TAMEER
Opportunities
Enter into Mobile phone banking as mobile phone companies have over 50 million
customers. There is a potential to expand as the potential market size is about 10 – 15
million people; currently microfinance sector is catering to only 1 million clients. This fact
presents two opportunities i.e. either expand into other urban areas of Pakistan or
expand into rural areas of Pakistan. Tameer can provide Micro-insurance.
The most attractive opportunities for TMFBL are:
 Enter into Mobile phone banking.

 Expand into other urban areas of Pakistan.
The most serious threats are:
 ORASCOM (Mobilink) is going to enter Microfinance sector.

 Probability of loosing HR to competitors and newcomers.
 Law and Order situation.
Threats
The government is encouraging new players to enter into the market. This may cause
increase the extent of rivalry among existing competitors. As a result of the government
initiatives ORASCOM (Mobilink) is going to enter Microfinance sector. The increase in
KIBOR23 can increase the interest rates on borrowings and deposits. One challenge is
how to retain the Human resources as new & existing entrants may hire trained and
experienced employees of Tameer Bank by offering attractive compensation packages.
Increasing political instability in the country is also a challenge for the bank. The customers
of TMFBL24 are self-employed people; any obstacle (such as strikes, riots or bomb blasts)
in the way of executing their day to day transaction may affect their business and as a
result TMFBL may face problem in collections of loan repayments.
The Government support to only government-owned banks such as Khushhali Bank and
Rozgar Bank can make it difficult for TMFBL to compete with them. The lack of expansion
into other areas of Pakistan and increase in business volume can lead the bank to the
bankruptcy because of high fixed costs.
Tameer’s response to Opportunities and Threats
Tameer’s response has been average to some opportunities such as Mobile Phone
Banking and Micro-Insurance; Tameer has not yet taken any serious steps to explore
these areas. Tameer is relatively good at expanding into the other urban areas of Pakistan.
These results can be assessed by evaluating current offerings of Tameer and its existing
23
Karachi Inter-Bank Offer Rate
24
Tameer Microfinance Bank Ltd.
Page 21 of 41
branch presence across the country. Tameer is currently not focusing on the other most
attractive opportunity i.e. Enter into Mobile phone banking.
EFE (External Factor Evaluation) Matrix

Weighted
Weight25 Rating26 Score
Key External Factors
Opportunities
1. Enter into Mobile phone banking. 0.15 1 0.15
2. Expand into other urban areas of Pakistan. 0.15 3 0.45
3. Expand into rural areas of Pakistan. 0.05 2 0.10
4. Start providing Micro-insurance. 0.05 1 0.05
Threats
1. ORASCOM (Mobilink) is going to enter
Microfinance sector. 0.10 2 0.20
2. Tight monetary policy may increase the cost of
funds. 0.05 3 0.15
3. Probability of loosing HR to competitors and
newcomers. 0.10 2 0.20
4. Political instability in the country. 0.07 2 0.14
5. Law and Order situation. 0.10 2 0.20
6. Government support to government-owned banks 0.08 3 0.24
7. The lack of expansion can lead the bank to the
bankruptcy because of high fixed costs. 0.10 3 0.30
TOTAL 1.00 2.18
The EFE score of TMFBL is 2.18 which is just below 2.5 because there are some factors
in the external environment which are very volatile27; management could not handle those
factors well.
Tameer has generally been average in managing some threats such as threat of
ORASCOM entry in the microfinance sector, probability of loosing HR to competitors and
new entrants, political instability in the country and unsatisfactory law and order situation.
In addition, Tameer’s response has also not been satisfactory to the most important
threats mentioned above. Tameer has not yet figured out an action plan to manage
ORASCOM’s entry in the industry.
5.10. KEY INTERNAL FACTORS
Strengths
In addition to the above, the strength of the company is the business model itself. There
are 10 million economically active individuals in Pakistan who fall outside of conventional
banks’ target market. These individuals are bankable but un-banked. While there are other
players in microfinance, the field is relatively wide open. TMFBL is growing five times faster
25
Weight represents relative importance of each factor.
26
Rating represents how well Tameer is managing a particular factor.
27
Volatile factors include political instability and law and order situation.
Page 22 of 41
than the industry’s growth rate. Tameer has a license to operate at the district, province
and national level. IFC28 has provided 10% equity in TMFBL. Tameer has Voice Aided
biometric ATMs that no other microfinance bank has. Tameer is a member of Pakistan
Microfinance Network. All branches are connected via real-time online software; all
transactions are directly posted in the core operating system.
Weaknesses
Tameer did not follow any established business model of the industry. There are certain
challenging areas for Tameer such as lack of experience in the microfinance sector,
difficulties in managing internal liquidity, higher cost of funds and capital less than
commercial banks etc. The model has to be improved in the light of experiences from
these managing these challenges. Raising deposits is proving to be the biggest challenge.
Tameer offer better rates than any other bank which should result in Tameer raising
deposits is large volumes. However, experience has not matched the projection and
growth in deposits is lagging. Further, the trainings are more class-room focused rather
than field trainings. 13% cost of funds as compared to commercial banks is also a
significant improvement area. Capital of Rs.600 million as s significantly lower than the
capital of commercial banks; this result in paying more to attract large customers.
IFE (Internal factor evaluation) Matrix

Weighted
Key Internal Factors Weight29 Rating30 Score
Strengths
1. Commercially viable Business Model. 0.16 3 0.48
2. TMFBL is growing five times faster than the
industry’s growth rate. 0.13 4 0.52
3. TMFBL has a license to operate at the district,
province and national level. 0.11 2 0.22
4. IFC has provided 10% equity in TMFBL. 0.09 3 0.27
5. TMFBL has Voice Aided biometric ATMs that no
other microfinance bank has. 0.09 3 0.27
6. All branches are connected via real-time online
software; all transactions are directly posted in the core 0.15
operating system. 3 0.45
Weaknesses
1. Lack of experience in microfinance sector. 0.08 2 0.16
2. Difficulties in managing internal Liquidity. 0.08 2 0.16
3. Class-room focused training lacking field exposure. 0.08 3 0.24
4. Higher Cost of funds. 0.05 3 0.15
5. Capital less than commercial banks. 0.07 2 0.14
TOTAL 1.00 3.06
28
International Finance Corporation.
29
30
Rating represents how well Tameer is managing a particular factor.
Page 23 of 41
Tameer has been good at using its strengths. The most important strengths are:
 Commercially viable Business Model.

 License to operate at the district, province and national level.
 Real-time online core-banking software; all transactions are directly posted in the
core operating system.
Tameer has been average at improving some of its weak areas such as lack of experience
in microfinance sector, difficulties in managing internal liquidity and capital less than
commercial banks. The most serious weaknesses which need to be worked upon are:
 Lack of experience in microfinance sector.

 Difficulties in managing internal Liquidity.
The IFE score of TMFBL is 3.06 above 2.5 which shows that the company is managing
well its internal environment.
5.11. KEY SUCCESS FACTORS OF THE MICROFINANCE INDUSTRY:
Based on the analysis of external and internal environment of the Tameer Bank, the
following are some key success factors which a bank should embark in the industry for
survival.
1. Technological infrastructure
2. Ability to raise funds
3. Professional and Competent Management
4. Financial Strength
5. Commercially viable business model
6. Growth
7. License to operate on national level
Page 24 of 41
5.12. COMPETITIVE PROFILE MATRIX (CPM)
Based on the relative importance of the Key Success Factors and banks’ response to
these factors, Tameer Bank has more attractive position as compared to its major
competitors. The CPM scores of three organizations signify that they have close
competitive positions relative to key success factors.
First
Khushhali
Tameer Bank Microfinance
Weight Bank
Key Success Factor 31 Bank
Rating32 Rating Score Rating Score
Score
1- Technological
0.17 2 0.34 4 0.68 3 0.51
Infrastructure
2- Ability to raise
0.16 4 0.64 2 0.32 3 0.48
funds
3- Professional and
Competent 0.08 2 0.16 3 0.24 2 0.16
Management
4- Financial Strength
0.17 3 0.51 2 0.34 3 0.51
5- Commercially
viable business 0.14 2 0.28 3 0.42 3 0.42
model
6- Growth
0.14 2 0.28 4 0.56 2 0.28
7- License to operate
0.14 4 0.56 4 0.56 4 0.56
on national level
Total 1.0 2.77 3.12 2.92
5.13. COMPETITIVE OPPORTUNITIES AND THREATS FOR TAMEER BANK
The strong technological infrastructure, the commercially viable business model and extra-
ordinary growth as compared to its competitors enable Tameer Bank to expand its
operations successfully into other urban areas of Pakistan.
The competitors are at advantageous position when evaluated on two key success factors
i.e. ability to raise funds and Financial Strength. The reason behind this is the fact that the
Khushhali Bank is formed by ten top commercial banks of Pakistan; it also has support of
government through its different programs. The First Microfinance Bank is formed by the
Agha Khan Rural Support program. These institutions support their respective banks in
case they need more funds. Tameer does not enjoy this kind of support.
31
32
Rating represents how well a particular bank is managing the respective factor.
Page 25 of 41
5.14. INTERNAL COMPETENCIES TAMEER SHOULD DEVELOP TO ADDRESS THE

KEY SUCCESS FACTORS AND DEAL WITH THE COMPETITIVE OPPORTUNITIES
AND THREATS
In the light of Competitive Profile Matrix, Tameer needs to focus on the Ability to raise
funds as well as the Financial Strength. Tameer is better at managing most of the industry
key success factors such as Technological Infrastructure, Professional and Competent
Management, Commercially viable business model, Growth, License to operate on
national level etc as compared to its major competitors.
Tameer needs to increase volume of business so that large fixed costs can be offset
against the incremental revenue generated. The strong technological infrastructure, the
commercially viable business model and extra-ordinary growth as compared to its
competitors enable Tameer Bank to expand its operations successfully into other urban
areas of Pakistan. Expansion can only be beneficial when there are standardized
operations, employees understand well and are committed to the strategic vision and
mission of the company and performance is evaluated against the contribution of
employees in strategy implementation. In order to achieve large volumes, Tameer must
develop its employees and delegate them strategic vision, mission and the strategy
adopted by the executives.
In order to build investor’s confidence, Tameer must generate sufficient ROI by improving
cost at every cost touch-point. Tameer can only become profitable by improving its
strategic cost management because cost attached with micro-loans is one of the most
important contributors to the operational loss and deterioration in the ROI. The improved
cost will enable Tameer to earn adequate ROI. The increased ROI and improved financial
position will improve the credit ratings of Tameer. The improved credit ratings will build
investor’s confidence and hence Tameer can have reduced cost of funds and can have
increased availability of funds.
6. STRATEGIC ANALYSIS
Khushhali Bank First Microfinance Bank
Tameer Bank
Page 26 of 41
6.1. RECOMMENDED GENERIC STRATEGY
Focused differentiation strategy is the appropriate generic strategy for Tameer as the
bank is pursuing or treating only one segment of microfinance sector which they term as
the “missing middle segment” i.e. the segment which is above poverty line but does not
fall into the commercial bank market and which is still un-banked. The people who fall in
this segment are self-employed. Bank has got core competencies relevant to this segment
only; employees have got proficiencies in assessing people who fall in this segment. They
are proficient in assessing the ‘ability’ and ‘willingness to pay’ of the people who belong to
the missing middle segment.
The business model of TMFB was also designed to cater this segment. Also the structure
and resources were designed to gain competitive advantage in this sector. The operations,
human resources, technological infrastructure are all compatible with requirements to do
business in this segment of microfinance market.
Following are the merits of the suggested focus differentiation strategy:
 The target market niche is big enough to be profitable and offers good growth potential.
 The industry leaders i.e. Khushhali Bank and First MicroFinance Bank do not see that
having a presence in this niche is crucial to their own success – a condition that
reduces rivalry from major competitors.
 It is costly or difficult for multi-segment competitors (such as Khushhali and FMFB) to
put capabilities in place to meet the specified needs of the missing middle segment.
 The industry has many different niches and segments, thereby allowing TMFBL
(focuser) to pick a competitive attractive niche suited to its resources strengths and
capabilities.
 There is no other microfinance bank or NGO who are attempting to specialize in the
same target segment – a condition that reduces the risk of segment over crowding.
 The TMFBL can compete effectively against challengers based on the capabilities and
resources it has to serve the targeted niche and the customer goodwill it has built up.
Strategies such as market penetration and market development offer substantial

focusing advantages. Focused strategy is most effective when consumers have distinctive
preferences or requirement and when rivals firms are not attempting to specialize in the
same targeted segment.
The focused differentiation is suitable because successful differentiation will allow TMFBL
to:
 Command a premium price for its products. The insensitivity of borrowers towards
interest rates will also allow Tameer to charge higher interest rates for superior
services.
 Increase the number of borrowers and depositors who can be won over by the
differentiation features such as Biometric ATMs, Mobile Banking etc.
 Gain buyer loyalty to its brand.
Differentiation enhances profitability whenever the extra price the product commands
outweighs the added cost of achieving the differentiation. Tameer can achieve advantage
of this factor by using its technological infrastructure and central core operating system.
The differentiation strategy will also work well because Tameer has core competencies on
Page 27 of 41
which differentiation can be built. Following competencies will help Tameer in achieving
differentiation:
 Understanding of commercial banking (most employees are from commercial banks).

In other MFBs, very few personnel are from the commercial banking. This is one of
the factors why most of the MFBs are not able to run their organizations especially the
branch networks profitably. The employees of TMFBL are proficient in managing
Branch networks, ATM networks and in structuring financial products according to the
needs of their customers keeping in view that they are catering to the segment which
is un-banked but bankable.
 Investment in technology. Central core operating system: All branches are connected
via real-time online software; all transactions are directly posted in the core operating
system. Furthermore, all branches are equipped with voice-aided biometric ATMs
which can support multiple regional languages. No other MFB has biometric ATM
which can support multiple regional languages. The target market of microfinance
sector comprise of mostly illiterate people who cannot use normal ATMs which require
PIN code.
6.2. EXISTING GENERIC STRATEGY OF TAMEER MICROFINANCE BANK LTD.
The existing strategy of TMFBL is focused differentiation strategy. Since Tameer bank
is still operating within the same missing middle segment with which it started its business
and for which TMFBL designed its business model.
The strategy we recommended for Tameer bank is also focused differentiation strategy.
Hence, company should not change its strategy because this strategy has enable Tameer
bank to capture a competitive position in the industry. Segment differentiation means
greater product flexibility, greater compatibility, lower cost, improved services, less
maintenance, greater conveniences or more features. A focused differentiation strategy
allows the firm to charge a higher price for its product and to gain customer loyalty because
customers may become strongly attached to the differentiation features. Following are the
competitive advantages Tameer has achieved by pursuing focused differentiation
strategy:
 No other player has really done anything remarkable in the Missing Middle segment
of Pakistan’s Population i.e. segment above the Poverty line but still un-banked. Hence
Tameer has strong first mover advantage.
 Tameer Bank has the most efficient and state-of-the-art technological infrastructure.
Tameer has Central core operating system which gives it the competitive advantage
in-terms of reduced cycle time, cost-savings and the most efficient MIS in the industry.
Page 28 of 41
6.3. STRATEGIC ALTERNATIVES FOR TAMEER MICROFINANCE BANK LTD.
Three alternatives have been evaluated that emerged from the SWOT Analysis included
in Annexure-II on page 28. Tameer bank is is in an excellent position to use its internal
strengths to (1) take advantage of external opportunities (2) overcome internal
weaknesses, and (3) avoid external threats. For Tameer Intensive Strategies i.e.
continued concentration on current markets (market penetration) and products (product
development) are appropriate. Tameer should expand into urban and rural areas of
Pakistan and start mobile phone banking.
Considering the relative importance of key internal and external factors, shown by
respective weights, and attractiveness of these factors to the respective strategies, shown
by the attractiveness score; the final Strategy for Tameer Bank is to expand into other
urban areas of Pakistan such as Rawalpindi, Sialkot, Faisalabad, Peshawar, Quetta etc.
Page 29 of 41
Quantitative Strategic Planning Matrix (QSPM)

Expand Expand into Start
into Rural Urban Mobile
Areas Areas Banking
Weights AS TAS AS TAS AS TAS
33 34
KEY INTERNAL FACTORS

Strengths
1. Commercially viable 0.13 3 0.39 4 0.52 2 0.26
Business Model.
2. TMFBL is growing five times 0.13 2 0.26 4 0.52 2 0.26
faster than the industry’s
growth rate.
3. TMFBL has a license to 0.11 4 0.44 4 0.44 2 0.22
operate at the district, province
and national level.
4. IFC has provided 10% equity 0.09 1 0.09 1 0.09 1 0.09
in TMFBL.
5. TMFBL has Voice Aided 0.09 3 0.27 4 0.36 1 0.09
biometric ATMs that no other
microfinance bank has.
6. All branches are connected 0.19 2 0.38 4 0.76 1 0.19
via real-time online software; all
transactions are directly posted
in the core operating system.
Weaknesses
1. Lack of experience in 0.08 4 0.32 3 0.24 2 0.16
microfinance sector.
2. Difficulties in managing 0.08 3 0.24 2 0.16 4 0.32
internal Liquidity.
3. Class-room focused training 0.08 3 0.24 4 0.32 1 0.08
lacking field exposure.
4. Higher Cost of funds. 0.05 3 0.15 2 0.10 1 0.05
5. Capital less than 0.07 3 0.21 4 0.28 2 0.14
commercial banks.
1.00
KEY EXTERNAL FACTORS
Opportunities
1. Enter into Mobile phone 0.20 1 0.20 1 0.20 4 0.80
banking.
2. Expand into other urban 0.15 1 0.15 4 0.60 1 0.15
areas of Pakistan.
33
Weight represents relative importance of key internal and external factors.
34
AS represents Attractiveness Score i.e. attractiveness of each factor to the respective strategies.
Page 30 of 41
Expand Expand into Start

into Rural Urban Mobile
Areas Areas Banking
Weights AS TAS AS TAS AS TAS
33 34
KEY INTERNAL FACTORS

Strengths
1. Commercially viable 0.13 3 0.39 4 0.52 2 0.26
Business Model.
2. TMFBL is growing five times 0.13 2 0.26 4 0.52 2 0.26
faster than the industry’s
growth rate.
3. TMFBL has a license to 0.11 4 0.44 4 0.44 2 0.22
operate at the district, province
and national level.
4. IFC has provided 10% equity 0.09 1 0.09 1 0.09 1 0.09
in TMFBL.
5. TMFBL has Voice Aided 0.09 3 0.27 4 0.36 1 0.09
biometric ATMs that no other
6. All branches are connected 0.19 2 0.38 4 0.76 1 0.19
3. Expand into rural areas of 0.05 4 0.20 1 0.05 1 0.05
Pakistan.
4. Start providing Micro- 0.05 - - - - - -
insurance.
Threats
1. ORASCOM (Mobilink) is 0.10 1 0.10 1 0.10 4 0.40
going to enter Microfinance
sector.
2. Tight monetary policy may 0.05 3 0.15 4 0.20 2 0.10
increase the cost of funds.
3. Probability of loosing HR to 0.10 2 0.20 3 0.30 1 0.10
competitors and newcomers.
4. Political instability in the 0.07 3 0.21 4 0.28 2 0.14
country.
5. Law and Order situation. 0.05 2 0.10 4 0.20 1 0.05
6. Government support to 0.08 4 0.32 2 0.16 1 0.08
government-owned banks
7. The lack of expansion can 0.10 3 0.30 4 0.40 1 0.10
lead the bank to the bankruptcy
because of high fixed costs.
1.00
Totals 4.92 6.28 3.83
Page 31 of 41
7. STRATEGIC IMPLEMENTATION
The final strategy which came out as a result of matching the external and internal
environment is:
To expand into other urban areas of Pakistan such as Rawalpindi, Sialkot,

Faisalabad, Peshawar, Quetta etc.
In order to implement this strategy, Tameer must focus on the Eight Managerial
Components of Strategy Implementation.
7.1. LEADING THE STRATEGY IMPLEMENTATION AND EXECUTION PROCESS
One make-or-break component of successful strategy implementation and execution is

how well the management leads the process. Although major initiatives to implement
corporate strategies usually have to be led by the CEO and other senior officers, top-level
managers still have to rely on the active support and cooperation of middle and lower
managers (such as branch managers) to push strategy changes into functional areas and
operating units (branches) and to carry out the strategy effectively on a daily basis. 35
7.2. CORPORATE CULTURE AND LEADERSHIP
Due to relatively recent history of Tameer Microfinance Bank, it will take some time before
Tameer has an established corporate culture and leadership style accepted and well
understood at levels of the organization. Tameer needs to harvest a strong corporate
culture because in a strong-culture company, values and behavioral norms are like
crabgrass, deeply rooted and difficult to weed out. Tameer must establish an Adaptive
Culture because adaptive culture is a valuable competitive asset.
In adaptive cultures member share a feeling of confidence that the organization can deal
with whatever threats and opportunities come down the pike; they are receptive to risk
taking, experimentation, innovation, and changing strategies and practices whenever
necessary to satisfy the legitimate interests of stakeholders – customers, employees,
shareowners, suppliers, and the communities where the company operates. There is a
spirit of doing what’s necessary to endure long-term organizational success provided core
values and business principles are upheld in the process.
7.3. BUILDING A CAPABLE ORGANIZATION
Tameer would continue to face some difficulties in attracting good intellectual resources
till it emerge as an established premier microfinance bank of Pakistan. Tameer has been
striving hard to build core competencies by having the most efficient and effective front-
end staff, state of the art banking systems. However, transforming core competencies into
competitive capabilities and competitive advantage is a steady consistent process. The
three organization-building actions are36:
35
Ch. 11: Building Resource Strengths and Organizational Capabilities, Strategic Management by Thompson & Strickland.
36
Ch. 11: Building Resource Strengths and Organizational Capabilities, Strategic Management by Thompson & Strickland.
Page 32 of 41
 Staffing the organization – includes putting together a strong management team,

and recruiting and retaining employees with needed experience, technical skills, and
intellectual capital.
 Building core competencies and competitive capabilities that will enable good
strategy execution and then keeping the competence/capability portfolio updated as
strategy and external conditions change.
 Structuring the organization and work effort – organizing business functions and
processes, value chain activities, and decision making in a manner conducive to
successful strategy execution.
Tameer should consider following steps to develop its knowledge base and build
intellectual capital:
 Spend considerable effort in screening and evaluating job applicants, selecting only
those with suitable skill sets, energy, initiative, judgment and aptitudes for learning and
adaptability to the company’s work environment and culture.
 Put employees through training programs that focus more on field work as compared
to class-room training.
 Tameer must realize the strategic role of employee training by putting employees
through training programs that continue not just through their early years but
throughout their careers.
 Give them challenging, interesting, and skill-stretching assignment.
 Rotate them through jobs that not only have great content but those span functional
and geographic boundaries.
 Encourage employees to be creative and innovative, to challenge existing ways of
doing things, and to submit ideas of new financial products for the microfinance sector.
 Foster a stimulating and encouraging work environment, such that employees will
consider Tameer Bank “a great place to work”.
 Exert efforts to retain high-potential, high performing employees with salary increases,
performance bonuses, stock options and equity ownership, and other long-term
incentives. Average performers are coached to do better, while underperformers and
benchwarmers are weeded out.
7.4. MATCHING ORGANIZATION STRUCTURE TO STRATEGY
There are certain areas on which Tameer must focus in order to successfully match their
organization structure to the suggested strategy. These are:
 Identify strategy-critical value chain activities.

 Decide value chain activities to perform internally and which to outsource from
partners.
 Make internally performed strategy-critical value chain activities the main building
blocks in the organization structure.
 Decide how much authority to centralize at the top and how much to delegate to down-
the-line managers and employees.
 Provide for cross-unit coordination and collaboration to build/strengthen internal
competencies and capabilities.
 Provide for the necessary collaboration and coordination with outsiders.
Page 33 of 41
Tameer is not in position to outsource any of its value-chain activities because its core-
competencies rest with its technological and intellectual resources. Outsourcing poses a
danger to loose competitive advantage to the competitors and new entrants.
There is no need to change the existing structure of the organization as for the suggested
strategy of expansion into rural areas an appropriate structure is already in place which is
flexible and delegates authority to regional managers in a decentralized way where they
are empowered to make decision within the scope and framework of corporate strategies,
policies and procedures.
7.5. LINKING BUDGETS TO STRATEGY
Tameer needs to have a formally documented framework to execute its strategic

decisions; the framework could cover both financial and non-financial aspects essential
for the successful execution of the strategy. Currently, Tameer does not allocate financial
resources for its strategic and non-strategic initiatives distinctively. Tameer does not need
big movements of people and money in order to implement this strategy. However,
adequate financial resources must be allocated to:
 Conduct the initial study of the new city, number of branches to be opened in that city
and cost-benefit and suitability analyses of implementing and introducing products,
existing technologies such as ATMs and real-time systems in that city.
 Run the business in new cities professionally and according to the standards set by
the top management.
Tameer must also move people from Karachi to their new branches in other cities in order
to train new people and to delegate them the strategic vision and mission of Tameer Bank
and also to standardized the processes and functions in other cities too.
7.6. CREATING STRATEGY SUPPORTIVE POLICIES AND PROCEDURES
Tameer needs to prescribe enough policies to give its employees clear direction in
implementing strategy and to place desirable boundaries on their actions, then empower
them to act within these boundaries. Allowing company personnel to decide and act
anywhere between the “white lines” is especially appropriate when individuals’ creativity
and initiative are more essential to good strategy execution than standardization and strict
conformity.
7.7. INSTITUTING BEST PRACTICES AND A COMMITMENT TO CONTINUOUS

IMPROVEMENT
Identifying and implementing best practices is a journey, not a destination.
There is no set example for Tameer which can be termed as best in the microfinance
sector. Tameer doesn’t have any benchmark organization and benchmark business model
to follow. There are certain mistakes being committed by Tameer and Tameer has to build
itself the best practices in the industry by continuously learning and adapting its practices
in the light of its experiences.
Page 34 of 41
Tameer needs to employ the concepts of Total Quality Management (TQM)

37
and Learning Organization by continuously improving its functions and building a
capacity of continuous learning. TQM entails creating the total quality culture bent on
continuously improving the performance of every task and value chain activity.
7.8. INSTALLING SUPPORT SYSTEMS
Innovative state-of-the-art support systems can be a basis for competitive advantage if

they give a firm, capabilities that rivals can’t match. This is true in the case of Tameer
Bank, its central core operating system connect its all branches to this system which
enables them to post transaction directly in the central system. Tameer must leverage the
benefits of its system in the suggested expansion strategy by linking all the new branches
to this system. This system has given Tameer a competitive edge in the industry because
only FMFB has computer based transaction posting system other than Tameer but the
support system of Tameer is the most latest and efficient in the industry. Hence, Tameer
can obtain competitive advantages in other cities also by connecting its upcoming
branches to this system.
Tameer also needs to have state of the art systems for Loan Origination and Approval,
Risk Management i.e. for Credit, Market and Operational Risk Management, Portfolio
Management and Analysis etc.
7.9. DESIGNING STRATEGY-SUPPORTIVE REWARD SYSTEMS
One of the biggest strategy implementing challenges is to employ motivational techniques

that build whole-hearted commitment and winning attitude among employees. Tameer
needs to develop a strong reward system at all levels that motivates employees to
contribute towards the vision, mission and strategic objectives of the bank. There are
certain suggestions which Tameer can follow in order to gain strong commitment of its
employees towards this strategy.
 Linking the Reward system to strategically relevant performance outcomes.

 Basing incentives on achieving results, not on performing assigned functions.
In implementing the incentive compensation system following factors must be

emphasized:
 The performance pay off must be a major not minor piece of the total compensation
package.
 The incentive plan should extend to all managers and all workers, not just top
management.
 The reward system must be administered with scrupulous care and fairness.
 The incentive must be tightly linked to achieving only those performance targets
spelled out in the strategic plan.
 The performance targets each individual is expected to achieve should involve
outcomes that the individual can personally affect.
37
TQM is a philosophy of managing a set of business practices that emphasizes continuous improvement in all phases of
operations, 100 percent accuracy in performing activities, involvement and empowerment of employees at all levels, team
based work design, benchmarking and fully satisfying customer expectations.
Page 35 of 41
 The time between the performance review and payment of the reward should be kept
short.
 Non-monetary rewards should be liberally used; reliance should not be placed solely
on monetary rewards.
8. DEVELOPMENTS SINCE 2007
8.1. BRANCH EXPANSION INTO URBAN AND RURAL AREAS OF PAKISTAN
Tameer Bank has expanded its branch network from 18 branches in 2007 to 39 branches
by Dec 31, 2009. Tameer has opened branches both in Urban and Rural Areas of
Pakistan. Tameer has also opened number of Sales Centres and Community Centres to
facilitate its customers.
8.2. MOBILE BANKING38
Telenor Pakistan and Tameer Microfinance Bank together have launched easypaisa, a
uniquely convenient and safe way for everyone to carry out financial transactions.
easypaisa users have the freedom to make bill payments and send and receive money at
thousands of outlets and in addition manage their bank accounts over their mobile phones.
easypaisa combines the best from the financial and mobile sectors, offering the first
branchless banking solution of its kind in Pakistan and neighboring countries. Branchless
banking has been used internationally as a successful tool to reach customers who cannot
be served by conventional branch-based financial services.
Telenor Pakistan & Tameer Bank’s easypaisa portfolio, initially launched with Bill Payment
solution, is scheduled to come up with services such as money transfer, mobile wallet
accounts, cash deposits and withdrawal facilities in near future. The services are for
everyone offering innovation, freedom, security and convenience.
38
All pictures, logos and description of Easypaisa has been taken from Tameer Bank’s Website: www.tameerbank.com
Page 36 of 41
ANNEXURE
ANNEXURE – I: FINANCIAL RATIOS
Liquidity Ratios TMFBL Industry Average Remarks39

Liquid Assets/ Total Assets 0.46 0.53 Below Average
Liquid Assets/ Total Deposits 1.23 3.85 Below Average
Loans/Deposits 1.09 3.68 Above Average
Loans/Total Assets 0.41 0.35 Below Average
Loans/Investments 17.64 6.68 Below Average
Commitments/Total Assets 0.002 0.01 Above Average
Net Cash Flow/Total Assets 0.01 -0.02 Above Average
Net Cash Flow/Total Liabilities 0.01 0.41 Below Average
Net Cash Flow/Total Deposits 0.02 -0.40 Above Average
TMFBL INDUSTRY
Leverage Ratios
Debt to Total Asset Ratio 0.57 0.37
Debt to Equity Ratio 1.30 0.79
Long-term Debt to Equity Ratio 0.40 0.40
Activity Ratios
Fixed Asset Turnover 1.13 1.68
Total Asset Turnover 0.07 0.10
Profitability Ratios
Gross Profit Margin 0.81 0.82
Net Profit Margin -0.56 -0.35
Return on Asset 0.04 -0.04
Return on Equity -0.09 -0.06
E.P.S -0.84 -0.37
Growth Ratios
Sales 5.956 311.52%
Net income 255.91% 249.05%
3. EPS 355.07% 287.63%
Working Capital 700,896 301,413,010
39Above average means the performance is better as compared to the industry and below average means
the company’s liquidity is lesser as compared to the industry.
Page 37 of 41
ANNEXURE – II: MATCHING & DECISION MATRICES (INPUT-MATCHING-DECISION

MODEL)
MATCHING STAGE
Threats – Opportunities – Weaknesses – Strengths (TOWS) Matrix

Strengths – S Weaknesses – W
1. Commercially viable 1. Lack of experience in
Business Model. microfinance sector.
2. TMFBL is growing five times
faster than the industry’s 2. Difficulties in managing
growth rate. internal Liquidity.
3. TMFBL has a license to
operate at the district, province 3. Class-room focused training
and national level. lacking field exposure.
4. IFC has provided 10% equity
in TMFBL. 4. Higher Cost of funds.
5. TMFBL has Voice Aided 5. Capital less than
biometric ATMs that no other commercial banks.
6. All branches are connected
Opportunities - O SO Strategies WO – Strategies
1. Enter into Mobile phone 1 – Expand into other urban
banking. areas of Pakistan.
2. Expand into other urban (S1, S2, S3, S5, S6, O2)
areas of Pakistan.
3. Expand into rural areas of 2 - Expand into rural areas of
Pakistan. Pakistan.
4. Start providing Micro- (S1, S2, S3, S5, S6, O3)
insurance.
Threats - T ST Strategies WT – Strategies
1. ORASCOM (Mobilink) is
going to enter Microfinance 1 – Start mobile banking in 1 – Open more branches to
sector. microfinance sector in achieve larger scale of
2. Tight monetary policy may collaboration with ORASCOM operations only in Karachi.
increase the cost of funds. (Mobilink). ( W2, W4, T7)
3. Probability of loosing HR to (S1, S2, S3, S4, T1, T3, T7)
competitors and newcomers.
4. Political instability in the
country.
5. Law and Order situation.
6. Government support to
government-owned banks.
7. The lack of expansion can
lead the bank to the bankruptcy
because of high fixed costs.
Page 38 of 41
Strategic Position And Action Evaluation (SPACE) Matrix
Financial Strength (FS) Environmental Stability (ES)

Return on Investment (ROI) 5 Technological Changes -3
Leverage 4 Rate of Inflation -4
Liquidity 2 Demand variability -2
Working capital 2 Price range of competing products -3
Cash Flow 5 Barriers to Entry into Market -4
Ease of exit from market 3 Competitive pressure -3
Risk involved in business 3 Price elasticity of demand -1
(FS) Average 3.43 (ES) Average -2.86
Competitive Advantage (CA) Industry Strength (IS)

Market Share -3 Growth Potential 5
Product Quality -2 Profit Potential 3
Product life cycle -2 Financial Stability 3
Customer Loyalty -2 Technological know-how 5
Competition's capacity utilization -3 Resource Utilization 4
Technological know-how -1 Capital intensity 3
Control over Suppliers and
Distributors -3 Ease of entry into market 4
Productivity, capacity utilization 4
(CA) Average -2.286 (IS) Average 3.88
Page 39 of 41
Internal – External (IE) Matrix
Grand Strategy Matrix
DECISION STAGE
Strategies TOWS SPACE IE GRAND Total

Expand into other urban areas of
    4
Pakistan.
Expand into rural areas of Pakistan     4
Start mobile banking in
microfinance sector in collaboration     4
with ORASCOM (Mobilink).
Open more branches to achieve
larger scale of operations only in  1
Karachi.
Page 40 of 41
REFERENCES
ACADEMIC AND PROFESSIONAL REFERENCES:
 The 5 competitive forces that shape Strategy

 Profiling the industry and company
 The Core Competencies of the Corporation
 From Competitive Advantage to Corporate Strategy
 On Competition, Michael Porter, HBS Press
 Strategy Maps, Kaplen and Norton, HBS Press
 IoBM Case Discussion (Strategic Management Class): The Chinese Fireworks
Industry
 IoBM Case Discussion (Strategic Management Class): Levis Personal Pair Jeans
 IoBM Case Discussion (Strategic Management Class): The Skil Corporation
 IoBM Case Discussion (Strategic Management Class): Cola Wars, Coke and Pepsi in
the 21st Century
 IoBM Case Discussion (Strategic Management Class): Unilevers’ Acquisitions
 IoBM Case Discussion (Strategic Management Class): On Blue Ocean Strategies
 IoBM Case Discussion (Strategic Management Class) Revlon Inc.
 IoBM Case Discussion (Strategic Management Class): McDonald’s Corporation
 IoBM Case Discussion (Strategic Management Class): Continental Airlines / South
West Air Strategic Management 12th Edition, Fred David
 Strategic Management and Business Policy, Wheelen and Hunger, 10th Edition
 Strategic Management, Hitt, Ireland and Hoskisson, 5th Edition
INDUSTRY REFERENCES:
 Microwatch, September 2006
 Microfinance Institutions Ordinance 2001
 Companies Ordinance 1984
 Prudential Regulations for Microfinance Banks/ Institutions, SBP
 Microfinance Myths and Realities by Mr. Nadeem Hussain
 Country Paper On Pakistan Microfinance In The Private Sector Prepared for the
Microcredit Summit New York, November 10-13, 2002 By the Pakistan Microfinance
Network (PMN)
 Development of Microfinance by Dr. Shamshad Akhtar
 Emerging Issues for National Microfinance Associations by Gregory Chen Stephen
Rasmussen, August 2005
 Consumer Credit Wave by Mr. Nadeem Hussain
 Report And Recommendation Of The President To The Board Of Directors On
Proposed Loans To The Islamic Republic Of Pakistan For The Microfinance Sector
Development Program
 Performance Indicators Report (PIR) Workshop “Sharing Microfinance Resources and
Knowledge In South Asia”, January 29, 2004
 Microfinance Performance in Pakistan 1999-2005, Growth – but a structural Flaw
Persists by US AID
 Evolution of microfinance in Pakistan By Amer Saleem Khan and Stefan Platteau, The
News (http://thenews.jang.com.pk)
 Guidelines for Commercial Banks to Undertake Microfinance Business, State Bank Of
Pakistan Small & Medium Enterprises Department.
Page 41 of 41

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INSTITUTE | OF | BUSINESS | MANAGEMENT

Under the supervision of Prof. Javaid Ahmed, IoBM

TAMEER MICROFINANCE BANK:

The microfinance market in Pakistan is small by international standards2. It has so far

a new phase of microfinance development. The country has witnessed a wave of

There is a formally recognized Pakistan Microfinance Network (PMN), which is self-

1. The First Micro Finance Bank Limited

It is estimated that 40 Microfinance Institutions (MFIs) operate in Pakistan out of which 19

Of principal concern is the low coverage of Microfinance services. The Microfinance

The microfinance business further faces difficulty in accessing alternative sources of

Knowing how to conduct micro-businesses is an additional challenge in Pakistan given its

1.1. THREAT OF NEW ENTRANTS

3 State Bank of Pakistan

Response of Existing MFBs & MFIs:

1.2. BARGAINING POWER OF CUSTOMERS

1.3. THREAT OF SUBSTITUTES9

1.4. BARGAINING POWER OF SUPPLIERS

For a microfinance bank, there are three sources of funds:

 Deposits: According to the guidelines of SBP for microfinance banks, a

1.5. RIVALRY AMONG EXISTING COMPETITORS

2.1. POLITICAL ENVIRONMENT

2.2. ECONOMIC ENVIRONMENT

2.3. SOCIAL, CULTURAL & DEMOGRAPHIC ENVIRONMENT

Pakistan has an estimated population of 169,270,617, as of in 2007.19 Pakistan has the

Constraints on agricultural productivity contribute to rural poverty and unemployment.

I. Inadequate Access of the Poor to Services

ii. Obstacles for Microfinance Outreach to Women

Social intermediation costs to enhance women's access to microfinance are significantly

iii. Absence of Risk Mitigation Measures

2.4. TECHNOLOGICAL ENVIRONMENT

3. IMPACT OF EXTERNAL ENVIRONMENT ON INDUSTRY ATTRACTIVNESS

3.1. IMPACT OF POLITICAL ENVIRONMENT

The political forces

3.2. IMPACT OF ECONOMIC ENVIRONMENT

The economic forces:

3.3. IMPACT OF DEMOGRAPHIC, CULTURAL & SOCIAL ENVIRONMENT

3.4. IMPACT OF TECHNOLOGICAL ENVIRONMENT

 are decreasing the threat of new entrants as the technological developments in

4.1. KHUSHHALI BANK LTD.

Microfinance Social Development Fund – US$ 40 million fund supports social

4.2. FIRST MICROFINANCE BANK LTD.

5. TAMEER MICROFINANCE BANK LIMITED

TAMEER is Microfinance bank set up by a group of highly experienced bankers committed

I. Tameer-e-Ghar (Home improvement loan)

Product Name Eligibility

II. Tameer-e-Karobar (Business Loan

Product Name Eligibility

III. Tameer-e-Bacchat (Savings)

Product Name Benefits:

IV. Tameer Khazana - Term Deposit Account

Product Name Payment structures

Tenor: Payment structures

5.3. BRANCH NETWORK

5.4. THE VALUE FLOW CHAIN

US & IFC/WORLD BILATERAL

5.5. INTERNAL RESOURCES

 Cash balances with SBP and NBP

Existing staffing resources

 Tameer-e-Ghar (Home improvement loan)

Reputation of Management: Top tier corporate and consumer bankers in Top

5.6. CORE COMPETENCIES

 Understanding of commercial banking (most employees are from commercial

5.7. STRATEGIC COST MANAGEMENT PROCESSES