Compartamos Sees Microfinance Weather the Crisis
Banco Compartamos Expects to Grow Lending by 20 to 25% in 2009
February 27, 2009
The Wall Street Journal
Mexican microfinance bank Banco Compartamos expects to grow lending between 20% and 25% this year even as Mexico's economy heads into recession, since tiny businesses continue to demand credit. Carlos Danel, Compartamos' co-chief executive said, "Micro businessmen are self-employed and do not lose their jobs. Where micro businesses do suffer is the scale of their operations shrinks a bit. It shrinks relatively little because they are not in luxury businesses that are discretionary, rather their activities are very basic and very defensive."
Danel added that the bank expects to add 300,000 new clients this year to the 1.16 million it had at the end of 2008 after a 38% increase. Overall bank lending in Mexico, meanwhile, has slowed considerably as lenders tighten credit standards. Compartamos has enjoyed strong growth in its niche market, with 2008 net profit rising 28% to MXN1.12 billion (US$73 million) for a return on average equity of 44%. Its non-performing loans rose to MXN98 million (US$6 million), representing 1.7% of total loans. This compares with 3.2% for the banking sector as a whole. "We expect the non-performing loan portfolio to increase. We do not think it is going to be significant." Danel said.