2012 latin america and the caribbean regional snapshot

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2012 Latin America & the Caribbean Regional Snapshot

December 2012


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Content

Credit and savings products Financial performance and portfolio risk Quarterly information Special cases of analysis

Urban and rural creditCredit by methodologyCooperatives: Principle indicatorsPortfolio Yields

Funding structure data


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Latin America and the Caribbean at a glance

• South America (SA) led the region in growth of borrowers (14.6%) and portfolio (24.3%).

2008 2009 2010 20110

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

SA MEX CC

Num

ber

of

act

ive loans

2008 2009 2010 20110

4,000,000,000

8,000,000,000

12,000,000,000

16,000,000,000

20,000,000,000

24,000,000,000

SA MEX CC

Gro

ss L

oans (

US

D)

• Central America and the Caribbean (CC) continued their recovery in credit activity increasing 12.4% in borrowers (2.3% in 2010) and 10.7% in portfolio (5.6% in 2010).

2008 2009 2010 20110

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

0

5,000,000,000

10,000,000,000

15,000,000,000

20,000,000,000

25,000,000,000

30,000,000,000

Number of active borrowers Gross Loan Portfolio (USD)

LA

C:

Nu

mb

er

of

acti

ve

borr

ow

ers

LA

C:

Gro

ss L

oan

Port

folio

(US

D)


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Latin America and the Caribbean: Portfolio by Products

• Microenterprise was the most prevalent product (62.9% in 2011), which doubled its portfolio between 2008-2011 while total portfolio doubled as well. In turn, Housing loans increased at the regional level driven by progress in SA (36.7%).

• Consumer Credit decreased in CC (-7.4%) as the market shows greater caution in credit lending. Consumer lending also decreased in Mexico (MEX, -18.4%) as a result of intensive write-offs by the larger MFIs in the country.


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Latin America and the Caribbean: Deposits

At the regional level in 2011, growth in depositors (5.5%) and deposits (19.9%) was less than what it was in 2010.

Between 2009-2011 in MEX, voluntary deposits grew faster than obligatory deposits due to the expansion of SOFIPOS, (Spanish acronym for Popular Financial Societies).


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CC and MEX saw reduced returns-on-assets (ROA) resulting in a decrease in the regional median. In 2011, MEX experienced increased expenses (operational, financial, and loan loss provisioning).

CC and MEX also had lower returns-on-equity (ROE) in 2011 due to increasing equity.

Latin America and the Caribbean: Profitability

2008 2009 2010 2011ROA

0%

2%

4%

6%

8%

SA MEX CC LAC

Retu

rn o

n A

ssets

(M

edia

n)

2008 2009 2010 2011ROE

0%

5%

10%

15%

20%

SA MEX CC LAC

Retu

rn o

n E

quit

y (

Media

n)


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Write offs decreased in SA, but portfolio-at-risk levels (PAR) saw a slight increase over 2010 levels. Meanwhile in CC, even though there was a decrease in its portfolio risk indicators, it continues to have the highest proportion of PAR in the region.

In the case of MEX, MFIs allocated more resources to risk coverage to account for the increase in PAR.

Latin America and the Caribbean: Credit Risk


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Ecuador and Bolivia were the only countries that showed continuous progress over the last seven quarters.

As of September 2012, the El Salvadorian portfolio was lower (-2.6%) when compared to the balance at the end of 2011.

Latin America and the Caribbean: Quarterly Index Scale (Base Year

December 2010)


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Generally across the region, PAR levels have been on the decline, especially in Nicaragua (-5.3 p.p.) and Colombia (-2.5 p. p.)

Latin America and the Caribbean : Portfolio-at-Risk 2012

During 2012, policy changes were first implemented, or in the process of implementation, in Ecuador and Bolivia that would have a significant impact on MFI operations. At the same period, PAR levels in both countries also experienced a slight increase.


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What was the focus of the supply of credit?

2009 2010 20110

200400600800

1,0001,2001,4001,6001,8002,000

Average loan balance of rural loans

SA CA

USD

Rural credit in SA (34.3%) and CA (12.9%) experienced portfolio growth levels superior to growth in urban credit (20% and 9%, respectively).

Rural credit in SA played a strong role in portfolio growth, despite many of the countries in this sub-region having mainly urban populations. In the case of CA, the average balance decreased due to Nicaragua’s smaller rural portfolio. Had Nicaragua been excluded, this sub-region would have had a constant level of average rural loan balance of USD 741.

2009 2010 20110

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

300,000,000

350,000,000

400,000,000

Central America and the Ca-ribbean

RUR URB

2009 2010 20110

1,000,000,000

2,000,000,000

3,000,000,000

4,000,000,000

5,000,000,000

6,000,000,000

7,000,000,000

8,000,000,000South America (SA)

RUR URB


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Will individual credits continue to be the most offered product?

Yes. While the majority of LAC countries use this methodology extensively, we can see that group credit (village banks and solidarity groups) continues to expand in Ecuador, El Salvador, Mexico and Nicaragua, with Mexico leading the way.

2009 2010 2011 2009 2010 2011 2009 2010 2011 2009 2010 2011Ecuador El Salvador Mexico Nicaragua

0%

20%

40%

60%

80%

100%

GRP IND

Port

folio P

erc

en

tag

es


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What was the profile risk according to credit methodology?

MFIs with intense group credit offerings in the four countries of analysis (Ecuador, El Salvador, Mexico, Nicaragua), maintained their risk levels over the last three years.

In 2011, there was an improvement in risk indicators for MFIs who specialize in individual credit. Only in Nicaragua did this decrease correspond with a shift towards write-offs.

2009 2010 20110.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

GRP IND

Po

rtfo

lio

at

RIs

k >

3

0 d

ays (

Me

dia

n)


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Half of the observed 57 cooperatives in the region reported having a total loan portfolio amount of roughly USD 16.8M and a deposit balance over USD 14.5M by 2011.

Cooperatives: Summary of Trends


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Nominal Portfolio Yield (Weighted Average)

In the case of Mexico in 2011, there was a decrease in the weighted yield by portfolio size (-1.7 p.p.), considering the increased competition in the sector and the search to shift efficiency towards the client.

CC showed a minimal difference in yield over the past three years and was able to maintain sustainability despite higher administrative and personnel costs incurred in that period.


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Nominal Yield Portfolio

Countries with diminishing portfolio yields showed more efficient management of their assets to guarantee their sustainability in the context of high competition (typical of mature markets). In these same countries, growth in lending over 2011 was on par with the decrease in its portfolio risk indicators.


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Since 2009, CC’s proportion of deposits exceeds the proportion of borrowings demonstrating the regional focus away from borrowings.

SA has the most deposits from the public of all three sub-regions. Nevertheless, in 2011, growth in borrowings exceeded growth deposits for the first time.

The recapitalization of profits intensified in the past two years for the region, particularly in SA where more resources were used to build up reserves. Meanwhile in CA, capital increased significantly (40.1%) due to a combination of retained earnings and additional contributions.

Latin America and the Caribbean: Funding


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The source of funds for MFIs in the region was mostly local in the last three years.

Latin America and the Caribbean: Funding

LAC Percentage

Funding by country of origin

2009 2010 2011

Peru 16.5% 17.3% 15.7%

Colombia 11.8% 10.3% 14.1%

Brazil 5.1% 7.1% 8.0%

USA 9.4% 7.2% 6.7%

Mexico 10.3% 7.6% 6.4%

Rest 47.0% 50.5% 49.1%

Total 100.0% 100.0% 100.0%

LAC Percentage

Origin of Funding 2009 2010 2011

LAC 61.2% 64.1% 68.4%

Norteamérica 10.4% 8.6% 8.4%

Europa 28.2% 27.2% 23.2%

Total 100.0% 100.0% 100.0%

LAC Recipient countries of funding in 2011

Funding by country of origin

Bolivia Brazil Colombia Ecuador El Salvador Mexico Nicaragua Peru Other LAC Total

Peru0.2% 0.1% 1.0% 0.0% 0.0% 0.0% 0.0% 98.7% 0.0% 100.0%

Colombia0.0% 0.0% 100.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 100.0%

Brazil0.0% 99.8% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.2% 100.0%

USA6.9% 4.1% 6.3% 16.1% 6.2% 13.7% 4.1% 34.8% 6.5% 100.0%

Mexico0.0% 0.0% 0.0% 0.0% 0.0% 100.0% 0.0% 0.0% 0.0% 100.0%

Foreign funding originated mainly from financial institutions and European funds.


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2012 latin america and the caribbean regional snapshot

Documents

latin america

distribucin o copia

permiso escrito previo

total portfolio

rural credit credit

credit lending

consumer credit

gross loan portfolio