latin american and the caribbean microfinance market trends 2006-2011

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Latin America and the Caribbean Microfinance Market Trends 2006 – 2011

Renso Martínez

The Leading Source of Microfinance Data and Analysis

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s

prior written permission is strictly prohibited.

September 23, 2011

Esta presentación contiene información que es propiedad del MIX, y todos los derechos están reservados por MIX. Cualquier difusión, distribución o copiado total y/o parcial de esta presentación está permitida siempre y cuando se atribuya al autor y a los patrocinadores. En cualquier otro caso está

terminantemente prohibido.

This report was prepared by Renso Martínez, Operations Manager and MIX Regional Manager for Latin America and the Caribbean.

The content and opinions expressed herein are those of the author and do not necessarily represent the official position of the Inter-American Development Bank or of any of its members. Reproduction of this report in full or in part is permitted provided that credit is given to the author and sponsors.

Microfinance Information eXchange, Inc. (MIX)

Contact: Renso Martinez [email protected]

MIX Lima, PeruJirón León Velarde 333, Lima 14, Peru

Tel: (51) 1 471-9526 / Fax: (51) 1 471-6816

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Web: www.themix.orgEmail: [email protected]

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Contact information:

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Paola Pedroza, SeniorSpecialist; [email protected]

1300 New York Avenue, N.W.Washington, D.C. 20577

Web: www.fomin.orgEmail: [email protected]

Contact Information

mailto:[email protected]

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September 23, 2011



Presentation

MIX and the Multilateral Investment Fund (FOMIN), a member of IDB Group, are pleased to present the report “Latin America and the Caribbean Microfinance Market Trends 2006 – 2011”, a joint effort to gather, analyze and disseminate information from a select group of Microfinance Institutions (MFIs).

For this third issue of the report, the principal aim has been to present the most significant trends in performance of MFIs in the region on the basis of data provided by 48 institutions (13.2% of the MIX sample) that operated in the market throughout the 2006-2011 period. In total, the sample justifies coverage of 55% of lenders and 53% of the regional gross portfolios reported to MIX. All the data is available on a spreadsheet that can be downloaded from the MIX webpage.

Our thanks go to the various sources of data and to our readers for following us in each of our publications.

http://www.themix.org/publications/mix-microfinance-world/2012/06/tendencias-2006%E2%80%932011-del-mercado-microfinanciero-en-amer



September 23, 2011



Introduction

• MFIs in the region accelerated their growth, taking account of an increase of over 20% in the main indicators of scale and outreach, and underlining the 24% increase in the portfolio in 2011, which led to a growth in assets of 19%.

• Despite this, in terms of financing, growth in deposits fell by 20% over the same period, while debts tracked growth in the portfolio with a similar percentage (23%). Growth in equity was lower (18%) when compared to other accounts.

MAIN ACCOUNTS AND INDICATORS OF 48 LAC MFI

(us$ Millions)

YoY. % YoY. %

'11/'10 '11/'06 1/

Borrow ers ('000) 10,512 17% 17%

Depositors ('000) 14,096 9% 24%

Gross Loan Portfolio 15,797 24% 23%

Microenterprise 2/ 8,707 23% n/d

Other credit types 7,089 24% n/d

Assets 20,718 19% 23%

Deposits 12,629 20% 25%

Borrow ings 3,765 23% 19%

Equity 3,264 18% 24%

1/ Annual average n/d: Not available

2/ Final MFI information for Bolivia, Ecuador and Peru, and

estimated for the other countries.

Main accounts2011

Balances



September 23, 2011



Credit and Deposit at Regional Level

• The MFI portfolio in the region rose in 2011, showing growth in the portfolio (24%) and in borrowers (17%), driven by all credit types.

• Meanwhile, a deceleration was seen in the performance of funds raised in the form of deposits (20%) and depositors (9%) compared to 2010.

Active Borrowers and Depositors in 48 MFI from LAC Credit and Deposits in 48 MFI from LAC

10,512

14,096

0

3,000

6,000

9,000

12,000

15,000

18,000

2006 2007 2008 2009 2010 2011

Outreach(# '000)

Borrowers

Depositors 15,797

12,629

0

3,000

6,000

9,000

12,000

15,000

18,000

2006 2007 2008 2009 2010 2011

Scale(US$ Millions)

GLP

Deposits



September 23, 2011



Credit and Deposits by Sub-regionBorrowers and GLP trends in 48 MFI from LAC Depositors and Deposits in 48 MFI from LAC

0

100

200

300

400

0

100

200

300

400

2006 2007 2008 2009 2010 2011

GLP(2006 = 100)

Borrowers(2006 = 100)

MX (Borrowers) CC (Borrowers)SA (Borrowers) MX (GLP)CC (GLP) SA (GLP)

0

100

200

300

400

0

100

200

300

400

2006 2007 2008 2009 2010 2011

Deposits(2006 = 100)

Depositors(2006 = 100)

MX (Depositors) CC (Depositors)SA (Depositors) MX (Deposits)CC (Deposits) SA (Deposits)

BORROWERS AND DEPOSITORS IN LAC SUB REGIONS

YoY. % YoY. %

'11/'10 '11/'06 1/

MX 4,588 18.0% 28.7%

CC 504 7.1% 4.3%

SA 5,420 17.1% 11.6%

MX 424 14.2% 20.1%

CC 1,095 6.0% 23.4%

SA 12,577 9.2% 24.7%

2011 Balances

Main accounts

Depositors(# Thousands)

Borrow ers(# Thousands)

Sub Region

CREDIT AND DEPOSITS IN LAC SUB REGIONS

YoY. % YoY. %

'11/'10 '11/'06 1/

MX 1,584 12.3% 24.4%

CC 941 10.7% 14.3%

SA 13,272 26.1% 23.4%

MX 80 1.0% 28.8%

CC 633 13.5% 20.9%

SA 11,916 20.8% 24.8%

Deposits(US$ Millions)

Main accounts Sub Region2011

Balances

Gross Loans Portfolio(US$ Millions)



September 23, 2011



Credit and Deposits in Three CountriesBorrowers and GLP trends in 3 countries from LAC Depositors and Deposits in 3 countries from LAC

0

100

200

300

400

2006 2007 2008 2009 2010 2011

2006 = 100

BOL (Borrowers) ECU (Borrowers)PER (Borrowers) BOL (GLP)ECU (GLP) PER (GLP)

0

100

200

300

400

500

2006 2007 2008 2009 2010 2011

2006 = 100

BOL (Depositors) ECU (Depositors)PER (Depositors) BOL (Deposits)ECU (Deposits) PER (Deposits)

BORROWERS AND DEPOSITORS IN 3 LAC COUNTRIES

YoY. % YoY. %

'11/'10 '11/'06 1/

BOL 556 13.4% 9.9%

ECU 377 11.9% 5.7%

PER 2,075 13.8% 10.6%

BOL 2,233 9.8% 26.6%

ECU 696 10.0% 17.1%

PER 2,705 9.1% 16.4%

Borrow ers(# Thousands)

Depositors(# Thousands)


Balances

CREDIT AND DEPOSITS IN 3 LAC COUNTRIES

YoY. % YoY. %

'11/'10 '11/'06 1/

BOL 2,202 28.4% 27.5%

ECU 982 12.3% 14.4%

PER 5,298 27.7% 30.7%

BOL 1,955 17.4% 32.8%

ECU 721 20.8% 14.8%

PER 4,258 24.6% 35.1%

Gross Loans Portfolio(US$ Millions)

Deposits(US$ Millions)


Balances



September 23, 2011



Balance by Client and by Sub-region

Average client balance trends in 48 MFI from LAC (in US$)

1,503

896

345 188

1,868

578

2,449

947

0

500

1,000

1,500

2,000

2,500

2006 2007 2008 2009 2010 2011 2006 2007 2008 2009 2010 2011

Average Loan balance per Borrower Average Deposit balance per Depositor

LAC MX CC SA



September 23, 2011



Credit Types by Sub-region

GLP estructure trends by Credit type in 48 MFI from LAC

17.2%9.7%

0.0% 0.0%

20.3%25.5%

18.7%9.4%

44.4%53.3%

59.3%48.1%

34.1%26.9%

44.2%56.7%

26.3% 27.6% 38.4%

38.1%

7.6% 9.7%

27.7%28.1%

8.6% 6.0% 1.2% 6.9%8.9% 6.2% 9.5% 5.9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2011 2006 2011 2006 2011 2006 2011

LAC MX CC SA *

Housing Consumption Microenterprise Comercial

*Change on microenterprise and comercial credit type definition in Peru starting 2010



September 23, 2011



Credit Types in Three Countries

GLP estructure trends by Credit type in 3 countries from LAC

9.2% 0.2%15.0% 14.5% 12.5%

4.5%

75.6%

78.9%57.6% 60.1%

55.5% 72.3%

8.6% 15.3%23.0% 22.1%

25.2%

20.4%

6.5% 5.6% 4.3% 3.3% 6.8% 2.8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2011 2006 2011 2006 2011

BOL ECU PER *

Housing Consumption Microenterprise Comercial

*Change on microenterprise and comercial credit type definition starting 2010



September 23, 2011



Financing by Sub-region

• Leverage in the region displayed a slight increase in 2011, partly due to the results from Mexico, where equity was reduced in the light of lower profits, but still remains below the levels recorded prior to 2009.

• Assets productivity presented improvements at a regional and sub-regional level beginning in 2010, and showed positive evolution in 2011.

Debt to Equity and Productivity assets ratios trends in 48 MFI from LAC

5.3

1.8

5.2

6.4

76.2% 76.7% 77.7% 76.1%

0%

20%

40%

60%

80%

100%

0

2

4

6

8

10

'06 '07 '08 '09 '10 '11 '06 '07 '08 '09 '10 '11 '06 '07 '08 '09 '10 '11 '06 '07 '08 '09 '10 '11

LAC MX CC SA

GLP to AssetsDebt to Equity

Debt to Equity GLP to Assets



September 23, 2011



Financing in Three Countries

• Despite the debt/capital ratio in South America showing a slight fall, in Bolivia, Ecuador and Peru there were no substantial changes in the overall trend.

• Greater differences emerged in the productivity of assets, with the trend in Peru showing an increase.

Debt to Equity and Productivity assets ratios trends in 3 countries from LAC

9.2

6.3 6.6

79.1%

78.6%

82.8%

0%

20%

40%

60%

80%

100%

0

3

6

9

12

15

'06 '07 '08 '09 '10 '11 '06 '07 '08 '09 '10 '11 '06 '07 '08 '09 '10 '11

BOL ECU PER

GLP to AssetsDebt to Equity

Debt to Equity GLP to Assets



September 23, 2011



Financial Structure by Sub-regions

Financial structure in MFI from LAC

14.9% 15.8%

38.8% 35.2%

18.3% 16.2% 12.2% 13.4%

6.3% 5.1%

3.7%5.3%

5.7% 5.6%6.6% 5.1%

21.8% 18.2%

53.9% 55.7%

35.2%

25.9%

17.3% 13.2%

57.1% 61.0%

3.7% 3.9%

40.9%52.3%

64.0% 68.3%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2011 2006 2011 2006 2011 2006 2011

LAC MX CC SA

Deposits Borrowings Other Liabilities Equity



September 23, 2011



Risk and Profitability by Sub-regions

• The region showed a fall in delinquency levels over the past two years, together with a slight increase in returns.

• South America followed the regional trend. In Mexico the results were distinct from the rest of the region (greater risk, lower profitability). In Central America the level of risk fell, though it remained above 8%, together with a fall in returns.

PAR > 30 days and Return on Assets ratios trends in 48 MFI from LAC

3.7%

6.0%

8.6%

2.7%

2.1%

4.7%

0.2%

2.3%

-2%

0%

2%

4%

6%

8%

10%

12%

'06 '07 '08 '09 '10 '11 '06 '07 '08 '09 '10 '11 '06 '07 '08 '09 '10 '11 '06 '07 '08 '09 '10 '11

LAC MX CC SA

PAR > 30 days ROA



September 23, 2011



Risk and Profitability in Three Countries

• Bolivia showed the lowest level of portfolio at risk (1.0%) and a yield doubles that of the previous measurement (2.0%).

• Peru showed the highest level of risk compared to its peers, though its yield was also higher.• Ecuador showed a favorable trend in both indicators over the last two years, which

converged at around 1.5%.

PAR > 30 days and Return on Assets ratios trends in 3 countries from LAC

0.9%

1.6%

5.6%

1.9% 1.7%

3.2%

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

'06 '07 '08 '09 '10 '11 '06 '07 '08 '09 '10 '11 '06 '07 '08 '09 '10 '11

BOL ECU PER

PAR > 30 days ROA



September 23, 2011



Final Comments

• In the region a greater advance was seen in the credit portfolio compared to the previous year, though growth remains mixed when analyzed by sub-regions. South America showed better results comparison with other sub-regions.

• In Mexico intense growth in competition has been observed, leading to market saturation, especially in the south of the country. Together with consumer credit, this has led to a slowdown in credit growth in the country.

• In parallel, the slight improvement in levels of risk and profitability corresponded to the credit dynamics themselves, though differences were present at a sub-regional level: erratic in Mexico, still recovering in Central America and steadier in South America.

• Of note is the deceleration experienced in deposits throughout the region. The effects of prioritizing recovery in the last few years appears to be reflected in this source of financing, which is consistent with the uptick in funds owed.



September 23, 2011



Data Preparation

• Cut-off date: December 31 between 2006 and 2011, reclassified (without adjustments) according to MIX standards. • Data from 48 MFI participants (see list of MFIs in the appendix), was taken from public sources, provided by microfinance networks or

the MFIs themselves.• Sources: MIX Market, banking and/or financial authorities of countries in the region whose MFIs are included, the MFIs themselves.• All the indicators correspond to consolidated figures for the 48 MFIs, except for the Return on Assets and the Portfolio at Risk over 30

days, which are median figures.• The data used can be found at the following webpage: http://

www.themix.org/publications/mix-microfinance-world/2012/06/latin-american-and-caribbean-microfinance-market-trends-

MFI REPRESENTATION ON EACH COUNTRY BASED ON 2010 FIGURES OF MIX SAMPLE AND CREDIT TYPE

(US$ Millions and Percentages)

Number of MFI Gross Loan Portfolio (US$ Millions) Credit Types 1/

Report MIX Coverage Report MIX CoverageMicro

Enterprise 2/

Consumption

Bolivia 6 24 25% 1,773 2,280 78% 80% 15%

Colombia 3 29 10% 2,934 4,396 67% 42% 45%

Ecuador 6 42 14% 874 1,652 53% 70% 18%

El Salvador 3 14 21% 321 389 82% 78% 13%

Honduras 6 19 32% 165 222 74% 78% 7%

México 7 51 14% 1,388 1,858 75% 54% 40%

Nicaragua 3 25 12% 115 300 38% 87% 8%

Paraguay 4 6 67% 719 738 97% 56% 43%

Perú 7 59 12% 3,876 7,001 55% 83% 22%

Dominican Repúblic 2 11 18% 249 585 43% 70% 23%

Venezuela 1 1 100% 74 75 100% 99% 1%

Other 8 countries 3/ - 82 0% - 3,881 0% n/d n/d

Total Region 48 363 13% 12,487 23,374 53% 67% 29%

1/ As percentage of the Gross loan portfolio on each 48 MFI included in this report. n/d: Not available

2/ Microenterprise and small business loans are included.

3/ It includes Argentina, Brazil, Chile, Costa Rica, Guatemala, Haiti, Panama and Uruguay.

Countries

http://www.themix.org/publications/mix-microfinance-world/2012/06/latin-american-and-caribbean-microfinance-market-trends-

http://www.themix.org/publications/mix-microfinance-world/2012/06/latin-american-and-caribbean-microfinance-market-trends-



September 23, 2011



Glossary of Terms

Other definitions:

• Borrowing: Balance of the principal of all the funds received by a financial institution on the basis of a loan agreement.

• Gross loan portfolio: The sum of the principal balances of the credits received by clients. Includes credits due, in arrears and renegotiated, but not loan write-offs. Does not include accrued interest.

• Net loan portfolio: The same as the Gross loan portfolio, minus the provisions for the potential risk of losses in credits granted due to defaults on payments.

Definitions of types of credit used by MIX:

• Commercial: Credits aimed at financing the production and marketing of goods and services in different phases. Normally aimed at corporations and large and medium enterprises.

• Microenterprise: Credits aimed at financing the production and marketing of goods and services in on a small scale. May be granted to groups of borrowers backed by solid guarantees.

• Consumer: Credits granted to individuals to finance the purchase of consumer goods or the payment of services not related to business use (not for commercial or enterprise purposes).

• Housing (mortgage): Credits granted to individuals for the acquisition, construction, remodeling or improvement of housing, whether or not they are backed by a mortgage.



September 23, 2011



Participating InstitutionsINSTITUTIONS PARTICIPANTS IN LAC TRENDS 2006-2011 REPORT

ACHRONYM NAME COUNTRY

ACCOVI Asociación Cooperativa de Ahorro y Crédito Vicentina de R.L. El Salvador

ADOPEM Asociación Dominicana para el Desarrollo de la Mujer Dominican Republic

Apoyo Integral Apoyo Integral S.A. de C.V. El Salvador

ASODENIC Asociación de Oportunidad y Desarrollo Económico de Nicaragua Nicaragua

Banco ADEMI Banco de Ahorro y Crédito ADEMI Dominican Republic

Banco Familiar Banco Familiar S.A Paraguay

Banco FIE Banco para el Fomento a Iniciativas Economicas Bolivia

Banco Solidario Banco Solidario S.A., Ecuador Ecuador

BancoSol Banco Solidario S.A., Bolivia Bolivia

BanCovelo Banco Popular Covelo Honduras

BanGente Banco de La Gente Emprendedora Venezuela

BCSC Banco Caja Social Colombia Colombia

CAME Consejo de Asistencia al Microemprendedor, S.A. de C.V., SOFIPO Mexico

CMAC Arequipa Caja Municipal de Ahorro y Crédito de Arequipa Peru

CMAC Cusco Caja Municipal de Ahorro y Crédito de Cusco Peru

CMAC Piura Caja Municipal de Ahorro y Crédito de Piura Peru

CMAC Trujillo Caja Municipal de Ahorro y Crédito de Trujillo Peru

COAC Jardín Azuayo Cooperativa de Ahorro y Crédito Jardín Azuayo Ltda. Ecuador

CompartamosBanco Banco Compartamos S.A. Institución de Banca Múltiple Mexico

Coop Jesús Nazareno Cooperativa Jesús Nazareno Ltda. Bolivia

COOPROGRESO Cooperativa de Ahorro y Crédito Cooprogreso Ltda. Ecuador

CRECER Crédito con Educación Rural Bolivia

Crediscotia Crediscotia Financiera S.A. Peru

D-Miro Fundación para el Desarrollo Microempresarial D-Miro Ecuador



September 23, 2011



Participating Institutions (cont.)INSTITUTIONS PARTICIPANTS IN LAC TRENDS 2006-2011 REPORT

ACHRONYM NAME COUNTRY

FIELCO Financiera El Comercio Paraguay

Financiera Edyficar Financiera Edyficar S.A. Peru

Financiera Fama Financiera Fama S.A. Nicaragua

Financiera Independencia Financiera Independencia, S.A.B. de C.V. SOFOM E.N.R. Mexico

FINCA - ECU Banco FINCA S.A., Ecuador Ecuador

FINCA - HND Financiera FINCA Honduras S.A. Honduras

FINCA - MEX Fundación Integral Comunitaria, A.C. - FINCA México Mexico

FinComún Servicios Financieros Comunitarios, S.A. de C.V. SFP Mexico

FINSOL Financiera Solidaria Honduras Honduras

FMM Popayán Fundación Mundo Mujer Popayán Colombia

Forjadores de Negocios Forjadores de Negocios, S. A. de C.V. SOFOM ENR Mexico

FUNED Fundación para el Desarrollo de Honduras Honduras

Interf isa Financiera Grupo Internacional de Finanzas S.A.E.C.A. Paraguay

MiBanco MiBanco, Banco de la Microempresa S.A. Peru

ODEF Financiera Organización de Desarollo Empresarial Femenino Financiera S.A. Honduras

ProCredit - BOL Banco Los Andes ProCredit Bolivia

ProCredit - ECU Banco ProCredit Ecuador (ex Sociedad Financiera Ecuatorial, SFE) Ecuador

ProCredit - HND Banco ProCredit Honduras Honduras

ProCredit - NIC Banco ProCredit Nicaragua Nicaragua

ProCredit - SLV Banco ProCredit El Salvador El Salvador

PRODEM FFP Fondo Financiero Privado PRODEM Bolivia

Te Creemos Te Creemos, S.A. de C.V. SFP Mexico

Visión Banco Visión Banco S.A.E.C.A. Paraguay

WWB Cali Fundación WWB Colombia Colombia



September 23, 2011



About FOMIN / IBD

Through donations, loans and capital investments, FOMIN, a member of the IDB Group, supports the projects of private, and innovating that broaden access to basic services, finances, markets, skills and abilities for most of Latin America and the Caribbean. Founded in 1993, FOMIN is the largest source of donations in Latin America and the Caribbean, and focuses its activities principally on the development of micro, small and medium enterprises.



September 23, 2011



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