MICROCAPITAL STORY: Banco Compartamos' Client Base Reaches One Million

Mexican microfinance giant Banco Compartamos recently announced that it has officially reached the milestone of providing microlending services to one million active clients.

“To reach one million clients fills us with pride, but it also obligates us to double our efforts,” stated CFO Fernando Alvarez Toca.

“There continues to be a large market for us to reach in Mexico and this is one of the reasons that will allow us to maintain growth in the coming years,” he added.

Compartamos continues grow in size and scope following its 2007 IPO, amid a fierce ideological debate about the existence and scale of commercial microfinance institutions. On one side, individuals like Sam Daley-Harris, director of the non-profit Microcredit Summit Campaign, accuse Compartamos of “mission drift” – claiming that the firm is losing sight of the socioeconomic goals of microfinance when it seeks to maximize investor returns. On the other hand, many argue that Compartamos’ large operational scale and commercial status have enabled it to achieve strong credit ratings, which ultimately creates more financing opportunities that allow it to serve more impoverished clientele. In addition, the sustainability of its operational scale instills confidence in the microfinance asset class from the perspective of institutional investors, a sentiment that may ultimately attract greater capital inflows into the sector. For more information on the debate surrounding Compartamos, please refer to this MicroCapital story.

Compartamos was originally founded in 1990 as a faith-based NGO. After a transitioning to commercial status in 1997, the firm steadily scaled up operations, making an Initial Public Offering on the New York and Mexican Stock Exchanges in April 2007.

As of 2007, Compartamos held total assets of USD 474.4 million, had a debt-equity ratio is 123.33 percent, and received an “AA-” in its most recent credit rating by Standard & Poor’s in October 2007. The MFI enjoyed a 33.7 percent increase in annual net income between 2006 and 2007, as reported by MicroCapital. Since its IPO in 2007, Compartamos’ market capitalization has expanded to USD 1.8 billion. A complete set of financial data on Compartamos can be found at MIX Market, a microfinance information clearinghouse.

By Ryan Benson, Research Assistant

Additional Resources:

PR Newswire: Compartamos Banco Reaches One Million Client Target

MIX Market: Banco Compartamos Profile

Banco Compartamos: Home

Microcredit Summit Campaign: Home

MicroCapital Story: New York Times Reports on Controversial Microfinance Giant Banco Compartamos of Mexico

MicroCapital Story: Banco Compartamos, Mexico’s Largest Microfinance Bank, Reports 33.7 Percent Increase in Net Income in 2007

MicroCapital Story: “Further Extracts from the Microfinance Practice Group Debate on Compartamos IPO – Malcolm Harper”

MicroCapital Story: “Further Extracts From the Microfinance Practice Group Debate on Compartamos IPO – Vineet Rai”