MICROCAPITAL BRIEF: Dutch Development Bank Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden (FMO) Planning to Loan $10m to Bank Andara of Indonesia for On-lending to Microfinance Institutions (MFIs)

Dutch development bank Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden (FMO) recently signed a letter of intent with Bank Andara (Andara), an Indonesian provider of retail and wholesale microfinance services, to provide a local-currency senior loan equivalent to USD 10 million for on-lending to local microfinance institutions (MFIs). FMO will also provide technical assistance to Andara as part of the agreement. The letter of intent was executed by FMO’s CEO Nanno Kleiterp and Andara’s President Director David Yong and is pending approval from the Central Bank of Indonesia.

The agreement is intended to reduce the cost of financing for Andara’s MFI customer base and enable Andara to pass its technical expertise to its MFI clients to help them build more robust and efficient technological and business systems. No additional information regarding the financial terms of the loan were provided.

Andara was founded in 2008 with a mission to improve the livelihoods of low-income Indonesians by expanding access to a wide range of inclusive financial services primarily through its partner MFIs. As of September 31, 2013, Andara reported total assets of IDR 1.4 trillion (USD 122.4 million), a gross loan portfolio of IDR 1.2 trillion (USD 106.1 million), return on assets of -0.36 percent and return on equity of -2.16 percent [2]. FMO is a Dutch development bank majority-owned by the Dutch government with other investors including commercial banks, trade unions, employers’ associations and individuals. In 2012, FMO reported total assets of EUR 5.6 billion (USD 7.3 billion).

By A’kos Szebeni, Research Associate

About Bank Andara

Founded in 2008, Bank Andara provides loans to microfinance institutions (MFIs) and loans and savings services to individuals in Indonesia. Its shareholders include MercyCorps, the International Finance Corporation (IFC), the Hivos-Triodos Fund, Cordaid, the Kreditanstalt für Wiederaufbau Bankengruppe and Mr. I Wayan Gatha. Its mission is “to catalyze large-scale outreach to millions of Indonesians lacking access to the financial sector by providing innovative financial products and services to and through microfinance institutions; and to maximize the value of its shareholders’ investments, while creating a long-term, profitable financial institution.” As of September 30, 2013, Bank Andara reported total assets of IDR 1.4 trillion (USD 122.4 million), a gross loan portfolio of IDR 1.2 trillion (USD 106.1 million), return on assets (ROA) of -0.36 percent and return on equity (ROE) of -2.16 percent. As of Dec 31, 2012, Andara reported 745,000 depositors. The institution does not disclose the number of active borrowers it serves.

About Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden N.V. (FMO)

Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO) is a Dutch development bank that was founded in 1970. It supports financial institutions and governments through loans, guarantees and other investment promotion activities including local-currency investments. FMO is owned by the Dutch government, which holds a 51 percent stake, alongside commercial banks, trade unions, employers’ associations and individual investors. In 2012, FMO reported total assets of EUR 5.6 billion (USD 7.3 billion).

Sources and Additional Resources:

[1] Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden N.V. (FMO) Press Release: “FMO and Bank Andara Sign Letter of Intent”, http://www.fmo.nl/k/n114/news/view/13836/179/fmo-and-bank-andara-sign-letter-of-intent.html

[2] Bank Andara: “Quarterly Report Sept 2013”, http://www.bankandara.co.id/en/investor/financial/1/Quarterly-Reports

MicroCapital story, January 10, 2014, “Dutch Development Bank Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden (FMO) Loans $6.8m to Nigeria’s Fortis Microfinance Bank For On-lending to Women” https://www.microcapital.org/microcapital-brief-dutch-development-bank-nederlandse-financierings-maatschappij-voor-ontwikkelingslanden-fmo-loans-6-8m-to-nigerias-fortis-microfinance-bank-for-on-lending-to-women/#more-26468

MicroCapital story, July 4, 2013, “Standard Chartered Bank (SCB) Loans $5.7m to Bank Andara to Support Microfinance Institutions (MFIs) in Indonesia” https://www.microcapital.org/microcapital-brief-standard-chartered-bank-scb-loans-5-7m-to-bank-andara-to-support-microfinance-institutions-mfis-in-indonesia/

MicroCapital story, October 17, 2012, “Standard Chartered Indonesia Loans $3m to Bank Andara to Finance Lending, Technology Services for Microfinance Institutions,” https://www.microcapital.org/microcapital-brief-standard-chartered-indonesia-loans-3m-to-bank-andara-to-finance-lending-technology-services-for-microfinance-institutions/

MicroCapital story, October 5, 2012, “Citibank Indonesia, Overseas Private Investment Corporation Share Risk on $1.8m Loan to Bank Andara to Support Microfinance Institutions,” https://www.microcapital.org/microcapital-brief-citibank-indonesia-overseas-private-investment-corporation-share-risk-on-18m-loan-to-bank-andara-to-support-microfinance-institutions/

MicroCapital Universe Profile: Bank Andara, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bank+Andara

MicroCapital Universe Profile: Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden (FMO), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Nederlandse+Financierings-Maatschappijvoor+Ontwikkelingslanden+N.V.+%28Netherlands+Development+Finance+Company%2C+FMO%29

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