MICROCAPITAL STORY: Oikocredit Loans USD 514,028 to Hermandad de Honduras

This story comes courtesy of the Consultative Group to Assist the Poor (CGAP) and the MIX, the microfinance information clearinghouse, from the CGAP-MIX Microfinance Capital Markets Newsletter. The newsletter has reported that Oikocredit, a financial institution of the Netherlands, has lent USD 514,028 to Hermandad de Honduras, a Honduran social services organization that deals in microfinance. The loan contributes to Hermandad’s micro loan portfolio of USD 5.0 million, a portfolio increase of 10.1 percent (see “Financial Statements”). The present portfolio provides loans to 9,812 customers, with micro loan sizes averaging USD 512.Oikocredit was founded in 1975 out of a social movement of the World Council of Churches. The organization provides financial services worldwide, with economic development as its focus. More information about Oikocredit is available in the Who’s Who section of the July 2006 MicroCapital Monitor. The MIX, the microfinance information clearinghouse, reports that Oikocredit’s total fund assets amounts to USD 455.8 million, with USD 198.2 million devoted to 306 microfinance-related investments. Interestingly, the MIX also reports that Oikocredit is expected to decrease its microfinance investment operations this year, to USD 131.6 million.

The USD 514,028 loan to Hermandad de Honduras is on the smaller scale of loans provided by Oikocredit. The Dutch financial institution allocates loans ranging from USD 50,000 to USD 5 million in size (see “Fund Instruments”).

According to the MIX, Hermandad de Honduras was established in 1977 as a Honduran nonprofit. The MIX reports that 91 to 100 percent of the nonprofit’s operations are comprised of microfinance. Unfortunately, the institution’s microfinance business has a net loss in terms of return on assets: -5.0 percent (see “Financial Data”). Hermandad de Honduras’ return on equity also stands in the negative, at -12.4 percent (see “Financial Data”). The end result is a negative profit margin of -18.3 percent (see “Financial Data”).

By Quentin Ruiz-Esparza, Research Associate

Additional Resources:

CGAP: “List of Recent Transactions.”

Hermandad de Honduras: “Our Beginnings.”

Hermandad de Honduras: “Financial services.”

Oikocredit: “About us.”

The MIX Market: “Profile for Oikocredit.”

The MIX Market: “Profile for HdH.”

MicroCapital: “MicroCapital Monitor.”