Banco Compartamos SA, a Mexican microfinance bank reported first quarter Net Interest Income after provisions rose 27.3 percent over the previous year to 913 million pesos (USD 69.6 million), and Net Income increased 14.7 percent from a year earlier to 288 million pesos (USD 21.9 million). The increase was due primarily to an increase in interest income of 36.9 percent resulting from a 42.4 percent growth in the bank’s loan portfolio to 6.3 billion pesos (USD 480 million) due to a larger client base. Total active clients rose to 1,200,124 or an increase of 40.1 percent over first quarter 2008. Offsetting these improvements was a 115.2 percent increase in interest expense due to the increase in leverage to finance this growth and secure funds in the volatile financial environment.
Net Interest Margin fell 9.7 percentage points to 51.1 percent from 60.8 percent a year earlier, due to an increase in the cost of funds, an increase in the provisions for loan losses, and a decrease in the active rate of the portfolio as lower rates were given to customers with good credit history. Return on Average Equity (ROAE) fell by 3.3 percentage points to 38.4 percent, while Return on Average Assets (ROAA) also fell to 14.6 percent versus 20.4 percent a year earlier. The decline in ROAE and ROAA was primarily due to a higher asset base due to the increase in cash and investments needed to secure funds in the volatile financial environment. Cash and other investments increased 297.9 percent, from 292 million pesos (USD 22.2 million) reported in 1Q08 to 1,162 million pesos (USD 88.5 million) in 1Q09. Excess cash was invested in short-term instruments such as those of the Mexican Federal Government or local banks.
The average outstanding balance per client rose slightly, by 1.7 percent to 5,252 pesos (USD 400) from 5,166 pesos (USD 394). Past-due loans (NPLs) rose to 1.9 percent of Compartamos’s total portfolio in the first quarter versus 1.69 percent a year earlier as the mix of products in the portfolio changed. The bank’s principal product, loans to groups of self-employed women, made up 78.1 percent of the total portfolio in the first quarter, and had an NPL ratio of 0.63 percent. During 2008, Compartamos implemented a new policy of writing off all non-performing past due loans of over 270 days. As a result, loan write-offs for first quarter 2009 reached 34 million pesos (USD 2.6 million), compared to 8 million pesos (USD 610,000) for first quarter 2008, and 27 million pesos (USD 2.1 million) in fourth quarter 2008.
Compartamos funding sources consist of equity, short-term and long-term debt denominated in pesos, and credit lines with banks and other institutions. Compartamos currently has no long-term debt outstanding but has tapped the Mexican market in the past. Standard and Poors rates Compartamos’ short-term and long-term local debt (mxA-1) and (mxAA-) respectively. Fitch rates the company’s short-term and long-term local debt (F1+1(mex)) and (AA-(mex)) respectively. For a press release on Standard & Poors ratings report click here. For a press release on Fitch’s rating report, click here.
Compartamos Banco’s profile can be found on the MIX Market, the microfinance information clearinghouse, here. Compartamos has received a disclosure rating of five diamonds from the MIX market. A five diamond rating indicates that an MFI has disclosed general information, two consecutive years of outreach and impact data, two consecutive years of financial data, two consecutive years of audited financial statements, as well as adjusted data such as ratings, evaluations, due diligence and other studies. A five diamond rating is the highest rating.
To read a MicroCapital story on Compartamos’ fourth quarter 2008 report, click here.
To download the first quarter 2009 report, the corporate presentation, or a webcast, click here. For additional information contact Patricio Diez de Bonilla, Investor Relations or Maria Teresa Chavira, Investor Relations at +52 (55) 5276 7388 / +52 (55) 5276 6398 or investor-relations@compartamos.com.
By Laura Anderson, Research Associate
Additional Resources:
Compartamos Banco: Home, First Quarter 2009 Report, First Quarter 2009 Corporate Presentation
PRNewswire/First Call: Fitch Raises Compartamos’ Ratings
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