Banco Compartamos, a Mexican microfinance bank, announced its non-audited financial results for the second quarter ending June 30, 2009. The figures were announced in pesos and have been converted here to US dollars. The figures adhere to the requirements of the Comision Nacional Bancaria y de Valores (CNBV), the Mexican banking and securities regulator [4]. Compartamos underwent an Initial Public Offering (IPO) in April 2007, and has since been publicly traded on the Mexican Stock Exchange. The highlights of the report were the net income increase of 31 percent compared to the same quarter of last year. The result gains more significance when the global financial recession and performance of the overall banking system is taken into account. While filing the report with the Mexican Stock Exchange, the bank has stated that Net profit was Ps 327 million (USD 24.7 million), up from the Ps.249 million (USD 18.8 million) recorded in the second quarter of 2008. Earnings per Share (EPS) was Ps.0.76, up from the Ps.0.58 per share for the second quarter of 2008 [1].
As per the report, the total loan portfolio reached Ps. 6,729 million (USD 508 million) in the second quarter of 2009, which is 40.4 percent higher than the Ps. 4,792 million (USD 361.8 million) for 2Q 08. This growth was achieved due to a 40.1 percent increase in new clients during the last twelve-months, with its total active clients estimated at 1,317,472 as of June 30, 2009 [1]. Provisions for loan losses jumped to Ps 61 million (USD 4.6 million) from Ps 9 million (USD 679 k) for 2008, while total allowances for loan losses rose 46 percent to Ps 215 million. The ratio of non-performing loans to total loans rose to 2.26 percent at the end of the quarter, up from the 1.38 recorded for the previous year. According to a Wall Street Journal analysis, this ratio is reportedly still better than that of the overall banking system [2]. Net interest income also surged 36 percent to Ps 1.08 billion (USD 815 million), thanks to a big increase in loans, while the operating income grew 29 percent to Ps 440 million (USD 33.2 million). However, the increase in interest income was offset by a 68.2 percent growth in interest expense or Ps. 30 million (USD 2.2652 million). The interest expense recorded for 2Q 09 is Ps. 74 million (USD 5.58 million) and Ps. 44 million (USD 3.3 million) for 2Q 08. The increase in interest expense was due to a higher leverage required to achieve two main goals; firstly, to finance loan portfolio growth, and secondly, to increase the cash and other investments position in order to secure the funds to maintain growth during the current volatile financial climate.
According to a feature on the Wall Street Journal, analysts see the bank’s target market as largely ‘recession proof’ given the basic nature of the business activities of its clients. The article also states that Compartamos relies on bond issuances and credit lines with other banks to fund its lending operations because its business model of operating through small offices and loan agents makes it very expensive or impractical to collect deposits from the public [2]. At the end of the quarter, Compartamos was extremely liquid and well capitalized with Ps.1.08 billion (USD 249 million) in cash on its balance sheet and Ps.3.19 billion (USD 240 k) in shareholders’ equity. As of Jul 21 2009, the company’s outstanding shares were trading at Ps. 45.50 (USD 3.43).
Commenting on bank’s performance, its executive Vice president, Mr.Carlos Danel mentioned that the second quarter of 2009 was more challenging due to the macro-economic environment and the influenza A (H1N1) virus which required them to ‘react quickly and continue growing following their strategy’ [1]. Mr. Danel also mentioned that the aim of Compartamos was to reach out to new clients, and to extend credit to micro entrepreneurs ‘during one of the most challenging economic times in recent history’.
Banco Compartamos was established in 1990 and is headquartered in Mexico City. Compartamos provides small loans to low-income Mexican individuals and business owners, such as craft manufacturers, food vendors and other small businesses. With nationwide coverage, Compartamos works with local and international lenders to secure financing to these markets segments, which are currently underserved. Banco Compartamos shares began trading on the Mexican Stock Exchange on April 20, 2007 under the ticker symbol “COMPART” [1]. Banco Compartamos’ 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 [3].
To download the second quarter 2009 report, click here. For additional information contact Patricio Diez de Bonilla, Investor Relations +52 (55) 5276 7388 or investor-relations@compartamos.com.
For information on Banco’s first quarter performance, refer to this MicroCapital story here [3].
By Bharathi Ram, Research Assistant
Bibliography:
[1] Banco Compartamos: “Press Release 2009”, July 21, 2009: http://www.compartamos.com/wps/wcm/connect/?MOD=PDMProxy&TYPE=personalization&ID=NONE&KEY=NONE&LIBRARY=/contentRoot/icm:libraries&FOLDER=/Sala+de+Prensa/Boletines+en/2009/&DOC_NAME=/contentRoot/icm:libraries/Sala+de+Prensa/Boletine
[2] Wall Street Journal: “Mexican Microfinance Bank Compartamos 2Q Net Up 31% to MXN327M”, July 21, 2009, http://online.wsj.com/article/BT-CO-20090721-709608.html#articleTabs%3Darticle
[3] Microcapital Story, April 22, 2009: “Banco Compartamos Reports First Quarter Results”, https://www.microcapital.org/microcapital-story-mexican-microfinance-institution-banco-compartamos-reports-first-quarter-results/
[4] Microcapital Story, March 4, 2009: “Compartamos Announces 2008 Fourth Quarter Earnings over Webcast”, https://www.microcapital.org/microcapital-story-compartamos-announces-2008-fourth-quarter-earnings-over-webcast/
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