Latin Finance - July/August 2010 - 46

Peru microfinance

From Micro to Major
by Lucien Chauvin

T

here are many statistics highlighting Peru’s rapidly expanding economy, like low inflation, steady GDP growth, increasing reserves and export earnings. But the best indicator of profound change from the decade-long boom is to found in the microfinance sector. Microloans increased to more than $4.5 sector that will Peru Microfinance Loans ($m) billion last year from $569 million in 2000. result in lower Exponential growth Growth has skyrocketed from 2007 onward, interest rates, new with loans increasing by nearly $1 billion products and other 5,000 annually and things are not slowing down. In innovations,” says April, for example, overall microloans in local Llosa. currency increased by 19.8% compared to Peru is also an 4,000 the same month last year, while loans in the international magnet traditional banking sector rose 10.6%. for specialized “We are in a period of sustained growth institutions investing 3,000 in microfinance and there are new areas and in small loans, new client bases being targeted. Competition with organizations 2,000 will remain fierce, because there is room for from more than 40 expansion,” says Patricia Inga, who studies countries providing microfinance at the Institute of Peru, a Limafunds to domestic 1,000 based think tank. Peru has the fastest growing microlenders. The microloan component in LatAm, according to majority of lenders the institute. are cooperatives and 0 “Loans to microenterprises will continue non-governmental 1990 1993 1996 2000 2003 2006 2008 2009 gaining relevance in the financial system, organizations Source: Peru Institute given that there is a potential market of five that make loans million people and so far the system has only to members. The been able to meet the needs of 1.8 million micro entrepreneurs,” bulk of the loans come from 40 entities, including banks, savings says Rafael Llosa, head of Mibanco, the state-run bank. and loans, and specialized micro-lending institutions, which are Lionel Derteano, vice president at microlender Edyficar, supervised by the SBS bank superintendent. estimates that the sector could expand by 40% annually in the Edyficar is the largest player in the sector with a market share coming years. Edyficar, started by the international non-profit just below 21%. It is followed by state-run MiBanco, with a 17.9% CARE, was taken over last year by Peru’s leading bank, Banco de market share, and Crediscotia, operated by Scotiabank, with 15%, Credito (BCP). according to SBS. M&A Hotbed The next step in microfinancing, according to Derteano and Inga, is M&A. “Everything points to consolidation,” says Derteano, who does not rule out the possibility of the BCP taking over other micro-lenders this year. BBVA Microfinance Foundation, an appendage of Peru’s second largest private bank, BBVA Continental, is likely to make the next big move with its savings and loan, Nuestra Gente, working on a deal to acquire another microlender, Confianza, its

Microfinance volume is rising at a fast clip in Peru, fuelling M&A activity. An arbitration center has been established to tackle the rise in past due loans.

Competition Heats Up

There were more than 200 institutions providing 1.8 million loans in Peru at the end of 2009 and Inga says the country has the most diversified o erings of micro-lending in the world. Loans at the end of 2009 averaged slightly above $1,000, with > an average interest rate of around 40% and tenor of six months, according to the banking and insurance regulator (SBS). Participants say that an increase in providers should benefit the end user. “There is an important level of competition in the

46 LATINFINANCE

July/August 2010



Latin Finance - July/August 2010

Table of Contents for the Digital Edition of Latin Finance - July/August 2010

Latin Finance - July/August 2010
Contents
Equity/Debt Fund Performance
European Investors
Brazil Domestic Buyside
Mexican Domestic Buyside
Mexico Venture Capital
CEMEX CFO Interview
Panama Investment
Canadian Miners
Peru Investor Report
Peru is Making Strides to Develop Gas and Oil
Microfinance Volume Rises at a Steady Clip
Latin Finance - July/August 2010 - Latin Finance - July/August 2010
Latin Finance - July/August 2010 - Cover2
Latin Finance - July/August 2010 - Contents
Latin Finance - July/August 2010 - 2
Latin Finance - July/August 2010 - 3
Latin Finance - July/August 2010 - 4
Latin Finance - July/August 2010 - 5
Latin Finance - July/August 2010 - 6
Latin Finance - July/August 2010 - 7
Latin Finance - July/August 2010 - 8
Latin Finance - July/August 2010 - 9
Latin Finance - July/August 2010 - Equity/Debt Fund Performance
Latin Finance - July/August 2010 - 11
Latin Finance - July/August 2010 - 12
Latin Finance - July/August 2010 - 13
Latin Finance - July/August 2010 - 14
Latin Finance - July/August 2010 - 15
Latin Finance - July/August 2010 - 16
Latin Finance - July/August 2010 - European Investors
Latin Finance - July/August 2010 - 18
Latin Finance - July/August 2010 - Brazil Domestic Buyside
Latin Finance - July/August 2010 - 20
Latin Finance - July/August 2010 - 21
Latin Finance - July/August 2010 - 22
Latin Finance - July/August 2010 - 23
Latin Finance - July/August 2010 - 24
Latin Finance - July/August 2010 - 25
Latin Finance - July/August 2010 - Mexican Domestic Buyside
Latin Finance - July/August 2010 - 27
Latin Finance - July/August 2010 - 28
Latin Finance - July/August 2010 - Mexico Venture Capital
Latin Finance - July/August 2010 - 30
Latin Finance - July/August 2010 - CEMEX CFO Interview
Latin Finance - July/August 2010 - 32
Latin Finance - July/August 2010 - 33
Latin Finance - July/August 2010 - Panama Investment
Latin Finance - July/August 2010 - 35
Latin Finance - July/August 2010 - 36
Latin Finance - July/August 2010 - 37
Latin Finance - July/August 2010 - 38
Latin Finance - July/August 2010 - Canadian Miners
Latin Finance - July/August 2010 - 40
Latin Finance - July/August 2010 - 41
Latin Finance - July/August 2010 - Peru Investor Report
Latin Finance - July/August 2010 - 43
Latin Finance - July/August 2010 - 44
Latin Finance - July/August 2010 - Peru is Making Strides to Develop Gas and Oil
Latin Finance - July/August 2010 - Microfinance Volume Rises at a Steady Clip
Latin Finance - July/August 2010 - 47
Latin Finance - July/August 2010 - 48
Latin Finance - July/August 2010 - Cover3
Latin Finance - July/August 2010 - Cover4
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