By Julian Rodriguez Marin.
Mexico's Compartamos bank has followed the path blazed by Bangladeshi economist Muhammad Yunus, the father of microloans for the poor, during its two decades of existence, transforming itself from a non-governmental organization into a financial institution that is expanding across Latin America.
"The group started as a humanitarian organization that synthesized its mission in its very name, 'Compartamos' (Let's Share), and dedicated itself to providing food to the most needy people in the state of Oaxaca," bank spokesman Roberto Ricalde told Efe.
Compartamos was created by a group of Anahuac University students, the majority of them children of business owners, who had strong beliefs in Christian charity and were inspired by the example of Mother Teresa to share their belongings with the poor.
The group initially sought donations from well-off Mexicans to help the poor and later decided to focus on microlending after learning about Yunus's Grameen Bank and its work with the poor.
The difference between the approach taken by Yunus, who won the 2006 Nobel Peace Prize, and Compartamos revolves around the level of interest charged.
While Compartamos charges an interest rate of slightly more than 3.5 percent monthly, Grameen charges just over 1.5 percent.
Compartamos executives contend that the higher interest allows the bank to help a larger number of people and cover its operating expenses.
"For a loan of some 5,000 pesos ($380), which is repaid in 16 weekly payments, the customer pays interest of close to 800 additional pesos," Ricalde said.
Compartamos was originally an NGO that helped the needy.
In 1990, the Income Generation Program was created, planting the seed for Compartamos Banco, which proposed to offer loans to help microenterprises grow and spur development in Mexico.
Compartamos's experience in the community led it to make loans to low-income groups for the operation of small businesses, which are monitored weekly and whose organizers guarantee repayment of the loans.
"Our customers are the most humble people in the population, and we support them with personal loans so they can engage in economic activities," Ricalde said.
In 2000, Compartamos incorporated as a financial institution with a limited business, raising funds by issuing debt in 2002 on the Mexico City Stock Exchange and becoming the first microlender in the world to issue bonds whose repayment it guaranteed itself.
Compartamos became a multi-bank holding company in 2006 with the assistance of leading bankers, such as Alfredo Harp Helu, and it has been listed on the Mexico City exchange since 2008.
"A year ago, we set the goal of taking our experience to other countries in Latin America, where microlending projects exist, and we entered Peru and Guatemala," Ricalde said.
Compartamos acquired a majority stake in March 2011 in Peru's Financiera Crear, gaining additional microlending experience.
A few months later, Compartamos opened a branch in Guatemala, where it started from scratch in the microlending industry.
The bank currently has more than 2.5 million customers, of whom 95 percent are women, with the average loan totaling 6,071 pesos (about $463).
Customers receive personal service from a team of some 17,000 loan originators and 521 offices.
"One of the savings we achieve in the operation is that we do not handle the cash directly, instead keeping it in bank accounts at other institutions," Ricalde said.
Compartamos retains its spirit as an NGO even though its operations adhere rigidly to established bank accounting principles.
As of June 30, Compartamos's loan portfolio totaled 15.44 billion pesos (about $1.17 billion). The bank posted net profits of 911 million pesos (about $69 million).
The bank's delinquent loans were running at about 3 percent, while return on assets (ROA) was 9.9 percent and return on equity (ROE) was 23.9 percent.
Compartamos's goal is to serve some 12 million customers in sectors that are off the radar screens of traditional banks. EFE