Can't Get Enough Compartamos?

Check out this 2006 New Yorker piece on MFI, which has a good chunk on Compartamos (if you can't get the link to work, you can also get The New Yorker on Lexis-Nexis, which we can access thru the Watson Library homepage).

And here's a brief wrapup of what's happened since the IPO:

Compartamos’ profits have continued to skyrocket since its April 2007 IPO. In July, the bank said its second-quarter profit rose 46% to $37.3 million from 2009. Return on equity rose as well, increasing to 42.3% in the quarter from 41.3%. Analysts credited the success, in part, to continuing customer growth, as the number of active Compartamos clients rose 23.4% to 1.63 million at the end of June. Compartamos’ comparatively recession-proof customers – low-income borrowers and small business owners engaged in pursuits such as craft manufacturing and food vending – also helped shield the bank from the Mexican economy’s 6.5% contraction in 2009. Default rates rose in the second quarter by more than 20% but, at just 2.2% of the bank’s loan portfolio, remain low. Now, Compartamos and other Mexican banks stand to benefit from a recovery slated to push Mexico’s economic growth up to around 5% this year.

Compartamos remains a behemoth in the Mexican microfinance sector, with a market share of just over 50%. Among its closest domestic competitors: Finsol, Fincomun and Financiera Independencia. Compartamos’ flagship product – Credit for Women, which offers 16-week loans exclusively to groups of 12-50 women – continues to dominate the bank’s business, accounting for some 75% of its loan portfolio and 89% of its clients. Critics continue to charge that Compartamos gouges its customers with interest rates averaging around 85%, compared to a global microfinance average of 26%. Bank officials say the fact that Mexican loans are much smaller than loans in other countries means Compatamos' rates have to be higher. Compartamos’ relatively high financing costs also contribute; the bank is working on launching a deposit program to diversify its funding base, which is currently comprised of its own capital, long-term debt and Mexican development-bank loans.

Compartamos is now one of five microfinance companies to have publicly listed shares. The other four are Bank Rykat of Indonesia, BRAC Bank of Bangladesh, Equity Bank of Kenya, and SKS Microfinance of India, which saw its shares rise 10.5% on its first day of trading last month. The microfinance industry itself is becoming a big-money player. In 2008, the sector attracted $14.8 billion in foreign capital, up 24% from the previous year. For the first time, the majority of the money came from private investors – including pension schemes and private-equity funds – rather than governments, according to the World Bank.

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