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Doing well by doing good

26 October 2009

What kind of bank makes money in this economic climate?  Banks like Banco Compartamos, S.A. — which isn’t your ordinary bank.   Oh sure, it offers savings, credit and insurance services, but not too many banks have gone from a non-profit charity to a commercial bank with a listing on the Bolsa de Valores (COMPART) within sixteen years.

Banco Compartamos is a kind of weird commercial bank — making loans not to companies, per se, but to people like Chiapas juice mogul Blanca Rosa Gamboa to diversify into two two taco stands;  or Veracruz potter and weaver Leocadia Cruz,  whose collateral was having been apprenticed to her trade at the age of eight, and now several stores as well as giving craft training in remote rural communities.

People are likely to pay loans back… especially when, like Compartamos’ clients, financial training and counseling is part of the package.  And not just any people… people who are providing goods and services, like juice and tacos and pots or swimming lessons (a Mexico City client got a loan to rent a pool to run swimming classes):  tangible things.

Given that Compartamos works with the client to assure they are able to pay the loan, what started as a not-for-profit microlending service became a normal business in 2000 and the next year became the first microlender to issue debt in the capital markets.  In 2006 it was transformed into a “normal” commercial bank… with one important difference.  It’s not only considered one of the best employers in Mexico, it’s doing what banks aren’t supposed to do… turn a healthy profit in an economic slump.  According to its latest financial statement (30 September 2009), Banco Compartamos

has experienced four successful and consecutive quarters of growth despite a challenging market environment, particularly in the hard-hit financial sector. We are very pleased with the results of our clear strategy, which has allowed Compartamos to reach very aggressive numbers, — interest income growth of 36.7%, total loan portfolio growth of 40.2% and a client base increase of 36.0% — compared to the third quarter of 2008. Additionally, despite the strong growth we have experienced, during the third quarter of 2009, we were able to control costs and improve the efficiency ratio to 55.0%, even though we grew the number employees as well as the number of service offices; this demonstrates Compartamos’ ability to generate strong results while controlling spending.

3 Comments leave one →
  1. 26 October 2009 10:43 am

    Heh…see what happens when you don’t juggle with money, but take an active interest in helping your borrower succeed? You get success everywhere!


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