According to data from the Superintendent of Banking, Insurance and AFP (sbs), direct credit in financial system Peru’s growth rate stood at barely 0.2% year-on-year through July, sustaining mortgage loan and non-retailers. On the contrary, mypay credit fell 5% and consumer credit declined 2%. If you look at the last month, the data sbs reveal that mypay credit Fell 1.1% compared to the same month last year; While consumer credit grew by only 0.3% annually.
Jorge Delgado, President of the Microfinance Association (Asomif), influences this scenario and emphasizes the rationality that exists today microentrepreneur,
“If you look at the data, the economy improved for a few months and then declined. This means there is no economic stability. Since there is none, it is difficult for me as an entrepreneur to predict whether Peruvians will have money in their pockets. In view of this, no one will take loans as there is no clarity as to whether the stock that a micro entrepreneur buys will be sold or not. “We have tried to grow judiciously.”
Furthermore, Delgado highlights other impacts in the environment: high interest rates, harmful interest rate cap laws and restrictions on credit due to citizen insecurity. “Today we see many wineries that have closed down due to insecurity. Or worse, some financial advisors cannot contact their clients in certain areas due to insecurity. “All these factors do not allow development.”He commented.
reconfiguration
A phase of discretion characterizes the growth seen in Peru’s microfinance sector today, especially among municipal savings and credit banks. This, from the point of view of consolidation. These institutions account for 56% of the total loans given by the microfinance system today.
Arequipa, Huancayo, Piura and Cuzco savings banks are those that, as of August 2024, have the largest participation in the balance of placements and deposits among institutions registered with the Peruvian Federation of Municipal Savings Banks (FAPMAC).
X-ray of microfinance segment. (Source: FEPCMAC, SBS / Infographic: Raul Rodriguez)
Wilber Dongo, Central Business Manager of Caja Arequipa, explains that in the case of his institution, approximately S/750 million are placed per month in approximately 70 thousand new loans. As of July, the growth recorded is 9%, which is lower than previous years.
What is the reason for this? The executive explains that customers who are eligible to avail credit have done so for short periods. As a result, amortization is faster and, in the face of balance growth, is not visible. “76% of our customers are micro and small businesses. The turnover of the new loan was 11.5 months, now it has become 9.5 months. This explains the fast payouts. “They are looking for lower installments to avoid shorter loan terms.”Said.
The ticket, although reduced, is not relevant to the average managed by Caja Arequipa: it has remained between S/10,500 and S/12,000 for the last 12 months. “Interest rates have remained high in the first half of this year and this has impacted profitability across the financial system. The reduction is expected in the second half, and with that we believe there will be more mobility in credit offtake.He insists.
so far this year
During the first half of the year, there was also intervention by microfinance institutions and subsequent transfer of their total assets into larger assets. In July, Caja Sulana transferred all its assets to Caja Piura – the entity that won the tender – and, this month, the financial company Credinka transferred its assets to Caja Arequipa.
For Rafael Alcazar, partner of Rebaza, Alcazar & de las Casas Studio, what happened is typical of the context that the microbusiness segment has experienced. “The institutions most focused on this area and those that were least prepared have not been able to recover from this. Each has its own characteristics – as the resolutions also mention administrative and risk management shortcomings – but are influenced by problems that have become transversal in the system. The important thing to highlight is that no savers were affected and this speaks well of the regulation we have in place. The regulator, even when it was forced to intervene, did so without activating the deposit insurance fund,” he says.
Caja Arequipa, in detail
Caja Arequipa recently acquired Credinka and, in 2015, acquired the equity block of Caja Señor de Lurén, allowing it to strengthen its position. Dongo points out that what has been seen in institutions like Credinka and Sulana does not match what has happened in recent months.
Caja Arequipa plans to open Credinka offices in Peru in the coming days. (Photo: Diffusion)
“There has been a financial weakness which, combined with the pandemic and its after-effects, has not allowed them to improve. Most financial institutions plan to double financial spending in 2023. In the case of Credinka, its financial expenditure is 45% of its financial income. “This accelerated the decline in their wealth.”He commented.
Arequipa’s decision to participate in the tender that allowed them to acquire Credinka’s assets responds to the fact that more than 91% of the credit balances were going to be new.
“Credinka was mainly in Cuzco, where it had 30% (of the market), and also in Puno, Apurimac and Arequipa accounted for about 60%. Cajamarca represents about 10%So, the operating costs were not going to have any impact on us. Besides, 95% of Credinka’s portfolio was micro and small businesses, so it was a great fit for us,He explains. The executive says that in the coming days, Caja Arequipa will try to open the agencies where Credinka previously worked.
long term
Alcazar believes it is the strength of regulation that will allow the expected consolidation of the system to continue. “I believe that there are organizations today that need to look for solutions for accounting positions. What the regulator has said is that it would welcome this consolidation process. I think the regulator is right to encourage this, so that entities do not enter the dissolution or liquidation process. “I think now is the time to be active on the boards of those entities that are looking at these sales or mergers.”he states. However, he admits the process will be complicated because savings banks – by their nature – are dependent on the municipal government.
Kaza Sulana is one of the microfinance institutions in which SBS intervened. Today its customers are part of Caja Piura (Photo: USI)
Meanwhile, for Delgado, beyond this consolidation process, what should be the center of attention is the recovery of the economy.
“Before focusing on the state of the two institutions that are already in disarray, we should focus on the fact that the economy must grow so that everything can regain dynamism. If the economy does not grow and demand does not increase, the flow will not be supported. Today even the payment of bills is being postponed. “Let us focus on Tia Maria and other similar projects to provide solutions to insecurity.”He claims.
Delgado also highlighted that the Christmas campaign is (with eagerness) expected in the second half of the year, one of the strongest campaigns for the sector. “We hope that the second half of the year will be a little better than the last half, but we are sure that it will not be what is needed”Concluded.