1 / 21

„Which Business Models for Growth in Europe?“

This conference explores the business models for growth in Europe, focusing on economic situations, legal frameworks, and portfolio characteristics. It highlights the mission, target groups, and uncovered demand, as well as geographical outreach and scale. The relationship with banks and insurance companies, products, lending methodology, monitoring, and portfolio quality indicators are also covered. The conference concludes with perspectives and challenges for growth and how to meet them.

neary
Download Presentation

„Which Business Models for Growth in Europe?“

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript


  1. „Which Business Models for Growth in Europe?“ Silvia Rico – Fundación Nantik Lum (Spain) Veronika Thiel – nef (UK) Giampietro Pizzo – Microfinanza (Italy) Moderator: Martin Jung – EVERS & JUNG EMN Conference Milan, 5th June 2009

  2. Content Structure • Economic Situation • Legal Framework • Mission, Target group and Uncovered Demand • Geographical Outreach and Scale • Relationship with Banks and Insurance Companies • Products • Portfolio Characteristics • Lending Methodology and Collaterals • Monitoring and Productivity • Portfolio Quality Indicators • Profitability and Sustainability • Income and Cost Structure • Business Development Services • Perspective and Challenges for Growth and how to meet it • Conclusion (main Success Factors or Hindrances for Growth)

  3. Three Countries – three Situations

  4. Economic Situations • Spain • 46.2M inhabitants • 22% rural population • GDP per capita: €23,704 • GDP growth:1.2%(2008) • Number of SMEs/ 1000 inhabitants: 58 • Informal sector in % of GDP: 22.5% • UK • 61 M inhabitants • 19% rural population • GDP per capita: €25,700 • GDP growth: 0.7% (2008) • Number of SMEs/ 1000 inhabitants: 26 • Informal sector in % of GDP: 12.5% • Italy • 60 M inhabitants • 32% rural population • GDP per capita: €28,057 • GDP growth: 1.5% (2008) • Number of SMEs/ 1000 inhabitants: 62 • Informal sector in % of GDP: 27%

  5. Legal Framework • Spain • No specific regulation for MFIs • Banks, savings banks and credit cooperatives are regulated by the banking law • Social entities (Social Microcredit Support Organisations) and Foundations of savings banks (Social Work) are regulated by their specific law (associations and foundations‘ law) • UK • No specific regulation for MFIs/CDFIs • Personal lending MFIs need to have consumer credit license • Some forms of incorporation require certain conditions by law and registration with the Financial Services Authority (FSA) • Otherwise, MFIs are not regulated by the FSA • Italy • No specific regulation for MFIs • Banking and non banking financial institutions are regulated by the law • Some institutions providing non banking microcredit are regulated by banking legislation (TUB art. 106) • Foundations and NGOs do not have a specific supervision or legal framework.

  6. Mission, Target Groups and Uncovered Demand

  7. Geographical Outreach and Scale - Spain Aprox. 20 Savings Banks (out of 47) of which 10 are most active and one microcredit bank (Microbank la Caixa) Nationwide: 2 (Obra Social Caixa Catalunya and Microbank la Caixa) Regional coverage related to the Savings Banks’ territory Social Microcredit Support Organisations (SMSOs) provide Business development Services

  8. Geographical Outreach and Scale - Spain Microcredit Supply Distribution in Spain

  9. Geographical Outreach and Scale - UK England by Region East Anglia 2 East Midlands 2 London 4 North East 4 North West 5 South East 4 South West 4 West Midland 4 Yorkshire 6 Nationwide 1 Northern Ireland 1 Scotland 1 England 35 Coverage is ok, but can be patchy in certain areas, especially rural ones.

  10. Geographical Outreach and Scale - Italy MFIs: 33 Nationwide 3 Regional 13 Local 17 MFIs: 33 Northern Region: 17 Centre Region: 9 Southern Region: 7

  11. Relationship with Banks, Insurance companies, Guarantee Funds

  12. Products • Italy • Social microcredit (=personal lending) and business microcredit • Average loan: € 7,192 • Min. loans: € 1,800 • Max. loans: € 17,000 • Average interest rate: 5,8% (from 1.8% to 12%) • Spain • Social microcredit: personal (self-employment) and small businesses • Average loan: € 9,900 • Min. loans: € 1,000 • Max. loans: € 25,000 • Average interest rate: 5.1% • UK • Personal lending and business microcredit to people rejected by bank • Average loan: £8,500 • Min. loans: £500 • Max loans: for MFIs around £15k • Fixed: average interest rate 13.4% (5.6-22%) • Variable: ca 5.8% over base rate (3.5-10%)

  13. Portfolio Characteristics • Spain • Strong portfolio growth • Gross loan portfolio (31/12/2007): € 84.4 million • Disbursed amount: €: 97,8 million for 8,773 loans (2002-2007) • Number of active clients (31/12/2007): 6,922 • Retention rate (% of refinanced clients): n/a • UK • Stagnating portfolio • Outstanding portfolio £10.4m (1252 loans) • Disbursed amount: £25m for 3691 loans (ca 2003-2007), av. £6773 • 2646 clients overall (including non-MFI clients) • Retention rate n/a • Italy • Strong portfolio growth • Disbursed amount: € 43.7 million for 3223 loans • On the 24 surveyed institutions that provided data: disbursed loans € 6.6 million for 923 loans • Retention rate n/a

  14. Lending Methodology and Collaterals

  15. Monitoring and Productivity

  16. Portfolio Quality Indicators • Spain • Portfolio At Risk at 30 days: 9% (3 respondents) • Portfolio At Risk at 90 days: n/a • Write off ratio: 5% (5 respondents) • Refinancing/ rescheduled ratio: 6% (3 respondents). • UK • PF at risk (28 responses): 22% (no split 30 days/90 days) • Write-offs ca 13% (27 respondents, range 0%-28%) • Refinancing and rescheduling – insufficient data • Italy • Data for 7 MFIs: • PAR30: range 0,8% - 72% (average value 25%) • Range of Write-offs 0% - 28%; average of 5.9%. • Restructured portfolio: n/a

  17. Profitability and Sustainability • Spain • Operational Self-sufficiency: 100 % (only 1 respondent!) • Financial Self-sufficiency: n/a • UK • Operational self-sufficiency – average of 8.5% with one organisation at 40% • Some CDFIs indicate they want to be self-sufficient in 4-8 years • No data on financial self-sufficiency • Italy p.48 • Data for 3 MFIs: • Self- sufficiency: ranges from 180% to 14% (average value 98%)

  18. Cost and Income Structure • Spain • Funding Savings Banks: interest income and Social Work funds • Social Microcredit Support Organisations (Business Development Services): private and public subsidies • Italy • Funding (33 MFIs): • private funds: 13 • public funds: 6 • mixed funds: 4 • n/a: 10 • UK • very little data for UK • Unit cost av. £742 • Capital: mostly grants

  19. Business Development Services • Spain • BDS are provided by SMSOs acting as partners of the savings banks • Services are either compulsory for all borrowers or forsome, or on request • UK • Very few formal • Vast majority refers to business advice agencies • Some compulsory programmes in house • Case-by-case decisions • Italy • 62% of the Institutions provide training or technical assistance • Services are either compulsory for all borrowers or for some, or on request

  20. Perspective and challenges for growth and how to meet it • Spain • Challenges: • Re-evaluate mission • Funding • Institutional capacity (staff SMSOs) • SMSOs to manage directly loan portfolios • Measure social performance and impact • Solutions: • Networking and coordination • Training • More government support • UK • Challenges: • Funds for operational costs • Funds for lending • Institutional capacity (staff) • Very little government support • Italy • Challenges: • Vision and strategy • Funding • Lack of scale and difficulties in meeting the demand • Solutions: • Training and mentoring • Networking and merging • Public and private partnerships • Solutions: • Market segmentation • Alignment with microfinance movement • Revision of insistence on full financial sustainability

  21. Conclusion • What are the common ‘Big Issues’? Lack of data and transparency Lack of market segmentation/alignment Lack of scale (=> capacity building and growth) Lack of financial resources Lack of coordination

More Related