financiera edyficar august 2010
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FINANCIERA EDYFICAR August 2010. Agenda. Brief history of Financiera Edyficar Funding Structure and its evolution. Brief History of Financiera Edyficar More than 12 yeas of experience A growth story with a solid and healthy position - PowerPoint PPT PresentationTRANSCRIPT
FINANCIERA EDYFICAR
August 2010
1. Brief history of Financiera Edyficar
2. Funding Structure and its evolution
Agenda
Brief History of Financiera Edyficar
o More than 12 yeas of experience
o A growth story with a solid and healthy position
o A local market that offered and continues offering significant opportunities
Challenges
o To continue expanding and consolidating its client base
o Maintain its # 1 ranking in the MES segment
Brief History: More than 12 years of experience
Porfolio: USD 3.83 MMClients: 6 M
1985 1998 2005 2006 2007 2008 2009 Jun-2010
Securitacion for microfinance
Acquisition the Edpyme Crear Cusco
Initial Stage as Edpyme
First non-banking microfinance company to successfully acces the Capital Markets
Portfolio: USD 185 MMClients: 181 M
Subordinated debt
Edyficar acquisition by BCP
Portfolio: USD 289 MMClients: 246 M
Brief History: Edyficar, a growth story…
Edyficar’s acquisition represented an opportunity :
▶ To acquire a successful business model for a high-growth segment.
▶ To maintain a key role in the microfinance segment.
Since 2005, Edyficar’s loan portfolio presents a compounded annual growth rate of 44%
Total Loan Portfolio
(USD MM)
5589
126
185
250289
2005 2006 2007 2008 2009 Jun-10
43.9%
6490
138
181
213
246
2005 2006 2007 2008 2009 Jun-10
34.3%
Total Cliente Base
(Thousand)
82% 80% 79% 79% 77%85%
2005 2006 2007 2008 2009 Jun -2010
Gross Financial Margin
Brief History: …with a solid and healthy position
18.4% 17.5% 17.4% 16.7%15.5% 15.4%
2005 2006 2007 2008 2009 Jun -2010
Operating Efficiency
3.7%3.5%
2.8%2.7%
3.9%
4.6%126% 127%
134%
154% 154% 150%
60%
80%
100%
120%
140%
160%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
2005 2006 2007 2008 2009 Jun-10
Non-Performing Loans and Coverage Ratio
Non-Performing Loans Coverage Ratio
28.0%23.7%
26.7%29.0%
21.6%
35.0%
2005 2006 2007 2008 2009 Jun -2010
ROE
Brief History: MES segment has a lot of room to grow
Banking System
5 million in the Banking System
9 million out of the Banking System
34% MES
The financial market offers significant opportunities and challenges for the next years in the funding front…
Opportunities
New funding at interest rates adjusted by new risk conditionsNew funding from deposits of Mutual Funds, Pension Funds, Commercial
Institutions, etc.Restructuring of DebtMore investment opportunities - Create investment portfolioImprove the management of Edyficar’s assets & liabilities and its overall financial
structureNew product of “micro savings”
…offering important opportunities in the local market
Short – RunImprove cost of fundingHigh rate of investmentsStrengthening of Capital
Long – RunSocial inclusionAcquisition of IMF’s
Challenges
Deposits Certificate
Corporate Bonds Program
First Subordinated Bonds
Capital Market
Brief History: BCP’s Client Base Consolidation
Brief History: BCP + Edyficar rank # 1 by MES loan portfolio
Funding Evolution
o Structure over time (last 5 years)
o Types of funding
o Advantages and disadvantages of each type of funding
o Structure before and after acquisition
o Social impact of financial improvements
o Future of funding: challenges and opportunities
Funding: Structure Over Time
Edyficar acquisition by BCP
39%
27%
20%
28%
44%
50%
44%
36%
49% 32% 6%23%
15%
▶ Public-sector fundingQuick process, always available and at lower cost. Offered short and long term. After
entering the capital market we decided to decrease this type of funding because it is perceived as high risk. Considered and available line of contingent funds.
▶ Commercial debtBetter conditions offered every year by microfinance funds, like local currency debt or
guarantee-free funding. Diversification strategy. They value transparency: Edyficar provided investors with updated information.Need to establish polices of asset & liabilities management
▶ Bonds/CDsImprove asset & liabilities management
▶ Deposits of Mutual Funds, AFP, other institutionAccess to the local financial market with good financial conditions, according to new
perception of institutional risk.
▶ Equity Strengthen its equity through capitalization of profits to achieve sustainable growth.
Funding
Funding: Advantages and Disadvantages of Each Type
Institution Advantages Disadvantages
Mutual Funds Good Interest rate × Short –term financing
× Only Financieras and Banks
× Requires solid credit rating
Government FundsGood interest rate. × Only Financieras and Banks
Capital MarketLoans in local currency
Well diversified× Long process required by the regulator.
× IMF has to pay management fees.
× More spread to lower credit rating
Government Bank Interest rate better than Microfinance Funds, but still higher than government
fund and mutual fund.
× Limited loan of credit
× No good image to credit-rating companies (government policy risk)
Microfinance Funds
Long term- financing ×No flexibility
×Increase funding cost by hedge.
×IMF has to pay management fees.
Funding: Structure Before and After Acquisition
Average Cost of Funding(Before and after acquisition)
Funding by currency in millions(Before and after acquisition)
192
9
324
167
687
0
100
200
300
400
500
600
700
US Dollars Euros Nuevos Soles
Sep-09 Jun-10
8.17%
3.83%
3.5%
4.5%
5.5%
6.5%
7.5%
8.5%
Funding: Structure Before and After Acquisition
Lenders 34.29%
Capital Market 2.25%
Money Market 23.82%
BCP 39.64%
Funding by supplier (Jun-10) Funding by destination (Jun-10)
Investment 19.60%
Working Capital 80.40%
Funding by institution (Sep-09) Funding by institution (Jun-10)
BCP 39.64%
Credifondos 9.22%
Blue Orchard 4.98%
Interfondos 5.75%
Symbiotics 3.12%
Other Deposits 8.88%
Other Lenders 26.17%
Capital Market 2.24%
KFW, 11.65%
Bonds, 9.25%
Blue Orchard 8.06%
COFIDE, 4.54%
Symbiotics, 4.51%
Triodos 4.43%
DWM 4.21%
ICO 3.90%
OIKOCREDIT 3.84%
Others 45.61%
Funding: Social Impact of Financial Improvements
Diversification of funding suppliers and new debt conditions adjusted to the institutional credit risk decreased our interest spending improving our profitability.
Encouraged by the cheaper funding, Edyficar plans to continue supporting the same economic sectors, keeping an average loan of USD 1,000.
Furthermore, we’ve decided to increase our efforts to penetrate in regions where the banking system hasn’t entered yet, in line with the social function of microcredit.
The Future of Funding: Challenges and Opportunities
▶ Capital Market:
•Subordin
ated bond
issues
(equity
strength)
•Corporate
bond
issues
without
guarantee
Local Capital Market
•Continue
with
diversifica
tion of
funding
suppliers.
•Diversific
ation of
investme
nt
portfolio.
•Improve
the
managem
ent of
currency
and
maturity
gap.
Treasury
(ALM)
FINANCIERA EDYFICAR
August 2010