Jordan Microfinance Institutions' Financial Viability to ... - EuroJournals
Jordan Microfinance Institutions' Financial Viability to ... - EuroJournals Jordan Microfinance Institutions' Financial Viability to ... - EuroJournals
128 European Journal of Economics, Finance And Administrative Sciences - Issue 42 (2011) Table No. 5: Jordan’s Microfinance Financial Key Performance Indicators KPs Table No. (5): Jordan's Microfinance Financial Key Performance Indicators KPIs Financial Indicators KPIs Development & Employment Fund DEF Al Watani Bank Ahlia Microfinance Comp. AMC FINCA Middle East Microfinanc e Comp. MEMC Micro Fund for Women MFW TAMWEELC OM UNRWA Offices 13 10 9 7 13 20 13 — 12.1 Personnel 103 132 73 71 94 206 175 — 122.0 Industry Norm Total assets 64,285,458 15,343,013 5,941,435 5,085,486 18,450,131 18,483,549 15,362,696 8,213,675 18,895,680 Total equity 57,388,699 6,964,356 5,213,089 161,972 9,572,269 9,569,782 7,275,339 86,724 12,029,029 Net loan portfolio 56,084,076 13,398,631 3,989,531 3,441,497 17,044,179 16,581,494 13,053,118 6,370,459 16,245,373 Gross loan portfolio 59,751,679 13,646,082 5,132,590 3,626,058 17,484,699 17,100,338 13,218,348 7,028,211 17,123,501 Impairment loss allowance 3,667,603 233,024 648,910 38,870 267,782 518,844 165,230 657,752 774,752 Liabilities and equity 64,285,458 15,343,013 5,941,435 5,085,486 19,216,939 18,483,549 15,362,696 8,213,675 18,991,531 Total liabilities 6,896,759 8,378,656 728,346 4,923,514 9,986,675 8,913,768 8,087,356 8,126,951 7,005,253 Deposits 0 0 0 0 0 0 0 0 - Total borrowings 4,907,717 7,890,962 610,328 4,480,986 8,754,294 8,182,761 8,041,630 0 5,358,585 Write offs 0 476,027 0 530 1,845 256,720 150,592 — 126,531 Debt to equity ratio 0.12 1.2 0.14 30.4 1.04 0.93 1.11 93.71 16.1 Source: www.themix.org/mfi/country/Jordan&www.mixmarket.org 4.3.1. Outreach KPIs Jordanian specialized MFIs are well exercising the microcredit sector in Jordan market. Three groups of financial indicators: outreach; returns and; risk KPIs, are clearly shown byTable No. 6 . Gross Loan Portfolio: Jordan MFIs have a total portfolio of 136.99 m. $ in 2009, of which Development & Employment Fund DEF has 59.75 m. $, which amounted to 43.6% of total portfolio in the market. DEF as an independent government entity capitalized that much of money due to the donations and gifts from the government and, gifts from international agencies via government support too. Middle East Microfinance Company MEMC showed the highest Loans Portfolio to Assets among Jordan MFIs, 94.8% of its assets are dedicated to loans, DEF and Microfund for Women MFW were shown very high assets allocated to loans for a 93% and 92.5% respectively. Other MFIs: AlWatani Bank, Ahlia Microfinance Company AMC, TAMWEELCOM, and UNRWA were allocated 85.6% - 88.9% of their assets to loans. However, FINCA is proven to have the lowest allocation of its assets to loans of only 71.3%; this is because the losses incurred due to its new establishment in 2007, thereby it needs more time to recover its pre-operating expenses and stabilize in the market. Number of Active Borrowers: in fact, number of active borrowers for each MFI depends on the loan duration and the amount of loans dispersed. Although, its nominal figure reflects the MFIs outreach, the actual indicator that reflects the depth of outreach is by comparing it with loan duration and borrowers’ extension accumulation of the same loan; many Jordanian MFIs consider relending to the same borrower as another active borrower, which makes the big difference. On the average, MFIs have 21637 active borrowers per each; as driven by the industry norm. Women Borrowers: Jordan MFIs focuses its operations to be in favor of females, FINCA, MFW and TAMWEELCOM are roughly fully lending to women 97.6% , 96.5% and 96.2% of their clients respectively, Alwatani Bank 90%, and the others MEMC by 64.5%, DEF by 58.4%, and AMC by 48.5% of their lending to females. Loans Outstanding: almost this indicator reflects number of active borrowers for all MFI in Jordan except for MEMC; because it calculates the renewal of a loan as another loan. In general, each Jordanian MFI had 22070 outstanding loans in 2009, on the average; this means that every employee supervises 181 loans outstanding in the year. Average Loan Balance per Borrower: DEF shows to be highest for this KPI, this is due to thefact that, DEF loan size is much higher than other MFIs, it ranges from 500 $ to 20,000 $. Whereas, most other MFIs loan size rages from 100 $-7000 $, only MEMC and Ahli companies have 20,000 $ loan ceiling; this is why they are rated at the second and third. These facts reflected in the Average
129 European Journal of Economics, Finance And Administrative Sciences - Issue 42 (2011) Loan Balance per Borrower/ GNI per capita, which amounted to 78.8%, 52.4% and47.8% to DEF, MEMC and AMC respectively. Average Outstanding Balance: on the average, average loan outstanding balance is 1130 $ in 2009 for Jordan MFIs, DEF is the biggest, then followed by AMC and MEMC for the beforementined reasons. This figure also reflected the Average Outstanding Balance/GNI per capita, which showed that, the loans dispersed by MFIs to borrowers in Jordan are amounted to 30% of the per capita income. In sum, these loans are so small, because they are targeting microenterprises. 4.3.2. Return KPIs Return on Assets ROA: ROA is shown to be high to UNRWA, MFW, AlWatani, TAMWEELCOM, and MEMC, it ranges from 7%-9.4%. However, it’s lower to DEF and AMC with 3.1% and 4.1% only. FINCA was exercised losses. Also, for Return on Equity ROE, DEF and AMC are the lowest and below the Jordan’s average norm. However, UNRWA is too high due to its very low equities. Operational Self-Sufficiency: Financial revenue to financial expenses and losses on loans is shown to be above the average norm for seven MFIs, DEF is shown to be the highest, while FINCA is the lowest. Financial Revenue / Assets: UNRWA, MFW are proven the highest financial revenue to assets and, DEF is performing the lowest ; due to its large amount of assets and its less concern of attaining profits, rather than mobilizing its money to cover remote areas. This is also affected the Profit Margin. DEF is shown the highest profit margin of 39% not because of its net income, but due to its low financial revenue, and its zero cost to a large amount of its capital. MEMC is proven to be the highest. Fortunately, all Jordanian MFIs, except AMC and FINCA are above Jordan’s industry norm. Real Yield on Gross Loan Portfolio: this rate is shown to be the highest for UNRWA to an amount of 39.1%, followed by TAMWEELCOM, MFW and FINCA with 39% and 37%, and AlWatani bank with 35.3%, then AMC and MEMC with 29.7%, and 24.3% respectively. Whereas, DEF is exercising the lowest rate of 9.3% only. Table No. 6: Jordan’s Microfinance Financial Key Performance Indicators KPs Table No. (6): Jordan's Microfinance Financial Key Performance Indicators KPIs Financial Indicators KPIs Development & Employment Fund DEF Al Watani Bank Ahlia Microfinanc e Comp. AMC FINCA Middle East Microfinanc e Comp. MEMCO Micro Fund for Women MFW TAMWEEL COM UNRWA Number of active borrowers 20,133 23,687 2,853 8,832 8,853 48,160 38,941 — 21,637 Percent of women borrowers 58.42% 90.00% 48.51% 97.64% 64.55% 96.45% 96.16% — 0.79 Number of loans outstanding 20,133 23,687 2,853 8,832 11,885 48,160 38,941 — 22,070 Gross loan portfolio in m.$ 59.752 13.646 Outreach KPIs Gross loan portfolio to total assets 92.95% 88.94% 86.39% 71.30% 94.77% 92.52% 86.04% 85.57% 0.9 Average loan balance per borrower 2,968 576 1,799 411 1,975 355 339 — 1,203 Average loan balance per borrower / GNI per capita 78.80% 15.30% 47.77% 10.90% 52.44% 8.92% 8.53% — 0.32 Average outstanding balance 2,968 576 1,799 411 1,471 355 339 — 1,131 Average outstanding balance / GNI per capita 78.80% 15.30% 47.77% 10.90% 39.06% 8.92% 8.53% — 0.30 Return KPIs Return on assets 3.08% 7.72% 4.08% -11.43% 7.05% 8.97% 7.53% 9.41% 0.05 Return on equity 3.38% 19.20% 4.78% -184.63% 14.16% 17.69% 18.45% 9855.20% 12.19 Operational self sufficiency 164.37% 132.65% 119.70% 69.25% 147.33% 133.89% 129.54% 134.12% 1.29 Financial revenue/ assets 7.87% 31.36% 24.78% 25.73% 21.94% 35.46% 33.04% 36.98% 0.27 Profit margin 39.16% 24.61% 16.46% -44.41% 32.13% 25.31% 22.80% 25.44% 0.18 Yield on gross portfolio (real) 9.26% 35.26% 29.68% 37.14% 24.33% 37.17% 39.17% 43.06% 0.32 Liquidity & Risk KPis Portfolio at risk > 30 days 2.27% 1.49% 15.95% 0.54% 0.41% 1.11% 0.65% — 0.03 Portfolio at risk > 90 days 2.27% 1.37% 14.58% 0.49% 0.33% 0.61% 0.26% — 0.03 Write-off ratio — 3.29% — 0.02% 0.01% 1.58% 1.08% — 0.01 Loan loss rate — 3.20% -0.33% 0.02% -0.24% 1.58% 1.08% -1.12% 0.01 Risk coverage 270.28% 114.91% 79.28% 199.75% 374.93% 274.53% 191.98% — 2.15 Non-earning liquid assets as a % of total assets 2.95% 7.06% 29.07% 0.02% 9.04% 5.77% 7.10% 18.33% 0.10 Source: www.themix.org/mfi/country/Jordan&www.mixmarket.org 5.133 3.626 17.485 17.100 13.218 7.028 Industry Norm 17.124
- Page 1 and 2: European Journal of Economics, Fina
- Page 3 and 4: 123 European Journal of Economics,
- Page 5 and 6: 125 European Journal of Economics,
- Page 7: 127 European Journal of Economics,
- Page 11 and 12: 131 European Journal of Economics,
129 European Journal of Economics, Finance And Administrative Sciences - Issue 42 (2011)<br />
Loan Balance per Borrower/ GNI per capita, which amounted <strong>to</strong> 78.8%, 52.4% and47.8% <strong>to</strong> DEF,<br />
MEMC and AMC respectively.<br />
Average Outstanding Balance: on the average, average loan outstanding balance is 1130 $ in<br />
2009 for <strong>Jordan</strong> MFIs, DEF is the biggest, then followed by AMC and MEMC for the beforementined<br />
reasons. This figure also reflected the Average Outstanding Balance/GNI per capita, which showed<br />
that, the loans dispersed by MFIs <strong>to</strong> borrowers in <strong>Jordan</strong> are amounted <strong>to</strong> 30% of the per capita<br />
income. In sum, these loans are so small, because they are targeting microenterprises.<br />
4.3.2. Return KPIs<br />
Return on Assets ROA: ROA is shown <strong>to</strong> be high <strong>to</strong> UNRWA, MFW, AlWatani, TAMWEELCOM,<br />
and MEMC, it ranges from 7%-9.4%. However, it’s lower <strong>to</strong> DEF and AMC with 3.1% and 4.1% only.<br />
FINCA was exercised losses. Also, for Return on Equity ROE, DEF and AMC are the lowest and<br />
below the <strong>Jordan</strong>’s average norm. However, UNRWA is <strong>to</strong>o high due <strong>to</strong> its very low equities.<br />
Operational Self-Sufficiency: <strong>Financial</strong> revenue <strong>to</strong> financial expenses and losses on loans is<br />
shown <strong>to</strong> be above the average norm for seven MFIs, DEF is shown <strong>to</strong> be the highest, while FINCA is<br />
the lowest.<br />
<strong>Financial</strong> Revenue / Assets: UNRWA, MFW are proven the highest financial revenue <strong>to</strong><br />
assets and, DEF is performing the lowest ; due <strong>to</strong> its large amount of assets and its less concern of<br />
attaining profits, rather than mobilizing its money <strong>to</strong> cover remote areas. This is also affected the<br />
Profit Margin. DEF is shown the highest profit margin of 39% not because of its net income, but due<br />
<strong>to</strong> its low financial revenue, and its zero cost <strong>to</strong> a large amount of its capital. MEMC is proven <strong>to</strong> be<br />
the highest. Fortunately, all <strong>Jordan</strong>ian MFIs, except AMC and FINCA are above <strong>Jordan</strong>’s industry<br />
norm.<br />
Real Yield on Gross Loan Portfolio: this rate is shown <strong>to</strong> be the highest for UNRWA <strong>to</strong> an<br />
amount of 39.1%, followed by TAMWEELCOM, MFW and FINCA with 39% and 37%, and<br />
AlWatani bank with 35.3%, then AMC and MEMC with 29.7%, and 24.3% respectively. Whereas,<br />
DEF is exercising the lowest rate of 9.3% only.<br />
Table No. 6: <strong>Jordan</strong>’s <strong>Microfinance</strong> <strong>Financial</strong> Key Performance Indica<strong>to</strong>rs KPs<br />
Table No. (6): <strong>Jordan</strong>'s <strong>Microfinance</strong> <strong>Financial</strong> Key Performance Indica<strong>to</strong>rs KPIs<br />
<strong>Financial</strong> Indica<strong>to</strong>rs KPIs<br />
Development<br />
&<br />
Employment<br />
Fund DEF<br />
Al Watani<br />
Bank<br />
Ahlia<br />
Microfinanc<br />
e Comp.<br />
AMC<br />
FINCA<br />
Middle East<br />
Microfinanc<br />
e Comp.<br />
MEMCO<br />
Micro Fund<br />
for<br />
Women<br />
MFW<br />
TAMWEEL<br />
COM<br />
UNRWA<br />
Number of active borrowers 20,133 23,687 2,853 8,832 8,853 48,160 38,941 — 21,637<br />
Percent of women borrowers 58.42% 90.00% 48.51% 97.64% 64.55% 96.45% 96.16% — 0.79<br />
Number of loans outstanding 20,133 23,687 2,853 8,832 11,885 48,160 38,941 — 22,070<br />
Gross loan portfolio in m.$ 59.752 13.646<br />
Outreach KPIs<br />
Gross loan portfolio <strong>to</strong> <strong>to</strong>tal assets 92.95% 88.94% 86.39% 71.30% 94.77% 92.52% 86.04% 85.57% 0.9<br />
Average loan balance per borrower 2,968 576 1,799 411 1,975 355 339 — 1,203<br />
Average loan balance per borrower / GNI per capita 78.80% 15.30% 47.77% 10.90% 52.44% 8.92% 8.53% — 0.32<br />
Average outstanding balance 2,968 576 1,799 411 1,471 355 339 — 1,131<br />
Average outstanding balance / GNI per capita 78.80% 15.30% 47.77% 10.90% 39.06% 8.92% 8.53% — 0.30<br />
Return KPIs<br />
Return on assets 3.08% 7.72% 4.08% -11.43% 7.05% 8.97% 7.53% 9.41% 0.05<br />
Return on equity 3.38% 19.20% 4.78% -184.63% 14.16% 17.69% 18.45% 9855.20% 12.19<br />
Operational self sufficiency 164.37% 132.65% 119.70% 69.25% 147.33% 133.89% 129.54% 134.12% 1.29<br />
<strong>Financial</strong> revenue/ assets 7.87% 31.36% 24.78% 25.73% 21.94% 35.46% 33.04% 36.98% 0.27<br />
Profit margin 39.16% 24.61% 16.46% -44.41% 32.13% 25.31% 22.80% 25.44% 0.18<br />
Yield on gross portfolio (real) 9.26% 35.26% 29.68% 37.14% 24.33% 37.17% 39.17% 43.06% 0.32<br />
Liquidity & Risk KPis<br />
Portfolio at risk > 30 days 2.27% 1.49% 15.95% 0.54% 0.41% 1.11% 0.65% — 0.03<br />
Portfolio at risk > 90 days 2.27% 1.37% 14.58% 0.49% 0.33% 0.61% 0.26% — 0.03<br />
Write-off ratio — 3.29% — 0.02% 0.01% 1.58% 1.08% — 0.01<br />
Loan loss rate — 3.20% -0.33% 0.02% -0.24% 1.58% 1.08% -1.12% 0.01<br />
Risk coverage 270.28% 114.91% 79.28% 199.75% 374.93% 274.53% 191.98% — 2.15<br />
Non-earning liquid assets as a % of <strong>to</strong>tal assets 2.95% 7.06% 29.07% 0.02% 9.04% 5.77% 7.10% 18.33% 0.10<br />
Source: www.themix.org/mfi/country/<strong>Jordan</strong>&www.mixmarket.org<br />
5.133<br />
3.626<br />
17.485<br />
17.100<br />
13.218<br />
7.028<br />
Industry<br />
Norm<br />
17.124
Change language