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CASE STUDIES
Figure 2: Compartamos taps into financial markets
Financial Structure
When Compartamos was first analyzed by the MicroBanking
Bulletin in July 1999, it was a briskly
growing non-governmental organization. Its loan
portfolio was almost completely funded through equity
and it did not access commercial funding.
Growth of the loan portfolio was therefore dependent
on donations and rapid accumulation of retained
earnings. The case study of 1999 detailed management’s
belief that the only way Compartamos
could achieve massive outreach, and thus fulfill its
mission, was to become profitable. Capital-funded
growth enabled Compartamos to transform in 2001
into a regulated non-bank financial institution. By
that time, the MFI was already a clear industry
leader, its 150,000 borrowers having exceeded the
regional benchmark of 13,755 borrowers many
times over.
100%
80%
60%
40%
20%
0%
1995 1996 1997 1998 1999 2000 2001 2002
Capital/ Asset Ratio (Compartamos)
Capital/ Asset Ratio (LAC)
Commercial Funding Liabilities Ratio (Compartamos)
Commercial Funding Liabilities Ratio (LAC)
Source: MicroBanking Bulletin no. 10 data. LAC is Latin America and the Caribbean. Data for Compartamos shown for the years
1995−2002; LAC data shown only for 1999−2002.
Subsequent changes in the Compartamos balance
sheet prepared it for the fastest phase of absolute
growth of any Latin American MFI (see figure 1).
From a near total dependence on donations and
retained earnings, Compartamos used its new legal
charter to quickly leverage its equity with commercial
debt (see figure 2). In the eight years
1995−2003, its assets grew from just over USD 1
million USD to USD 86.6 million. Compartamos
even joined a select group of microfinance institutions
that issue bonds, raising the equivalent of
USD 20.5 million in bonds on the Mexican Stock
Exchange in July 2002. The issue was the largest
ever floated by a microfinance institution and received
a rating of “mxA+” from Standard and
Poor’s. The stated reasons for the high grade included
low levels of competition and experienced
management. A larger subsequent issue in 2004,
which benefited from a 34 percent guarantee from
the International Finance Corporation (IFC), received
an even higher grade rating of “mxAA.” Despite
these achievements, Compartamos is not licensed
to mobilize savings, limiting the diversity of
financing options available and potential services to
clients.
Figure 3: The growth and decline of Compartamos’ revenue and expense
120%
100%
80%
60%
40%
20%
0%
1996 1997 1998 1999 2000 2001 2002
Operating Expense Ratio
Loan Loss Provision Expense Ratio
Financial Expense Ratio
Financial Revenue Ratio
Source: MicroBanking Bulletin no. 10 data.
10 MICROBANKING BULLETIN, MARCH 2005