The Premier Source for Microfinance Data and Analysis

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Microfinance Information Exchange

2012 Nepal Snapshot

CMF Nepal Microfinance Conference, Feb 14, 2013, Yak and Yeti Hotel, Kathmandu, Nepal

By Deepika Kumari and Liz Larson

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MIX BasicsContents of the presentation

Introduction

Profitability

Efficiency

Funding

Risk

2

What can we learn about Nepal’s microfinance market with MIX data?

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited.

MIX Basics

MFI

Donors and Investors

Raters

MFI Networks

Regulators

What is MIX?

2,100+ MFIs

150 Networks

200 Funders

300 Service Providers

3What can we learn about Nepal’s microfinance market with MIX data?

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited.

Nepal in South Asia

Avg Loan Size:

21,671 NPR Ris

ing

2008 2009 2010 201129

30

31

32

33

34

35

36

37

38

Nepal's MIX MFIs

37

MFIs

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Growth rates in key areas

1,713 Crore NRS212 Million USD

Loan Portfolio 37 %

807,312Borrower

s 9 %

741 Crore NRS91 Million USD

Deposits53 %

1.4 MillionDepositor

s 40 %

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• Growth driven by Rural Banks• All legal form growing

What institutions are driving this growth?

2008 2009 2010 2011 -

50,000,000

100,000,000

150,000,000

200,000,000

250,000,000

GLP by Legal Status

Rural Bank

Bank

Credit Union / Cooperative

NGO

The GLP and Borrowers Graphs depicts the Totals of the Balanced Panel of 24 MFI’s reported through 2008 to 2011 on MM

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Are loan sizes contributing to this growth?

2008 2009 2010 20110

50

100

150

200

250

300

350

400

0%

10%

20%

30%

40%

50%

60%

70%

80%

ALB USD

ALBGNI

Average Loan Balance

The ALB GNI is the Weighted Average % of the Balanced Panel of 24 MFI’s reported through 2008 to 2011 on MMThe ALB USD is the Average Loan Balance (ALB USD= Totals of GLP divided by Total of Borrowers) of the Balanced Panel of 24 MFI’s reported through 2008 to 2011 on MM

• Average loan balance growing• In context of economic growth, not much difference

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How profitable are Nepali MFIs?

The ROA Graphs is the weighted Average of a Balanced Panel of 24 MFI’s reported through 2008 to 2011 on MM

• ROA and ROE steadily increasing• Global context: high ROE

Kyrgyzstan

Cambodia

Brazil

Nigeria

Georgia

Benin

Ghana

Nepal

Indonesia

Uzbekistan

0% 5% 10% 15% 20% 25% 30% 35%

ROE, top 10 Countries

ROE

2008 2009 2010 20110.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

5.0%

Nepal, ROA and ROE

ROEROA

Perc

ent

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Efficiency: an analysis of costs

The Expense Graph depicts Totals of the Balanced Panel of 24 MFI’s reported through 2008 to 2011 on MM

• MFIs’ cost of funds increasing, but not dramatically• Yields rising in tandem• All other expense categories extremely stable

2008 2009 2010 20110.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

Deconstruction of Expenses

Financial ExpenseProvision for Impairment LossPersonnel ExpenseAdministriative ExpenseFinancial Revenue

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A deeper look at funding…..

2008 2009 2010 20110%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Liabilities and Equity Structure

DepositsBorrowingsEquity

The Liabilities and Equity Structure Graphs depicts Totals of the Balanced Panel of 24 MFI’s reported through 2008 to 2011 on MMThe Borrowings (USD) is the Totals of data extract from FSDB tools on MM- unbalanced Panel of MFI’s in Year 2011 only.

• Some institutions now allowed to mobilize public deposits

• Domestic borrowings and deprived sector lending still key

• Slight increase in equity, likely due to Nepal’s stellar ROE

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited.

The above table is an extract from the FSDB tool on Mix Market representing all the MFI’s in 2011.The Borrowings of MFI (USD) is the Totals of data extract from FSDB tools on MM- unbalanced Panel of all MFI’s in Year 2011.

2008 2009 2010 20110%

1%

2%

3%

4%

5%

6%

7%

8%

9%

DFIGovernmentOtherFinancial Institution

Funding interest rates trend

A deeper look at funding…..II

• Huge increase between 2009 and 2010• Slight decrease last year as liquidity crisis subsided

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited.

2008 2009 2010 20110%

2%

4%

6%

8%

10%

12%

14%

16%

18%

PAR > 30

%

How risky are microfinance clients in Nepal?

The PAR Graphs is the weighted Average of a Balanced Panel of 24 MFI’s reported through 2008 to 2011 on MM

• PAR decreasing dramatically in recent years

Bangladesh: 6.5%

India: 24%

Pakistan: 5%

This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this presentation without MIX’s prior written permission is strictly prohibited.

In conclusion . . .

Thank you

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MIX Global and Project Partners

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