Annual Report 2007

small and very small businesses. Despite the fact
that it is a relatively new player in the country’s
financial system, Banco ProCredit accounted for
approximately 20% of the annual growth in the
volume of loans outstanding to very small businesses
in Ecuador, achieving a 12% market share
in this sector.
In 2007 Banco ProCredit ranked fourth in the
financial system in terms of its total loan portfolio
growth, outperforming several of the country’s
major banks. More importantly, Banco ProCredit
was the leader in terms of growth in business
lending, a significant achievement considering
that it ranks as the 11th largest bank and has a
market share of only 2.5% by total loan portfolio
volume.
While these results were satisfactory, they were
not sufficient to allow the bank to achieve the targets
it had set itself for 2007. The loan portfolio
growth for the small and medium-sized enterprise
segment was lower than had been forecast,
as it took longer than planned to recruit business
client officers with the required skills and to give
them the necessary training. The bank’s decision
during the first half of the year to temporarily
postpone the opening of branches due to the uncertainty
generated by the changes being made
to the regulatory framework for the financial system
was another factor that affected its ability to
achieve its targets.
Business Loan Portfolio – Breakdown by Maturity
in %
100
90
80
70
60
50
40
30
20
10
0
Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec
03 04 05 06 07
< 12 months 12 – 24 months > 24 months
Loan Portfolio Quality (arrears >30 days)
in % of loan portfolio
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0
Jun Dec Jun Dec Jun Dec Jun Dec Jun Dec
03 04 05 06 07
Net write-offs:
in 2003: USD 50,908
in 2004: USD 105,052
in 2005: USD 365,489
M a n a g e m e n t B u s i n e s s R e v i e w 1
The bank resumed the process of opening branches
during the second half of the year, and by the
end of 2007 it had assembled a full team of business
client officers specialised in serving small
and medium-sized enterprises.
The bank ended the year with 57,581 loans outstanding
(growth of 46% with respect to 2006).
The average loan amount rose from USD 2,986 to
USD 3,255 due to the increasing share of the loan
portfolio accounted for by lending to small and
medium-sized enterprises (SMEs). Loans to this
segment accounted for 31% of the total portfolio
volume, demonstrating the bank’s commitment
to promoting development in Ecuador by providing
financing to the business sector and helping
local companies to generate employment.
The growth in the SME segment did not mean that
thebankdevotedlessattentiontoverysmallloans
(up to USD 1,000), however. It continued to place
great emphasis on loans in this size range, and the
share of the number of loans outstanding accounted
for by very small loans rose from 22% to 24%.
The sectoral breakdown of the portfolio remained
almost unchanged throughout the year: at yearend,
the largest share (40% of the outstanding
volume) was accounted for by trade, followed by
transport services (16%) and production (15%).
Lending to the agricultural sector (13%) continued
to be concentrated in the mountainous areas
of the country.
in 2006: USD 724,299
in 2007: USD 889,895