MICROBANKING BULLETIN - Microfinance Information Exchange

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BULLETIN HIGHLIGHTS AND TABLESSetting up the Peer GroupsAn Introduction to the Peer Groups and TablesThe MicroBanking Standards Project is designed tocreate performance benchmarks against whichmanagers and directors of microfinance institutionscan compare their own performance.The microfinance industry consists of a wide rangeof institutions, with very different characteristics.For the reference points to be useful, an MFI needsto be compared to similar institutions.The MicroBanking Bulletin addresses this issue withits peer group framework. Peer groups are sets ofprograms that have similar characteristics—similarenough that their managers find utility in comparingtheir results with those of other organizations intheir peer group. They are based on threeindicators:1) Region: With regulatory environments, interestrate policies, and macroeconomic conditionsvarying widely around the world, microfinancediffers by region.2) Scale of Operations: Microfinance institutionschange and develop as the scale of theiroperations grows. We classify MFIs as small,medium or large according to the size of theirportfolio, so that MFIs are compared with othersat a similar stage of growth and outreach.3) Target Market: We classify institutions into threecategories—low-end, broad, and high-end—according to the range of clients that they serve.The target market is measured by the ratio oftheir average outstanding loan per borrower toGNP per capita.The quantitative criteria used to determine eachinstitution’s peer group are summarized in Figure 1below. For each peer group, we provide averagecharacteristics and a wide range of performanceratios (see Tables 1 to 4 on pages 40 to 46). Thesenumbers represent performance benchmarks orstandards for MFIs based on their region, scale,and target market. For MFIs interested incomparisons by other characteristics, Tables A andB (pages 48 to 51) include selected ratios by age,scale, lending methodology, level of retail financialintermediation, and target market.New Peer GroupsThis issue of The MicroBanking Bulletin includesone new peer group and a redefinition of another.The Eastern European peer group has now beenseparated into two, Broad and High-end, whichsignificantly improves the homogeneity of thesegroups. In the last issue of the Bulletin, we tried toadd a fourth characteristic to our peer groupdefinitions: financial intermediary. However, onlyone region (Latin America) had enoughintermediaries to justify a separate peer group, andnearly all of those MFIs were credit unions. So, forthe purposes of clarity, the peer group LatinAmerican Intermediaries is now called LatinAmerican Credit Unions.Peer Group Composition and Data QualityThe members of each peer group are listed inFigure 2 on the following page and more detailedinformation about each institution can be found inAppendix II. Since the Bulletin relies primarily onself-reported data, we have rated the quality of thatinformation based on the degree to which we haveindependent verification of its reliability. The dataquality rating is NOT a rating of the institution’sperformance.Statistical IssuesIn the statistical tables that follow, the averages foreach peer group are calculated on the basis of thevalues between the 2 nd and 99 th percentiles, whichusually means that the top and bottom values foreach indicator are dropped. For the entire sampleof MFIs, the top and bottom deciles were excluded.These exclusions were done to reduce the effect ofoutliers. For more details, see Appendix I.Figure 1: Peer Group Criteria1. Region Latin America Asia Africa Africa/ MENA MENA/ CentralAsiaEasternEurope2. Scale of Operations Small Medium LargeTotal Loan Portfolio (US$) < 1,000,000 1,000,000 to 7,999,999 ≥ 8,000,0003. Target Market Low-end Broad High-endAverage Loan Balance /GNP per capita< 20% OR Avg. LoanBalance < US$15020% to 149% ≥ 150%36 MICROBANKING BULLETIN, SEPTEMBER 2000
BULLETIN HIGHLIGHTS AND TABLESFigure 2: A Guide to the Peer GroupsPEER GROUPNDATA QUALITY RATING(No. of MFIs with eachrating)AAA A BPARTICIPATING INSTITUTIONS *1. LA LargeSize: LargeTarget: Broad/High-end2. LA Medium BroadSize: MediumTarget: Broad3. LA Medium Low-endSize: MediumTarget: Low-end4. LA SmallSize: SmallTarget: Low-end5. LA Credit UnionsSize: AllTarget: Broad6. Asian LargeSize: LargeTarget: Low-end/Broad7. Asia-PacificSize: AllTarget: Low-end/Broad8. South AsianSize: Small/MediumTarget: Low-end/Broad9. African SmallSize: SmallTarget: Low-end10. African MediumSize: MediumTarget: Low-end11. Africa/MENASize: Large/MediumTarget: Broad/High-end12. MENA/CASize: Small/MediumTarget: Low-end13. Eastern Europe High-endSize: AllTarget: High-end14. Eastern Europe BroadSize: AllTarget: Broad11 5 5 1 Agrocapital, BancoADEMI, BancoSol, Calpiá, CM Arequipa,FIE, Finamérica, FWWB Cali, Los Andes, Mibanco,PRODEM13 3 6 4 ACODEP, ACTUAR, ADOPEM, ADRI, Banco la PequeñaEmpresa, CHISPA, EMPRENDER, Enlace, FAMA,FONDECO, FUNADEH, ProEmpresa, Sartawi13 2 5 6 CAM, CEAPE Pernambuco, CMM Medellín, Compartamos,Contigo, Crecer, FED, FINCA Honduras, FINCA Nicaragua,FMM Popayán, Portosol, ProMujer Bolivia, WR Honduras5 2 1 2 AGAPE, Banco do Povo de Juiz de Fora, FINCA Ecuador,FINCA México, Vivacred11 11 0 0 15 de Abril, 23 de Julio, ACREDICOM, Chuimequená,COOSAJO, ECOSABA, Moyután, Oscus, Sagrario,Tonantel, Tulcán5 3 2 0 ASA, BAAC, Bank Dagang Bali, BRAC, BRI5 0 5 0 ACLEDA, EMT, Hublag, RSPI, TSPI9 3 5 1 AKRSP, BASIX, BURO Tangail, CDS, FWWB India,KASHF, Nirdhan, SEEDS, SHARE9 2 4 3 FAULU, FINCA Malawi, FINCA Uganda, Foccas, RFF, SAT,SEF, UWFT, WAGES6 1 4 1 Kafo Jiginew, Nyésigiso, PAMÉCAS, PRIDE Vita (Guinea),PRIDE Tanzania, PRIDE Uganda6 2 1 3 ABA, ACEP, CERUDEB, Citi S&L, PADME, UNRWA6 1 4 1 Al Amana, Al Majmoua, Constanta, FATEN, FINCA Kyrgyzstan,Microfund for Women7 0 7 0 AMK, FEFAD, MEB, Moznosti, Network LeasingCorporation, SUNRISE, WVB8 0 4 4 BOSPO, Fundusz Mikro, Inicjatywa Mikro, LOK, MC-SEA,Mikrofin, Nachala, NOAAll MFIs 114 35 53 26† The MicroBanking Bulletin uses the following ratings system to classify information received from MFIs:AAA The information is supported by an in-depth financial analysis conducted by an independent entity in the lastthree yearsA The MBB questionnaire plus audited financial statements, annual reports and other independent evaluationsB The MBB questionnaire or audited financial statements without additional documentationLA = Latin America MENA = Middle East/North Africa CA = Central Asia* The institutions in italics and bold are new to the Bulletin. A short description of all institutions can be found in Appendix II.MICROBANKING BULLETIN, SEPTEMBER 2000 37
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