|
|
Compartamos loan size and interest ratesCompartamos started by disbursing very small loans, but they have experienced aggressive growth in loan size. Average outstanding balance has grown by a very striking nine-fold in ten years. Average loan balance was US$50 in 1996 and US$450 in 2006.
Note that the chart above shows average outstanding balance. The previous graphs about interest rates were focused on disbursed loan size. The disbursed size is roughly double the average outstanding balance for Compartamos, so their disbursements loans have grown from roughly US$100 in 1996 to US$900 in 2006. A very important point, as drawn out in the CGAP paper, is that they have not significantly lowered their interest rates. As the graph we saw early showed, high interest rates are necessary with small loan amounts, but interest rates can drop with larger loans and allow the MFI to cover costs.
I don't yet have a complete graph of interest rates for Compartamos, but measured as APR to the client (including taxes), their clients have paid over 100% APR every year. Rates were around 120% some years ago, and have lowered to about 105% in 2006. Compartamos does charge different interest rates in different branches, so there is no one set rate, but all the rates in all the branches are quite high by microfinance standards. These rates of >100% are shown on the Compartamos website and are quoted in the New Yorker article on Compartamos from last October. The result of keeping their interest rates extremely high is that Compartamos has made astounding profit rates over the past seven or more years. Click here... |
This website is managed by Chuck Waterfield. If you have any questions or comments about the website, please email waterfield@microfin.com |
