MIX report shows declining profits of microfinance institutions

MF Focus, July 16, 2009: After showing growth early this decade, profit margins of microfinance institutions have flattened relative to their asset bases, finds analysis of data between 2005 and 2007 by the Microfinance Information Exchange, Inc. (MIX). MIX announced the findings on Wednesday in its latest issue of MicroBanking Bulletin, covering benchmark trend lines of 487 MFIs in 78 countries.
The report finds that efficiency gains have become slimmer as institutions matured. Yet borrower outreach grew at a persistent rate across all regions, with loan portfolios growing even faster — 47% in US dollar terms in 2007, due in part to a depreciating currency.
“This data set represents MFI operational and financial performance trends in the three years prior to the economic crisis, providing a baseline against which to assess MFIs performance during the global economic downturn. As we move through the crisis, collecting and analyzing performance data at various intervals, we will be able to see how this industry has responded, providing us with details about industry strengths and weaknesses. This information can better prepare MFIs, investors and other industry actors for the next financial crisis, be it national, regional or global,” said MIX COO Blaine Stephens, in a statement.
The Microfinance Information Exchange, Inc. (MIX), a provider of business information and data services for the microfinance industry, advocates promotion of transparency in the sector and provides performance and financial information on MFIs, investors, networks and service providers associated with the industry.

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