Microfinance sector shows moderate recovery: HR Ratings

The sector of microfinance It already shows signs of a moderate recovery, after the complicated 2021 that meant a complex year due to the effects of the health emergency that mainly affected micro and small companies, one of the main segments of this industry, according to the rating agency HR Ratings.

The firm presented its sectoral analysis of microfinance institutions, where it highlighted that the gradual rebound of the economy has also allowed a recovery in the quality of payment of these institutions, as well as a greater demand for credit that is in line with an eventual normalization in origination policies.

“Although a recovery is observed with respect to the levels observed in (the) 2020, the profitability metrics have not yet stabilized at the levels observed prior to the pandemic, which reflects that the rate of recovery of the sector will take place gradually , with an expectation of sustained normalization expected towards (the) 2022 ”, highlighted the firm in the analysis.

According to the rating agency, in the first semester of the year, the sector’s adjusted delinquency rate —based on the 18 firms that qualify in the microfinance sector— stood at 17%, when in the same period of 2020 it was 16.1% and despite having an increase in the annual comparison, this trend is downward since at the end of the previous year this indicator was 18.5 percent.

“A decreasing trend is observed in the delinquency of portfolios in line with the gradual recovery of the economy and the reopening of operations. This in turn has been reflected in a lower requirement of preventive estimates, which, together with a control of operating expenses, has led to a moderate recovery in profitability, ”the report pointed out.

The analysis highlighted the issue of the digital transformation of these entities and despite the fact that this technological migration is expected to take place gradually, it is expected that in the medium term it will be constantly reflected in the operation of these institutions, which rely heavily on your job in branch operations.

“The microfinance sector is in a process of strengthening technological tools in search of greater efficiencies and automation of processes,” said the rating firm.


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