Banco ProCredit Ecuador
Located in the north-western part of the South American continent, Ecuador borders the Pacific Ocean at the equator and has a population of 15.8 million (source: National Institute of Statistics and Censuses, Ecuador, June 2013). The country's economy is based on exports, mainly oil, bananas, shrimp, flowers, and agricultural products, with remittances from Ecuadorian immigrants employed abroad also contributing significantly to GDP.
Ecuador experienced a steady economic decline and great political turmoil throughout the 1990s. The recession peaked in 1999, when the local currency was devalued by 200% against the US dollar (source: IMF, PIN No. 00/75, September 2000). The Ecuadorian banking sector suffered dramatic losses, necessitating a large-scale intervention by the banking authorities. The macroeconomic situation began to improve in 2000 thanks to the various measures taken to restore economic and political stability, including the adoption of the US dollar as the national currency. Low inflation and high prices for the country’s oil exports have contributed to the economy's relative stability in recent years.
Budget projections for 2013 indicate a GDP growth rate of just over 4.0%, compared with 5.1% in 2012. This slowdown in economic growth, despite a budget increase of 24%, is a result of the fact that public spending is limited to non-investment items and to slower growth of the construction industry. Oil industries account for 11.3% of Ecuador’s GDP. Given the government’s dependence on oil revenues, the fact that world prices are expected to remain stable or slightly fall will pose a major challenge for the government.
The Ecuadorian financial system is currently made up of 24 banks and 53 non-bank financial institutions. As of June 2013, the loan portfolio of the private financial sector totalled USD 21.2 billion. Although the aggregate portfolio is steadily growing, most of the growth as of June 2013 was in the retail and consumer portfolio. As of the same date, total deposits came to USD 27.1 billion. This figure has also been increasing, though mainly among the savings and credit co-operatives.
ProCredit was first attracted to Ecuador in 2001 by the lack of financial services for business clients and the high market potential in this segment. Despite the political instability at the time, exacerbated by the consequences of a severe economic crisis, ProCredit Holding, IPC and DOEN founded the finance company "Sociedad Financiera Ecuatorial S.A." in October of that year. To be able to offer a broader range of services, the company was converted into a fully-fledged bank, Banco ProCredit, in 2005.
As of 30 June 2013, the bank had a network of 40 branches, and managed 264,315 active deposit accounts with an aggregate volume of USD 220.0 million, as well as a gross loan portfolio of USD 389 million (source: internal reporting under IFRS for group consolidation). As of June 2013, Banco ProCredit’s held a 1.65% share of total assets in the private banking sector, 1.86% of the total portfolio and 1.18% of total deposits. Among the 24 private banks operating in the country, Banco ProCredit ranked 12th in terms of assets and liabilities and eighth in terms of income.
Banco ProCredit strives to be the market leader in providing responsible banking services to very small, small and medium-sized enterprises in Ecuador. Its efforts are reflected in the high quality of its portfolio and its better-than-average arrears rate compared with the rest of the Ecuadoran financial system. Based on its strong market position and sound risk profile, the bank holds a AAA- local rating assigned by Bankwatch Ratings (an associate of Fitch Ratings).
In March 2012 Banco ProCredit launched a new “green finance” service. Offering loans for environmentally friendly investment projects gives the bank a unique opportunity to focus on personally advising clients on “green” investment opportunities, and building long-term relationships with them.