Here is the quarterly portfolio performance update for the second quarter of 2013.
Volume picked up a little bit from the slow first quarter of the year with close to €875,000 disbursed in 1262 loans, making it the fifth consecutive quarter to exceed €800,000 in loan disbursement. That being said, the volume was still lower than anticipated and far from the impressive third and fourth quarters of 2012 (€950,000 and €1,075,000 disbursed, respectively). It was expected that the exit of Micro Africa Ltd, the largest provider on the platform, would affect the growth pattern negatively, but this does not seem to have materialised. The other providers have stepped up to fill the gap of Micro Africa as the number of loans uploaded to the platform for bidding has been consistent throughout the quarter; in fact, June turned out to be the busiest month of the quarter with €385,000 uploaded for bidding. Rather, the answer to the modest volume seems to once again be lack of capital. In the second quarter of the year, loans of close to €250,000 were cancelled during the bidding period.
The performance of the portfolio has continued much like the previous quarters: 78% of the amount disbursed in the last four years by the current providers* has now been repaid, 20 % is being repaid on time, less than 1 % is being repaid late, and net defaults are still kept below 2 %. In terms of defaults, this quarter did record a high number of defaults, particularly from PRC in Ghana (read more here). At the same time, a large amount of recoveries, more than €10,000, came through from Gatsby Microfinance Ltd to cover its defaulted portfolio in line with the risk guarantee agreement. Consequently, the effect of the PRC defaults on the overall portfolio is cushioned to some extent by the Gatsby recoveries.
The Portfolio Performance Graph above shows the performance of loans disbursed since 2010 divided by quarter of disbursement. The colour blue shows funds that have already been repaid, green shows amounts that are being repaid on time, yellow indicates the balances on loans that are currently more than 30 days late, while red shows the net defaulted principal (i.e. defaulted principal less recoveries).
The profit and loss have not changed a great deal from last quarter. Loans disbursed in 2012 have been negatively affected by currency, especially loans from the third quarter, but so far in 2013 the currency effects have been minimal. As can be seen in the second graph below, eight of the last nine quarters have had a positive net result – third quarter of 2012 being the outlier – while the five prior quarters were negative. The overall net return stays positive at 1.6 % on loans disbursed by the current providers in the last four years, thus very similar to the previous two quarters’ 1.5 % (Q1 2013) and 1.7 % (Q4 2012). It should be noted that 99.5 % of the amounts disbursed in 2010 and 2011 have by now been either repaid (97.2 %) or defaulted (2.3%), meaning that the profit and loss on these loans can only change minimally (via recoveries on defaults). The picture may however still change on loans disbursed in 2012 and 2013 as half of this portfolio remains outstanding.
The Profit & Loss graphs above show the current result on loans disbursed since 2010 divided by quarter of disbursement. In the first graph, the colour green shows the earned interest, the red indicates the net defaults (i.e. defaulted principal less recoveries), and the purple shows the net realised currency gains or losses. The second graph shows the same figures as a net sum to give an easy overview quarter by quarter.
MYC4’s total Outstanding Loan Balance (OLB) closed at €2.17 million in 4,743 active loans which is a slight reduction compared to the previous quarter. The lack of growth in OLB should be seen as a result of the modest disbursement volume, but also as a natural consequence of the quarter receiving a high amount of repayments – more than €1 million euro in fact. The performance of the portfolio has been excellent seeing as the portfolio at risk by more than 30 days (PAR30) has been stable at 3 % or below throughout the quarter.
* Current Providers: GrowthAfrica, Gatsby Microfinance Ltd, Micro Africa Ltd, Premier Resource Consulting, Tujijenge Tanzania, Fusion Capital Ltd, Makao Mashinani Ltd, Tujijenge Uganda, BELITA, KEEF, Yehu Microfinance Trust, SISDO, Fanikiwa Microfinance Company Ltd., Mtaji Credit Facility Ltd, and Uganda Microcredit Foundation Ltd.