Report of the Board of Directors
Market developments in FY 2016
The global microfinance market reported a strong growth of 15-20%1 over FY 2016. Asia displayed the strongest growth momentum. A particularly impressive development in this region was the revival of India’s microfinance market, which is by far, the most important market in the Asian region, whereby growth exceeded 30% in FY 2016. Central Asia was impacted by the economic crisis in Russia, leading to a slight slowdown in financial sector development compared to previous years. Other regions in the world, such as South and Central America, Africa and the Middle East, showed a growth of the microfinance market of around 10-15%.
Healthy market growth in the Asia-Pacific region was driven by an impressive economic momentum resulting in an average GDP growth of around 7%. Domestic markets in the region were booming without price stability appearing to be under threat. The labour markets were healthy, the demographic age structure was favourable and financial conditions were extremely robust due to inflow of capital. As a result, direct investment and portfolio investment rose to a new record high.
GDP growth is an important element for the potential growth of the microfinance market. Moreover, the development of the financial sector usually serves as a growth accelerator. The financial sectors of developing economies and emerging markets are generally underdeveloped. Their capacity has often not evolved sufficiently relative to the overall size of the economy: the volume of lending to other sectors of the economy typically amounts to 20-30% of GDP in these countries, compared with 100-200% of GDP in developed economies. As part of the overall economic growth of developing countries, the financial sector is therefore likely to expand at least three times more rapidly than the economy as a whole.
CreditAccess’ financial book year runs from April 1st until March 31st or equal to that of CAA-GK, its main Operating Company. CreditAccess’ other two Operating Companies, CAA-BAV and CAA-OP, have financial years equal to calendar years. For reporting purposes, CAA-BAV and CAA-OP align their financial results according to CreditAccess’ reporting period.
CreditAccess’ consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”). Due to the fact that the Company was incorporated on March 20th, 2014, the General Meeting of Shareholders resolved to extend to the first financial period from 20 March 2014 until 31 March 2015.
CreditAccess’ interest income and fees in FY 2016 were 80.6% higher at € 74.3 million. This increase was solely driven by a strong growth in loan book resulting from a 45% increase of active clients accompanied with a 9.5% higher average ticket size. Notwithstanding the reduced average interest rate on funding, the interest expenses and fees grew by 68.4% to € 37,3 million on account of the average higher outstanding debt to finance the higher portfolio book to € 356.6 million (+56%).
The resulting total income, i.e. net interest income and fees plus other income, came in at € 37.4 million, or 90.8% higher compared with the previous financial year.
Total income by Operating Company (x € million)