Q1 2024 quarterly report: Development financing portfolio passes new threshold

Implementing our 2022-2026 strategy 

During the first quarter of the year, Oikocredit’s community-focused development financing, a key pillar of our 2022-2026 strategy, continued to progress, growing to € 66.0 million. We intend this component of our investing to help build long-term resilience in low-income communities through support for high-impact, innovative projects in education, housing, water and sanitation, infrastructure and climate action.  

Total outstanding credit and equity also maintained momentum, rising to € 1,136 million – the cooperative’s largest ever aggregate development financing portfolio.  

In Q1 we published the results of our third annual Client Self-Perception Survey. The latest survey report is the outcome of close to 41,000 clients’ responses to our digital questionnaire survey during 2023 about significant changes in their lives over the past 12 months. More than three-quarters of respondents were women. The survey involved collaboration with 34 financial service partner organisations in nine languages in 15 countries in Africa, Asia, and Latin America and the Caribbean. It reveals the majority of clients’ satisfaction with our partners’ contribution to their wellbeing. Most clients informed us of improvements in their income and savings, although extreme weather disrupted many clients’ incomes. 

The survey findings keep clients’ priorities at the heart of our work, inform our decision-making and capacity building, and help partners adjust their products and services to serve clients even better. We have begun work with partners on our fourth annual survey.  

Oikocredit’s support, capacity building and action planning enhance our partners’ lasting contribution to the lives of people on low incomes. More than a third of our active partners improved their environmental, social and governance (ESG) performance during the quarter, with particularly strong performance among our inclusive finance and renewable energy partners. The vast majority of new investments we approved in Q1 were with partners achieving 'strong' or 'excellent' ratings on our ESG scorecard. 

Our strategy seeks to facilitate connections and nurture our global investor movement. In Q1 we held our fourth Oikocredit Live webinar for members, investors and others, entitled 'Unlocking Social Equity through Financial Inclusion’.  

Although our movement building also aims to increase the amount of capital our members and investors entrust to us, the quarter saw a decline in member and investor capital to € 990 million. This continued the recent trend of net redemptions. However, from the start of the year, our Belgium-based members and investors followed most of our other main inflow countries by transitioning to our new capital-raising model, with their shares and share-derived investment products replaced by participations. 

And since March, our marketing and capital-raising efforts have intensified, with early positive signs observed in Switzerland. In Austria, France and Germany, also, our activities and visibility at events have increased.

As a strategic partner of the Global Alliance for Banking on Values (GABV), in February 2024 we endorsed GABV’s Statement of Peace, which condemns violence and urges mainstream financial institutions to divest from the international arms sector. 

Portfolio development and financial performance 

As noted above, Oikocredit’s total outstanding credit and equity continued to grow in Q1, rising from € 1,084.7 million at end-2023 to € 1,136.1 million and thereby passing € 1,100 million for the first time. The increase resulted both from a sizeable number of new disbursements and from exchange rate gains. Community-focused projects accounted for € 66.0 million of the portfolio, up from € 57.3 million in Q4 2023.  

There was a net loss of € 2.6 million during the quarter, slightly less than the previous quarter’s loss of € 3.0 million. Rising loan loss provisions were the chief cause of the negative result.  

Portfolio quality, measured by the PAR 90 (portfolio at risk) ratio of outstanding loans with payments more than 90 days overdue, rose from 5.8% to 6.3%, above our 6% target threshold. Partners’ repayment difficulties in Latin America and the Caribbean were the main cause. 

Operating income for Q1 was € 16.7 million. As noted, member and investor capital reduced from € 1,000.8 million at end-2023 to € 990.0 million, as redemptions continued to exceed inflow. Net asset value (NAV) per participation strengthened slightly, from € 214.03 to € 214.39, with the rising market value of our member and investor capital value and general reserve.  

Operational costs as a proportion of total assets remained under control, falling from 3.9% to 3.5%. Costs are usually lower in the first half than in the second half of the year. Net liquidity (cash) decreased once more, from 11.3% to 8.7% of total assets, because of development financing portfolio growth and redemptions, but remained within our liquidity contingency ratio threshold. 

Future outlook 

We look forward to launching more marketing campaigns in our main inflow countries in the second quarter. Equally, Oikocredit will continue manage with due care the growth and quality of the credit and equity portfolio, while seeking to support more community-focused projects, for which we already have several promising prospects in the pipeline. 

More information about Q1 2024 is available at https://www.oikocredit.coop/en/about-us/facts-figures/facts-figures.