Q3 2024 quarterly report: Results hold steady despite market concerns

Implementing our 2022-2026 strategy 

Oikocredit’s 2022-2026 strategy includes high-impact, innovative community-focused investments in education, housing, water and sanitation, infrastructure and climate action. By Q3 our community-focused portfolio stood at EUR 72 million, above our target for the period.

We are very pleased to be starting the third year of our partnership with Aqua for All in support of small and medium enterprises serving the water and sanitation economy in Africa and Asia. We have also launched a new water and sanitation partnership with US-based non-profit Water.org to enlarge service provision in low-income communities, initially in Latin America.

Our collaboration on education since late 2021 with Opportunity International continues to increase access to affordable non-state schooling in low- and middle-income countries. We have now invested in 15 financial institutions where Opportunity has provided technical assistance, and results are encouraging.

Maanaveeya, Oikocredit’s Indian subsidiary, celebrated its 20th anniversary in August 2024. Together we have helped more than 2 million people in India improve their lives since 2004 by financing microfinance institutions, micro, small and medium enterprises, and sustainable energy projects. Remarkably, 95% of Maanaveeya’s partners’ clients are women, and 75% live in rural areas.

Our fourth annual Client Self-Perception Survey is well underway. Financial inclusion partners in Africa, Asia and Latin America have so far this year reached more than 24,800 clients with the online survey questionnaire. Seventeen partners have completed their data collection, and nine further partners are partway through the process.

In Q3 we published our latest Impact Report. The report demonstrates how Oikocredit’s investing continues to expand access to financing, non-financial support, and other opportunities for our partners and their clients, members, suppliers and employees across 33 countries in Africa, Asia, and Latin America and the Caribbean.

Our capacity building activities sustain improvements in credit and equity partners’ performance. We met our target of 40% of partners with improved environmental, social and governance (ESG) scores this year by the end of the quarter.

Working with our support associations, we maintained promotion of the cooperative’s impact investing mission in inflow markets such as Austria, Belgium, France, Germany and Switzerland.

To help Oikocredit re-engage with the World Council of Churches and its member organisations, Managing Director Mirjam ‘t Lam visited the WCC in Geneva in August. Mirjam’s conversation with WCC programme director Rev. Dr Kenneth Mtata focused on our historical relationship, impacts achieved together and future opportunities.

Financial performance and portfolio development

Oikocredit’s total outstanding development financing (credit and equity) reduced during the quarter from EUR 1,099.1 million to EUR 1,029.8 million, in line with our regular seasonal pattern.

The year-to-date net result was EUR 1.4 million positive, down from EUR 3.2 million at the end of Q2. Rising loan loss provisions and impairments reduced net income.

The extraordinary macroeconomic situation in Bolivia, our fifth largest outflow market currently with EUR 49.6 million invested, is affecting the repayment capacity of partners there. Because of Bolivia’s political instability and economic problems, expatriation of USD is at present possible only at excessive fees/commissions that have risen very rapidly during the year. We have determined an appropriate loan loss provisioning level for our Bolivian portfolio and have started discussions with partners on eligibility conditions for rescheduling or a moratorium.

Year-to-date operating income was EUR 63.5 million, benefitting from equity dividends during Q3, while operating costs as a proportion of total assets rose from 3.7% to 3.8%. Liquidity increased to 17.5%, above our contingency ratio threshold.

Net asset value per participation decreased to EUR 213.15 from EUR 214.38 the previous quarter, largely because of the reduction in income for the year and the decline in the restricted exchange fluctuation reserve.

Portfolio quality measured by the PAR 90 portfolio at risk percentage (outstanding loans with payments more than 90 days overdue) increased from 6.6% to 7.5%, remaining above our 6% target threshold. This rise resulted from PAR 90 increases in Africa and in agriculture and from the portfolio’s contraction.

Redemptions continued to reduce our member and investor capital in Q3 from EUR 981.0 million (Q2) to EUR 975.4 million. However, the rate of decrease has slowed; numbers appear to be stabilising; and there was member and investor capital growth in Belgium and France.

Organisational developments

We announced shortly after the close of Q3 that Gwen van Berne, Director of Finance & Risk, will leave Oikocredit at the end of the year to pursue a new career opportunity.

Future outlook

The environment in which Oikocredit operates remains challenging due to the global economic slowdown, political changes and climate-related events all affecting our partners and end-clients in different ways. We expect PAR levels to remain high and will continue to focus on actively managing the quality of our portfolio and apply a cautious approach to onboarding new partners. The economic and political situation in Bolivia makes it difficult to predict our portfolio’s overall performance in the fourth quarter.

More information about Q3 2024 is available here.

Linked documents

	Title	Filesize	MIME-type
	Oikocredit in Q3-2024 (PDF)	3.6 MB	application/pdf