Oikocredit announces annual results and reveals enhanced strategy to strengthen social impact
Amersfoort, the Netherlands – Social impact investor and worldwide cooperative Oikocredit today published its annual results for 2017. Oikocredit continues to fulfil its ambition to improve the quality of life of low-income people by providing financing and capacity building support to 747 partner organisations active in inclusive finance, agriculture and renewable energy.
High-quality portfolio despite external challenges
The cooperative’s overall annual result is a positive € 18.4 million, a lower result than in 2016 (€ 29.0 million). The strengthening of the euro against the US Dollar and correlated currencies heavily impacted Oikocredit’s results. At the same time, the negative exchange rate results were largely compensated by an internal fund that has been established to absorb these currency risks. The global low interest rate environment also affected lower earnings in Oikocredit’s credit business.
The cooperative was pleased to see that its newest focus area of renewable energy grew by 23.4 percent (€ 49.1 million), now representing 5 percent of the overall portfolio. Agriculture now accounts for 15 percent of the portfolio (€ 147.4 million), and inclusive finance, including microfinance, (€ 754.8 million), holds the majority of the portfolio at 76.9 percent. However, the cooperative’s overall development financing portfolio decreased by 6.3 percent to € 981.7 million. The portfolio’s contraction was a result of the strengthening of the euro, as the majority of the portfolio is disbursed in US dollars or correlated local currencies.
In addition, Oikocredit took steps to improve the quality of the development finance portfolio with an increased emphasis on the balancing of risk, social return and financial return. As a result, the portfolio at risk (the percentage of the credit portfolio with payments more than 90 days overdue) remained low at 4.6 percent (2016: 4.5 percent).
While the credit portfolio contracted, the equity portfolio grew by 16.9 percent, and now comprises 13.6 percent of the portfolio, in line with the cooperative’s ambition to reach 15 percent of the overall portfolio by 2021.
Oikocredit supported twice as many partner organisations (100, up from 45 in 2016) through its capacity building programmes in agriculture, financial services and client outcomes. Investments in these programmes went up by 53 percent to € 845,500.
Strong capital inflow from growing investor base
Oikocredit’s net inflow of lendable funds grew to € 117.4 million (2016: € 94.3 million ), in line with expectations. In addition, the cooperative’s member capital surpassed the one billion milestone (€ 1,012.4 million). Thanks to its members and support associations the cooperative’s inflow network has expanded by 2,000 to approximately 56,000 investors.
In line with financial results, Oikocredit’s managing board will recommend the declaration of a 1 percent dividend for 2017 to the annual general meeting in June.
Enhanced strategy to maximise social impact
In order to achieve maximum social impact, the cooperative updated its strategy in 2017 and defined a new ambition statement.
Thos Gieskes, managing director at Oikocredit, said: “The idea of creating Oikocredit first came 50 years ago. We are proud of our track record as a pioneer in development finance, having supported over 1,800 partners with € 3.3 billion since we were officially founded in 1975.
“However, the world around us is changing and we have to adapt our strategy in order to remain successful in future. In our ambition statement we defined our future role as a catalyst bringing about social change for low-income people with the aim of maximising social impact, while safeguarding the environment and generating fair financial returns for our global investor base.”
The updated strategy will be implemented in 2018 and will lead to stronger concentration within Oikocredit’s sectors and markets. It will also focus on reducing complexity and increasing efficiency through a review of the cooperative’s processes and operating model. Strengthening the organisation’s capabilities, its people and its systems are at the core of the strategy.
Result highlights:
- Net consolidated result of € 18.4 million
- Total assets up 0.9% to € 1,220.0 million
- Development financing portfolio down 6.3% to € 981.7 million
- 100 partners, up 122.2% benefiting from capacity building programmes, totalling € 845,000; up 72% from € 490,000.
- Net inflow of lendable funds up € 23.1 million to € 117.4 million
- Proposed 1% dividend
- Investors up by 2,000 – 56,000
- Full details available at www.oikocredit.coop/annual-report