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Presentation on the topic: PRESENTATION FOR INVESTORS MICROFINANCE BUSINESS ORGANIZATION 2016" - Transcript:
1 PRESENTATION FOR INVESTORS OF MIKROFIN ASSURANCE BUSINESS ORGANIZATION Almaty 2016
2 NAVIGATION Summary 2. Problem 3. Solution to the problem 4. Features of the business 5. How it works 6. Scaling 7. Market analysis 8. Large companies 9. Medium companies 10. MFO project 11. MCO / LLP project 12. How we differ 13 Promotion channels 14. Technological aspects 15. Financial model 16. Project launch costs 16. SWOT analysis of the project 16. Risks 14. Goal chart 15. Project financing method 16. Team 17. Postscript
3 SUMMARY 3 Investments Single Bachelors Essence of the project Single Bachelors Financial indicators Single Bachelors Launch of a microfinance project Total 500 million tenge Borrowed 500 million tenge Own 0 Non-financial indicators Single Bachelors Office location - Almaty Number of sales points - 2 plus management superstructure Personnel 34 people Planning horizon 6 years NPV IRR Payback period 4 years. 4 Disc. payback period 6 years. The MCO/LLP business was not included in the analysis.
4 FINANCIAL MARKET CLIENT MARKET The number of microfinance organizations decreased from 415 in mid-2015 to 71 this year. The market as a whole is shrinking Banks have reduced the supply of money Money has risen in price, there is no tenge liquidity, deposits are 80% in foreign currency 4 Credit history is deteriorating Business turnover is decreasing capital There is pent-up demand in households Clients are left without financing The crisis is putting pressure on business PROBLEM
5 Business credits 5 Payday loans (off-line) PROBLEM SOLUTION One “roof” MFO Single bachelors MCO / LLP Single bachelors Payday microfinance for amounts up to 150 thousand tenge. The company is an ordinary LLP. Loans in the amount of up to 18 million tenge. Subject to regulation by the National Bank. Three businesses Payday loans (online) Two companies Working with clients in the office and via the Internet - choice: Off-line immediately Online in the future
6 FEATURES OF BUSINESS 6 Business Min Authorized capital Max Interest rate on credit Regulations of the National Bank of Kazakhstan Note Credit partnership 100 MCI56% Yes Only participants of the partnership Pawnshop 100 MCI Unlimited No Provision of credits secured by movable property. Accounting, storage and sale of jewelry MFO 30 million tenge 56% Yes Unsecured loans, secured loans, group loans MCO / LLP 100 MCI Unlimited No Mainly online lending. Short-term loans - “credit before payday”
7 7 HOW IT WORKS Sales channels Single bachelors Offices Clients Single bachelors Products Single bachelors Business classic Business express Agro Pawnshop Consumer (?) Clients Single bachelors Products Single bachelors Paycheck-to-paycheck loan Sales channels Single bachelors Offices Internet MFO MCO / LLP
8 SCALING 8 Almaty (off-line) Almaty (off-line + online) Other regions? Kazakhstan? The project is easily scalable
9 PROBLEM 9 1. State: - Samruk-Kazyna - Kaz Agro - other state-owned companies 2. Oil and gas companies: TCO, KPO, SNPS, Lukoil, Agip 3. Mining and Metallurgical Companies: - Arcelor Mittal Temirtau - ENRC - Kazakhmys I Level. Great ones. Business structures of representatives of the establishment II Level. Large (Business & Authority) III Level. Large (other companies) Transport Communications Construction Trade FMCG Processing. industry Energy Oil and gas complex, except for the giants Mining and metallurgical complex, except for the giants Agriculture Transnational raw materials companies Oil Metal IV Level. Medium business (services for large businesses) Level V. Small “white” business Level VI. Small “gray” business and self-employed population MARKET ANALYSIS
16 MFO PROJECT 16 Status Rate Single bachelors Loan term Single bachelors 6-8 months. max 12 months Shtravy Lonely bachelors max loan amount Lonely bachelors Number of branches Lonely bachelors Issuance Lonely bachelors Issuance of credits only through the bank 1-2% for each day of delay Collateral 40-50%, average 45%, commission 2% Unsecured 50-55%, average 52%, commission 5.5% Collateral max 5 million, average 3 million tenge, Unsecured max 1 million, average 400 thousand tenge 1 Credit assessment. Single bachelors The assessment is based on the borrower's income and collateral Expected delay Single bachelors 2% / year - for secured loans, 4-6% / year for unsecured loans Loans Single bachelors 90% Collateralized 10% Unsecured 2
17 MCO / LLP PROJECT 17 Status Rate Single Bachelors Loan term Single Bachelors 3-30 days Shtrava Single Bachelors max loan amount Single Bachelors Number of branches Single Bachelors Issuing Single Bachelors Issuing loans only through the bank 1-2% for each day of delay, %, average 400%, commission 0% max 150 thousand tenge average 40 thousand tenge 1 Credit assessment. Single bachelors Scoring score according to the BKI Expected delay Single bachelors 20% / year Loans Single bachelors 100% Unsecured 3 Internet Single bachelors For the future, transition to a completely online MCO / LLP project
18 WHAT ARE WE DIFFERENT 18 We use group financing to reduce credit risks We focus on the pledge of liquid property When pledging vehicles, we use options A) mortgage B) installation of an electronic control system When pledging housing, we do not accept housing with children When issuing a credit 5 For large amounts, we use a repurchase agreement When returning a credit card If there is a delay from the 1st day, we connect a call center A person with shoulder straps is required
21 FINANCIAL MODEL 21 BALANCE SHEET ASSETS Money Loans provided to clients: Agricultural loans Consumer loans Business loans Problem loans Reserve for loans Total loans Fixed assets: Equipment, furniture, etc. Intangible assets Total fixed assets TOTAL ASSETS LIABILITIES A Other accounts payable Future income periods Total liabilities CAPITAL Paid-in capital Retained earnings Reserves Total capital TOTAL LIABILITIES AND CAPITAL Calculations were made without taking into account the business of MKO / LLP 000 KZT
22 FINANCIAL MODEL 22 18% 9% 73% Total 100% Without taking into account market influence, the growth dynamics of the credit portfolio is limited by 2 factors: 1) The size of investments and/or borrowed funds; 2) Labor productivity and the number of credit officers. Structure of the credit portfolio Agro-credentials Consumption. credits Business - credits 000 KZT
23 FINANCIAL MODEL 23 OP&U Interest income Interest expense Net interest income Fee income Personnel expenses General and administrative expenses Depreciation of intangible assets 0100 Depreciation of assets Provisions for problem loans Profit before taxes Income tax Net profit Net profit margin - 12% 39% 43% 44% 000 KZT
24 FINANCIAL MODEL 24 Dynamics of income and expenses 17% 83% Total 100% Commission income Interest income 46% 21%1%31% 100% Personnel expenses General and administrative. expenses Provisions Depreciation 000 KZT
25 FINANCIAL MODEL KZT ODDS Operating flow Net profit Depreciation and amortization Adjustments to accounts receivable and accounts payable Net cash Investment flow CAPEX Net cash Funding flow Loans issued to customers Loans repaid by customers Capital investments Net cash INCREASE IN CASH Cumulative net cash flow Discounted flow with accumulation
26 KZT FINANCIAL MODEL Indicator Sustainability and profitability Operational stability 88%198%221%225%226%227% Return on assets (ROA) -3%16%15%13%11%9% Return on equity (ROE) -3%17 % 14%12%10% Portfolio growth 286%121%74%53%40% Borrower growth 176%92%42%25%17% Asset/liability management Gross portfolio return 81%157%146%137%128%120% Net interest margin 100% Portfolio to assets 108%105%92%82%75%69% Debt to equity 0% Leverage1.1x 1.0x Efficiency and productivity Total headcount (end of period)34 Loan officers (end of period )10 Portfolio (thousand tenge) per 1st credit officer Profitability EBITDA margin - 12% 49% 54% 55% Net profit margin - 12% 39% 43% 44%
28 SWOT ANALYSIS OF THE PROJECT 28 Strengths Weaknesses Presence of a team motivated by results Experience in banking, retail and MS Presence of a call center No experience in implementing full-fledged independent financial projects The team is not fully formed Financial leverage is required Opportunities Threats Entry into the competitor market with stronger finances and marketing Changing market preferences, changing ecosystem Crisis is a good time to open a business with “anti-crisis” value Skim the cream and sell the business
29 RISKS 29 RISK RISK LEVEL METHOD OF LEVELING Incorrect business model Medium Refocusing on another market / market segment Incorrect marketing strategy Medium Refocusing on another market / market segment Weak organization of processes and procedures. High Detailed description of all processes, implementation of CRM for control Change of key employees High Motivation due to options on future profits Lack of financing Medium The project initially has a low financial barrier to entry, but high marketing costs The emergence of competitors with a similar product High Anticipatory occupation of a free market niche Change in preferences market Low No
30 SCHEDULE OF OBJECTIVES 30 Transition to strategic planning Transition to strategic planning Tactical planning Obtaining funding 0th period + 2 months. Test launch of the project Reaching break-even level + 12 months. + 6 months Reaching planned targets Reaching net profit + 6 months. + 3 months Making a decision to scale the project / exit the project + 3 months. Team
31 METHOD OF FINANCING THE PROJECT 31 1 Contribution to the Authorized Fund 30 million tenge (minimum required amount) 2 Next, the project can be funded in 2 main options or their combinations A. Direct financing B. Financing through a credit-deposit scheme in a bank. This scheme provides that the sum of the available limit and the loan balance is less than the deposit amount. Advantages - money always “works”, even if the MFO business has not yet reached the portfolio’s projected indicators. Indicative indicators: Deposit in tenge, deposit rate 10%, credit rate 13% Deposit in foreign currency, deposit rate 4%, credit rate 20% A mixed scheme is possible.
32 TEAM 32 Operations Management Director: Barak H.O. Role: Experience: Education: Salaried employees Outsourcing: IT Collection Partially marketing Chief accountant Credit officers Underwriters Operations Director: Unknown A.S. Role: Experience: Education: 4 Appraiser 5 Lawyer 6 SB
Allowed operations (2 of 2):
motivated to refuse to enter into a microloan agreement;
carry out other activities along with microfinance activities, taking into account the restrictions established by law, including issuing other loans and providing other services in the manner prescribed by federal laws and constituent documents;
attract funds in the form of loans, voluntary (charitable) contributions and donations, as well as in other forms not prohibited by federal laws, subject to the restrictions established by law.
It is worth noting that microfinance organizations have the right to provide the information they have to the credit history bureau.
Microfinance organizations (MFOs)
Operations prohibited:
Raise funds from individuals;
Act as a guarantor for the obligations of its founders;
Issue loans in foreign currency;
Unilaterally change interest rates and (or) the procedure for determining them
Apply to a borrower who has fully or partially repaid the microloan amount ahead of schedule and in advance in writing
who notified the microfinance organization of such intention at least ten calendar days in advance, penalties for early repayment of the microloan;
Carry out any types of professional activities in the securities market;
Issue a microloan (microloans) to the borrower if the amount
principal debt of the borrower to the microfinance organization for
microloan agreements in the case of provision of such a microloan (microloans) will exceed one million rubles.
Types of microfinance organizations
They attract savings deposits and place them mainly in mortgage loans. Distributed in the USA
Credit unions. They are created by a certain circle of founders close to their place of residence or professional activity (for example, credit unions of doctors, teachers, miners, etc.). The goal is to increase the efficiency of using funds and provide preferential loans
Mutual credit societies are organizations
whose activities have common features with credit unions, but they unite legal entities, usually similar in professional affiliation.
Banking system
The banking system is
a set of banks and non-bank credit organizations operating in the economy within a single
and legal mechanism.
In accordance with Art. 2 of the Law “On Banks and Banking Activities”, the Russian banking system includes the Central Bank of the Russian Federation (Bank of Russia), credit organizations, as well as
representative offices
Signs of classification
banking systems (1 of 5)
by the degree of state participation in banking
market model of the banking system.
according to the order of relationships,
developing between credit
single-tier banking system;
multi-level banking system.
Signs of classification of banking systems (2 of 5)
The model of the banking system implies the monopoly right of the state to carry out banking operations.
● state monopoly on banking operations and the establishment of banking institutions;
● a single vertical in the banking system; ● unified policy of relations with clients;
● state responsibility for the performance of banks;
● administrative appointment of bank managers by government agencies;
● a narrow range of credit institutions in the country
Signs of classification of banking systems (3 of 5)
The market model of the banking system is built on the principles of private property and competitiveness in the banking sector of the economy
● the role of the state is limited to establishing the basic principles and parameters of development.
● management of the banking sector is decentralized.
● the presence in the banking system of a significant number of private banks with the obligation of the state to maintain order in the national economy
Signs of classification of banking systems (4 of 5)
Single-level banking option
system is typical either for the initial stages of development of this activity, which presupposes the existence in the economy of a small number of banks of the same type. Or this is typical of a totalitarian economy, in which credit institutions operate only under state ownership.
Signs of classification of banking systems (5 out of 5)
Multi-level banking system
implies the division of credit institutions into several levels. Regardless of the number of allocated levels, the Central Bank (or another body performing its functions) is always on the first one.
Within the framework of the functioning of multi-level banking systems, we can distinguish
two-level and three-level systems
Multi-level banking system
The two-tier banking system is the most common in the modern world.
The second level is represented by banks and special institutions
Three-tier banking system.
The second level includes only banking institutions, and the third level contains special financial and credit institutions.
Microfinance organizations presentation
Presentation for speech by I.A. Kochetkova at FINFIN 2018 - about the socialization of MFOs-version 1
Dear members of the SRO “Unity”,
in connection with technical work
Your personal account is temporarily unavailable.
We apologize!
SRO "Unity" is working on
identifying organizations that carry out
illegal microfinance activities.
In this regard, we ask you to send
available information:
Consultation on software issues and transition to EPS and OSBU
Hot audience
- 0% failure rate
- high viewing depth
- the opportunity to promote a brand and create a positive image
- adequate price-quality ratio (2000 rubles per month for everything!)
- high ranking in search engines
- Convenient services for attracting hot clients (Unified database of loans and investments of the Russian Federation).
Rehabilitation of the industry’s image: unlimited text materials from partners.
- Remote press center (assistance in writing press releases, interviews, making banners).
Group of companies "International Financial Center" (IFC) began its activities with the creation in 1998 of the MFC Training Center, which immediately took a leading place among specialized centers for training and advanced training of financial specialists, including in the stock market, and since 1998 has been one of the leaders in the Russian market of relevant services. On the basis of the MFC Training Center, the following were created: MFC Institute, MFC-Consulting, Recruitment Agency, International Financial Center (St. Petersburg), Center for Professional Attestation and Certification.
Today, the MFC Institute is a methodological and organizational leader in the field of training and retraining of accountants as part of the transition to the chart of accounts and industry accounting standards (OSBU) of the Bank of Russia for non-credit financial organizations (NFIs), including for MFOs, CPCs, ZhNK , SKKK and pawnshops. Developed and implemented optimal training system , learning programs and corresponding to them training schedule, based on many years of experience (since 1998):
Developed and adapted specialized training programs for microfinance market participants .
Low affordable cost of training for “small” participants in the financial market and in general for participants in the microfinance market.
Free webinars on introductory issues of accounting and financial reporting for MFOs, CPCs, ZhNK, SKKK, pawnshops.
MFOs, CPCs, ZhNK, SKKK and pawnshops that have indicated the MFC Institute in the training plan (changes/additions to the training plan) are given an additional discount of 20 percent.
Handouts, visuals, educational and methodological materials, and knowledge control tools have been prepared and are actively used (in total, more than 500 pages).
Are attracted highly qualified teachers , presenting the material in an accessible way using practical examples from financial and economic activities MFO, CPC, ZhNK, SKKK and pawnshops .
Having unique experience in training microfinance market participants in the field of chart of accounts and OSAS .
Training is actively carried out using online technologies through Internet broadcasts. The MFC Institute has its own high-tech infrastructure for organizing Internet broadcasts and distance learning and interacts with the largest and most reliable service for organizing online broadcasts today.
Ample opportunities for accountants and auditors of microfinance market participants not to “confine themselves” only to industry (microfinance) specifics, but also to comprehensively study accounting and financial reporting for non-profit organizations, become a generalist and build a career in accounting, preparation of financial statements or audit of different types of non-financial organizations.
Microfinance organizations "Money Men" and "MigCredit" debunked myths about consumer lending in Russia
On November 14, microfinance organizations Money Men and MigCredit held a press conference “Consumer lending in Russia: myths and reality.”
The main topic of the press conference was an attempt to debunk some myths about unsecured consumer lending in Russia. General Director, Chairman of the Board of MigCredit MFC Laura Fainzilberg and Managing Director of the microfinance organization Money Men Alexander Dunaev cited a number of facts and figures indicating that the current level of debt burden of the population in the country is not only not critical, but is also significantly inferior to the similar level indicator of most countries with developing and developed economic systems.
Unsecured retail lending market in Russia
An important aspect of the country's lending growth has been the development of the overall financial infrastructure in the country. This is evidenced by the growth in the number of credit histories and the increased availability of information from credit bureaus for financial institutions. According to various sources, today 20% to 24% of potential borrowers do not have a credit history. The availability of information about the credit discipline of borrowers and the existing credit load in real time, in turn, stimulated the development of the express lending market. In addition, the factors that ensured the growth of the unsecured court market include the lack of long-term available funding, the growth of financial literacy of the population and the ability to build scalable intrabank operational processes.
Currently, the cash loans, credit cards and POS loans segment accounts for 63.5% of the total retail loans.
Despite the increased attention to monoliner banks in matters of debt exposure of the country's population (Russian Standard, HCF, Renaissance Credit, TKS, etc.), their combined share in the unsecured lending market does not exceed 15% of the total retail lending market.
The share of Russians' income allocated to servicing loans was 17% in 2012. For example, in Turkey, where the issue of the debt burden of the country's citizens is not raised at all, this figure is 30%. The share of income allocated to debt servicing among Russians is also lower than in Hungary, Poland, the Czech Republic and other European countries.
On average, in Russia, for every economically active resident there are 1.3 thousand dollars of consumer loans, which is almost 30% lower than the same figure in Poland.
At the same time, 52% of the economically active population in Russia have no loans at all.
In the credit card market, Russia lags significantly behind economically developed and developing countries in terms of the size of issues. There are only 155 credit cards per thousand Russians, while in the United States there are 1,701 credit cards per thousand residents.
Based on the results of the first half of 2013, the share of borrowers with two to five existing loans decreased by 5 basis points compared to the second half of 2012. Moreover, the share of borrowers with 5 loans is less than 1% of the total number of borrowers.
The trend is associated with reductions in risky unsecured lending programs.
Financial institutions are adjusting their credit policies in the direction of tightening requirements for borrowers, which indicates, among other things, the effective operation of market self-regulation mechanisms in the retail lending market.
The quality of loan portfolios is stable
Overdue debt in Russia is stable, and since 2010 it has had a general downward trend.
The total ratio of overdue consumer debt in the second quarter of 2013 shows positive dynamics compared to the same period in 2012 (4.6% versus 4.8%).
IFC: myths and reality
The volume of IFC loans does not affect the level of the population's credit burden. The IFC market is showing strong growth rates, having increased from 30 billion rubles. in 2010 to 48 billion rubles. In 2012.
Based on the results of 2013, the volume of the microfinance market is projected to grow to 85 billion rubles. At the same time, only 45% of the IFC's assets are financing individuals for consumer needs.
With excessive public attention to the microfinance market regarding the impact on the level of credit burden on the population, the volume of IFC loans is insignificant in comparison with the banking sector. The total portfolio of the IFC (including lending to small and medium-sized businesses) in relation to the volume of bank lending is only 0.18%.
IFCs do not issue loans online to “everyone.” Along with the growth of the IFC market, there is a strong trend towards improving risk management systems. The average approval rate for MigCredit loan applications during 2013 was 13.3%, the same figure for Money Man was 10%.
It is important for the IFC to issue a loan to someone who intends to repay the borrowed funds. At the same time, it is necessary to build trusting relationships with the prospect of long-term cooperation. Microfinancers develop future bank clients and return clients back to the track of institutionalized monetary relations. Thus, applying to the IFC can improve the credit history of borrowers. In the future, this gives them access to banking products.
IFC clients are not marginalized, but ordinary citizens-taxpayers with low incomes
Today, more than 20 million people of the economically active population of Russia do not have access to banking products. At the same time, just over 1.5 million Russians have used IFC services to date, which indicates the potential of the market.
The difference between MFCs and banks, which became the basis for the birth of the myth about the marginality of clients, is the willingness of MFCs to lend to people with an imperfect credit history.
Laura Feinzilberg:“Over the past few months, the public has been actively discussing issues related to unsecured consumer lending in Russia. One of the main theses in the information flow is the position that the consumer lending market in the country is overheated, the population is over-leveraged, i.e. has an excessive debt load. However, for most financiers, it is obvious that the level of credit burden in the consumer lending sector currently does not pose a threat to the country's economy. We conducted a study of the lending market and summarized scattered data confirming this statement.”
Alexander Dunaev: “The Russian microfinance market is growing at a steady pace, which indicates stable demand for the service from both individuals and small and medium-sized businesses. Naturally, this growth attracts the attention of the media and mega-regulators, which requires an increased degree of openness and transparency of our industry. We tried to clarify by considering objective facts to show a fair state of affairs in the consumer lending market in general, and specifically in the microfinance market.”
Chairman of the Board of SRO NP "Union of MiR", President of NAUMIR Mikhail Mamuta in his speech, he assessed the impact of the mega-regulator’s initiatives on the future of unsecured consumer lending in Russia.
The article was written based on materials from the sites: studfiles.net, sro-mfo.ru, moneyman.ru.
Description of the presentation by individual slides:
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Microfinance organizations: How to avoid falling into credit slavery? Teacher: Khoroshavtseva O.A.
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What does MFO mean? MFO (microfinance organization) are commercial structures that provide lending to individuals, including individual entrepreneurs. The size of their capital exceeds 70 million rubles. They are accountable to the Bank of Russia, although they have no direct relationship with banks.
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What activities does the MFO conduct? The main activity of microfinance organizations is issuing loans to individuals, incl. and via the Internet. However, most companies specialize in small short-term microloans. Services are provided to all categories of citizens on the basis of a Russian passport. The average loan amount in many microfinance organizations is 5,000 - 15,000 rubles. The size of the daily commission ranges from 1.5 to 2.2%, and the period for using the money is from 5 to 30 days.
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Regular borrowers can borrow large amounts at reduced interest rates. The maximum loan size is RUB 100,000. The term for managing the money is up to 1 year. By providing additional documents and confirming solvency, borrowers have access to preferential terms.
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Additionally, microfinance organizations can attract funds from individuals at interest rates that are several times higher than bank rates. But such deposits are not insured at the state level.
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How do you know if an MFO is real? To avoid fraud, take loans only from those microfinance organizations that operate officially. The activities of such structures are regulated by a special law “On microfinance activities of microfinance organizations.” The document clearly delineates the rights and responsibilities of the parties to the lending process, and also outlines the features of the creation and operation of such structures. Each official company is included in a special register, a list of which can be found on the official website of the Central Bank of the Russian Federation. For example, such companies include Credit 24, SMS Finance, Money Men.
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During the registration process of a new company, a license for microfinance activities is issued. You can see copies of licenses and other statutory documents on the official services of MFOs, in special sections.
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How is an MFO different from a bank? Banks and microfinance organizations are not direct competitors, since their areas of work and goals are different. But within the framework of providing consumer loans, the advantages of microfinance organizations are obvious:
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Microfinance organizations (MFOs) can be a real salvation in some specific situations - for example, when you urgently need to get a small amount before your salary. It is assumed that the client repays small loans almost immediately, and this story does not turn into a long epic with huge debts. But if only everything in life was as it was originally supposed to be! Unfortunately, clients often find themselves in real bondage, and not always directly through their own fault. They may be deceived by employees of these companies or may not be fully aware of what they are agreeing to when entering into an agreement.
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There are also restrictions on the activities of MFOs: loans cannot be issued in foreign currency; the microloan should not exceed 1 million rubles; You cannot put pressure on the client in order to conclude the most profitable contract for the organization. If an MFI offers you anything from this list, it is breaking the law! You should not agree to conditions that are obviously unfavorable for you.
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We have all heard stories about the kind of “slavery” that MFO clients find themselves in if they carelessly agreed to unfavorable conditions and signed the agreement without reading it. Many aspects of MFO activities still remain controversial and unclear, leaving room for speculation and violations. To improve this situation, in July 2017, the Central Bank approved a standard for protecting clients of microfinance organizations. This standard has somewhat tightened the operating conditions of MFOs; it is designed to protect, first of all, the interests of clients.
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The following changes have been made: the borrower cannot be provided with more than 10 short-term loans (up to 30 days) per year; clients can submit questions and complaints to microfinance organizations (they are obliged to respond), they must receive a response within 15 working days; MFO employees are required to record and store conversations with clients conducted through all available communication channels: telephone, correspondence on the Internet, paper correspondence. Digital evidence must be retained for six months, and paper documents for a year; once again separately noted that MFO employees cannot put pressure on clients in order to force them to enter into unfavorable agreements (for example, to use a certain service or sign a new microloan agreement with worse conditions); It is prohibited to award bonuses to MFO employees solely on the basis of the number of concluded contracts. This will avoid the situation of unhealthy competition within microfinance organizations, which forces employees to take any measures just to get a good reward.
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Naturally, these measures still will not protect against all problems associated with MFOs. Unscrupulous market players find gullible clients and force them to get involved in colossal debts, which sometimes become an unbearable burden: after all, if the payment is delayed, the amount of debt, taking into account the high interest rates on microloans, becomes absolutely enormous. However, fortunately, even imperfect legislation or its non-compliance often does not cause injustice.
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An example of an MFO client was calculated 730% on a microloan, the final payment amount was huge. But after studying the case materials, the court ruled that interest cannot be accrued on the entire amount and in the amount that the microfinance organization initially insisted on. And he made a decision that significantly simplified the terms of payment.
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A resident of the city of Ivanovo turned to an organization that issues microloans and entered into an agreement with it, according to which he received a loan of 10,000 rubles for a period of 15 calendar days. The most interesting aspect of this agreement was that the loan was issued at... 730% per annum! Having not received the amount due under the agreement from the borrower within the required time, the organization went to court. In their statement, her representatives demanded that the client pay both the principal and interest on the debt. The court of first instance ordered the defendant to pay a relatively modest amount: only 15,000 rubles in interest and 700 rubles in late fees. Not satisfied with this decision, the organization went further and filed an appeal. During the second consideration of this case, the decision of the court of first instance was canceled regarding the recovery of interest on the loan. And they assigned a much larger payment, determined at the rate of 730% per annum! Now the man owed 93,400 rubles! The total debt (with a fine and legal costs paid by the losing party) amounted to 107,100 rubles. Naturally, the defendant was not satisfied with this state of affairs, and he, in turn, filed a cassation appeal, in which he asked to cancel the second decision and declare the appeal decision illegal. Progress of the proceedings Having studied the case materials, the court drew attention to the terms of the agreement entered into by the microfinance organization and the borrower. On the one hand, the ability to specify in the agreement an interest rate that would be higher than the refinancing rate at the time of the transaction is enshrined in law. The interest rate is determined by agreement of the parties. And the appellate court is right in taking this circumstance into account when making its decision. On the other hand, it was not taken into account that situations similar to the one under consideration are regulated, among other things, by No. 151-FZ “On microfinance activities and microfinance organizations (hereinafter referred to as the Law on Microfinance Activities). And it states that microfinance organizations provide loans at high interest rates only on the conditions that the amounts are small and the term is not long. At the same time, it is important to ensure that the conditions are not overtly burdensome for the borrower and do not violate the financial interests of the organization that issues the loan. If you try to extend the terms of such a short-term agreement for a longer period, then the purpose of the activities of microfinance organizations is distorted, since it turns out that both the interest rate is extremely high and the duration of the period for which it is calculated is long. And this already violates the requirements of reasonableness and fairness, which, among other things, the contract must meet. If you extend the terms of a short-term agreement, the purpose of the activities of microfinance organizations is distorted, how is it that both the interest is extremely high and the duration of the period for which it is calculated is long. The appellate court proceeded from the fact that interest continues to accrue after the expiration of the loan agreement, which amounts to 15 calendar days, but this is incorrect and contradicts the essence of the legislative regulation of microloan agreements, because it makes the agreement with extremely high interest rates virtually unlimited. Based on all of the above, the Supreme Court exempted the defendant from paying enormous interest and recalculated the amount of the debt. When making its decision, the court was guided by the following rules: In Art. 421 of the Civil Code of the Russian Federation states that citizens and legal entities are free to enter into an agreement. In paragraph 1 of Art. 809 of the Civil Code of the Russian Federation specifies that the lender has the right to receive interest from the borrower, the amount of which is established in the agreement. According to Art. 333 of the Civil Code of the Russian Federation, a unilateral reduction of the interest rate under the agreement is not allowed. But at the same time, in paragraph 9 of part 1 of Art. 12 of the Law on Microfinance Activities specifies that a microfinance organization does not have the right to charge interest to the borrower if the amount of interest and other payments accrued under the agreement reaches four times the loan amount. In this regard, the Judicial Collegium for Civil Cases of the Supreme Court of the Russian Federation believes that the calculation of debt for the remaining period (elapsed from the moment of application to the court until the date of consideration of the case) at a rate of 730% cannot be taken into account, and therefore it is necessary to reduce the percentage interest charged. As a result, they were determined based on the weighted average interest rate calculated by the Bank of Russia (17.53% per annum). And thus, the amount that the defendant owes the lender is only 2170.84 rubles. Thus, the Supreme Court did not exempt the defendant from paying the debt on the microloan, but significantly reduced its amount, based on the principle of fairness and reasonableness.
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Do you think this court decision is fair? And are extremely high interest rates on microloans legal?
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Basic “safety rules” when concluding agreements with microfinance organizations: Carefully study the agreement, especially the small print. Don't hesitate to ask if you don't understand something. Often, misunderstandings occur precisely because some points are not clarified and clients do not ask the necessary questions to MFO employees. Take only the amount that you are guaranteed to be able to pay back within the agreed time frame. The area of “application” of microloans is very specific, and can become a real salvation in some situations, or a trap in others. Do not give in to provocations and pressure. Remember that you and only you need; the interests of MFO employees should not become the reason for concluding agreements that are unfavorable for you.
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If you realize that you will not be able to repay the microloan within the agreed time, do not panic. Try to pay off your debt as quickly as possible. If an MFO violates your rights, charges interest on an amount that it has no right to charge, or puts pressure on you (including with the help of debt collectors), go to court. It is possible that he will take your side. You will still have to pay off the debt, but without the colossal interest that is calculated unfairly.
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If a person is late, it is advisable to immediately contact an employee of the microfinance company, explain the situation and name the expected date of payment. MFOs are no less interested in a peaceful resolution of the problem than borrowers, so the likelihood of finding a compromise at the initial stage is very high. The decision in each case is made personally - operators will suggest the best way out of the situation if the person is really interested in solving this problem.
NAVIGATION Summary 2. Problem 3. Solution to the problem 4. Features of the business 5. How it works 6. Scaling 7. Market analysis 8. Large companies 9. Medium companies 10. MFO project 11. MCO / LLP project 12. How we differ 13. Promotion channels 14. Technological aspects 15. Financial model 16. Project launch costs 16. SWOT analysis of the project 16. Risks 14. Goal chart 15. Project financing method 16. Team 17. Postscript
SUMMARY 3 Investments Single Bachelors Essence of the project Single Bachelors Financial indicators Single Bachelors Launch of a microfinance project Total 500 million tenge Borrowed 500 million tenge Own 0 Non-financial indicators Single Bachelors Office location - Almaty Number of sales points - 2 plus management superstructure Personnel 34 people . Planning horizon 6 years NPV IRR Payback period 4 years. 4 Disc. payback period 6 years. The MCO/LLP business was not included in the analysis.
FINANCIAL MARKET CUSTOMER MARKET The number of microfinance organizations has decreased from 415 in mid-2015 to 71 this year. The market as a whole is shrinking Banks have reduced the supply of money Money has risen in price, there is no tenge liquidity, deposits are 80% in foreign currency 4 Credit history is deteriorating Working capital is decreasing in business There is pent-up demand in households Clients are left without financing The crisis is putting pressure on business PROBLEM
Business credits 5 Loans “before payday” (off-line) PROBLEM SOLUTION One “roof” MFO Single bachelors MCO / LLP Single bachelors Microfinance “before payday” for amounts up to 150 thousand tenge. The company is an ordinary LLP. Loans in the amount of up to 18 million tenge. Subject to regulation by the National Bank. Three businesses Payday loans (online) Two companies Working with clients in the office and via the Internet - choice: Off-line immediately Online in the future
FEATURES OF THE BUSINESS 6 Business Min Authorized capital Max Interest rate on the loan Regulations of the National Bank of Kazakhstan Note Credit partnership 100 MCI56% Yes Only participants of the partnership are credited Pawnshop 100 MCI Unlimited No Provision of loans secured by movable property. Accounting, storage and sale of jewelry MFO 30 million tenge 56% Yes Unsecured loans, secured loans, group loans MCO / LLP 100 MCI Unlimited No Mainly online lending. Short-term loans - “credit before payday”
7 HOW IT WORKS Sales channels Single bachelors Offices Clients Single bachelors Products Single bachelors Business classic Business express Agro Pawnshop Consumer (?) Clients Single bachelors Products Single bachelors Paycheck-to-paycheck loan Sales channels Single bachelors Offices Internet MFO MCO / LLP
PROBLEM 9 1. State: - Samruk-Kazyna - Kaz Agro - other state-owned companies 2. Oil and gas companies: TCO, KPO, SNPS, Lukoil, Agip 3. Mining and Metallurgical Companies: - Arcelor Mittal Temirtau - ENRC - Kazakhmys I Level. Great ones. Business structures of representatives of the establishment II Level. Large (Business & Authority) III Level. Large (other companies) Transport Communications Construction Trade FMCG Processing. industry Energy Oil and gas complex, except for the giants Mining and metallurgical complex, except for the giants Agriculture Transnational raw materials companies Oil Metal IV Level. Medium business (services for large businesses) Level V. Small “white” business Level VI. Small “gray” business and self-employed population MARKET ANALYSIS
10 MARKET ANALYSIS Large amounts of loans Targeted loans Large and medium-sized settlements High level of income Low level of delinquency Small amounts of loans Non-targeted loans Small settlements Low level of income High level of delinquency Sectoral structure of macro indicators SMEs Sources of funds for operations 25% Bank clients MFO clients Microfinance organizations are a conditional bridge for entrepreneurs between “financial isolation” and bank credit.
11 MARKET ANALYSIS City Population, thousand people 1Almaty Astana 743 3Shymkent 643 4Karaganda 475 5Aktobe 367 6Taraz 326 7Pavlodar 322 8Ust-Kamenogorsk 309 9Semipalatinsk Uralsk Kostanay Petropavlovsk Kyzylorda Atyrau Ak tau Temirtau Turkestan Kokshetau Taldykorgan Ekibastuz Rudny 114 Term Work with delays Rate Req. to the intended purpose Financial requirements Time to make a decision Requirements for a package of documents Requirements for collateral Better in an MFO Better in a bank
12 MARKET ANALYSIS 1577 MFOs per year Total MFOs Operating Active 71 MFOs per year Total MFOs Expert assessment of the micro-credit market capacity, million USD MFOs pawn shops Other Gray market Factoring, Internet loans, payday loans Value of MFO assets per year billion tenge MCOs / LLPs
13 Demographic pressure 2%2% population growth per year Almaty MARKET ANALYSIS 63% Credits issued for entrepreneurial purposes 22% Share of SMEs in the country's GDP 28% Share of SMEs in the country's labor force 26% Share of SMEs in Almaty and Almaty region to the total number of SMEs Legal entities 170 thousand Total number of SMEs Individual entrepreneurs 978 thousand 5% Astana The most developed SME segment is in the southern regions, where industry is poorly developed, and high demographic pressure is only partially utilized in megacities.
14 LARGE COMPANIES Name Market share by assets Number of clients Volume of credit.port.% overdue Profitability of KMF39.4%128 thousand 29.7 billion tons 1.5-4%ROA - 5.6% ROE % MKO Serta16.8% 7 thousand 15 billion tons Affiliate. with Tsesna Bank Orda Group Credit: MKO Arnur Credit, MKO "Nur Credit" 13.4% 20 thousand 8.0 billion tons 8% ROA - 5.6% ROE % Toyota Fin.Service 10.2% -5.4 billion .t-ROA% ROE% Yrys 8.13%4 thousand 5.6 billion tons-ROA% ROE% Esil 1.82%-0.96 billion tons-ROA% ROE% Asian.creed.fund 1, 73%5 thousand 0.96 billion tons 2% - Kaz Credit Line 1.26% -1.0 billion tons - Bereke 1.2% 7.5 thousand 0.9 billion tons 2.75%ROA % ROE % Shinhan Finance 0.93%-Affiliate. with Shinhan Bank 1 Loan 0.74% -0.6 billion tenge-ROA % ROE %
15 MEDIUM-SIZED COMPANIES Name Market share by assets Number of clients Volume credooo.port. % overdue Yield Union Kredoooit 0.65% -0.58 billion -ROA - 5.08% ROE - 33.6% Astana Finance (joint venture with Astana Group) 0.63% -0.56 billion tons -ROA – 3.0% ROE – 14.48% Kazmicrocredooit 0.4% -0.3 billion t-ROA – 7.97% ROE – 10.92% Comfort Finance (ex.PP Temirbank) 0.39%1200, 3 billion tons-ROA – 4.29% ROE – 22.28% Atyrau Microfinance Center 0.37%-0.29 billion tons-ROA – 7.71% ROE – 7.75% Yesil Finance 0.3% -0.25 billion tons-ROA – 4.89% ROE – 21.49% STAR0.24%-0.17 billion tons-ROA – 3.04% ROE – 3.04% Retail Credit (av. C Astana Bank) 0.2%400.17 billion tons 0.5%ROA – 5.94% ROE – 23.81% Credital0.17% -0.12 billion tons-ROA – 19.25% ROE – 19.34 % of the share Capital 0.14% -0.1 billion tons - ROA - 16.0% ROE - 26.34% Other 13 MFOs (aggregate data) 0.73% -0.42 billion tons - Total 100% .8 billion tons 5%ROA – 5.15% ROE – 20.88%
MFO PROJECT 16 Status Rate Single bachelors Loan term Single bachelors 6-8 months. max 12 months Shtravy Lonely bachelors max loan amount Lonely bachelors Number of branches Lonely bachelors Issuance Lonely bachelors Issuance of credits only through the bank 1-2% for each day of delay Collateral 40-50%, average 45%, commission 2% Unsecured 50-55%, average 52%, commission 5.5% Collateral max 5 million, average 3 million tenge, Unsecured max 1 million, average 400 thousand tenge 1 Credit assessment. Single bachelors The assessment is based on the borrower's income and collateral Expected delay Single bachelors 2% / year - for secured loans, 4-6% / year for unsecured loans Loans Single bachelors 90% Secured 10% Unsecured 2
MCO / LLP PROJECT 17 Status Rate Single Bachelors Loan term Single Bachelors 3-30 days Shtravy Single Bachelors max loan amount Single Bachelors Number of branches Single Bachelors Issuing Single Bachelors Issuing loans only through the bank 1-2% for each day of delay %, average 400%, commission 0% max 150 thousand tenge average 40 thousand tenge 1 Credit assessment. Single bachelors Scoring score according to the BKI Expected delay Single bachelors 20% / year Loans Single bachelors 100% Unsecured 3 Internet Single bachelors For the future, transition to a completely online MCO / LLP project
WHY WE ARE DIFFERENT 18 We use group financing to reduce credit risks We focus on collateral of liquid property When pledging vehicles, we use options A) mortgage B) installation of an electronic control system When pledging housing, we do not accept housing with children When issuing a loan 5 For large amounts, we use a repurchase agreement When return of the credit If there is a delay from the 1st day, we connect the call center A person with shoulder straps is required
20 TECHNOLOGICAL ASPECTS Communication and document flow system Loan accounting system integrated with the accounting system Data exchange system with the State Bank and PKB Scoring system Alert system (sms-mailing, mailing) Bitrix24 Contact Center website + Turnkey Lender website automated Application and behavioral scoring from PKB Not selected Not selected Collection process outsourcing Minimum required package of documents for organizing an MFO business 1. Credit policy 2. Collateral policy 3. Accounting policy 4. Regulations on working with credits 5. Regulations on the credit and tariff committee 6. Regulations on working with problematic credits 7. Regulations for interaction with the regulator, BKI 8. Regulations for cash transactions 9. Rules for calculating provisions 10. Job descriptions
FINANCIAL MODEL 21 BALANCE SHEET ASSETS Money Loans provided to clients: Agricultural loans Consumer loans Business loans Problem loans Reserve for loans Total loans Fixed assets: Equipment, furniture, etc. Intangible assets Total fixed assets TOTAL ASSETS LIABILITIES Other accounts payable Deferred income Total liabilities CAPITAL Paid-in capital Retained earnings Reserves Total capital TOTAL LIABILITIES AND CAPITAL Calculations were made without taking into account the business of MKO / LLP 000 KZT
FINANCIAL MODEL 22 18% 9% 73% Total 100% Without taking into account the influence of the market, the growth dynamics of the credit portfolio is limited by 2 factors: 1) The size of investments and/or borrowed funds; 2) Labor productivity and the number of credit officers. Structure of the credit portfolio Agro-credentials Consumption. credits Business - credits 000 KZT
FINANCIAL MODEL 23 OP&U Interest income Interest expenses Net interest income Fee and commission income Personnel expenses General and administrative expenses Depreciation of intangible assets0100 Depreciation of financial assets Provisions for problem loans Profit before taxes Income tax Net profit Net profit margin - 12% 39% 43% 44% 000 KZT
FINANCIAL MODEL KZT ODDS Operating flow Net profit Depreciation and amortization Adjustments to accounts receivable and accounts payable Net cash Investment flow CAPEX Net cash Funding flow Loans issued to customers Loans repaid by customers Capital investments Net cash INCREASE CASH Cumulative net cash flow Discounted cash flow accumulation
KZT FINANCIAL MODEL Indicator Sustainability and profitability Operational stability 88%198%221%225%226%227% Return on assets (ROA) -3%16%15%13%11%9% Return on equity (ROE) -3%17% 14%12%10% Portfolio growth 286%121%74%53%40% Borrower growth 176%92%42%25%17% Asset/liability management Gross portfolio return 81%157%146%137%128%120% Net interest margin 100% Portfolio to assets 108%105%92%82%75%69% Debt to equity 0% Leverage1.1x 1.0x Efficiency and productivity Total headcount (end of period)34 Loan officers (end of period) 10 Portfolio (thousand tenge) per 1st credit officer Profitability EBITDA margin - 12% 49% 54% 55% Net profit margin - 12% 39% 43% 44%
27 Stages of project implementation Costs, thousand KZT 1 month. 2 months. 3 months. 4 months. 1. Registration of microfinance organizations with the justice authorities Obtaining permission from the Credit Bureau (State Credit Bureau) Obtaining a license from the National Bank Approval of products and agreements in the National Bank Renting premises 6. Redecorating the premises (including equipping a place to work with the State Bank) Purchasing furniture and equipment for passing the State Clinical Hospital Installation of a video surveillance system, fire alarm and recording the process of signing contracts Purchase of equipment, furniture, safes Automation based on 1C MFO Reception of employees 12. Obtaining a loan from the Bank 13. Start of operation of the MFO Reserves for unforeseen expenses 750 Total expenses COSTS FOR LAUNCHING THE PROJECT
SWOT ANALYSIS OF THE PROJECT 28 Strengths Weaknesses Presence of a team motivated by results Experience of working in banking structures, retail and MS Presence of a call center No experience in implementing full-fledged independent financial projects The team is not fully formed Financial leverage is required Opportunities Threats Entry into the market of competitors with stronger finances and marketing Changing market preferences, changing ecosystem Crisis is a good time to open a business with “anti-crisis” value Skim the cream and sell the business
RISKS 29 RISK RISK LEVEL METHOD OF LEVELING Wrong business model Medium Refocusing on another market / market segment Incorrect marketing strategy Medium Refocusing on another market / market segment Weak organization of processes and procedures. High Detailed description of all processes, implementation of CRM for control Change of key employees High Motivation due to options on future profits Lack of financing Medium The project initially has a low financial barrier to entry, but high marketing costs The emergence of competitors with a similar product High Anticipatory occupation of a free market niche Change in preferences market Low No
SCHEDULE OF OBJECTIVES 30 Transition to strategic planning Transition to strategic planning Tactical planning Obtaining funding 0th period + 2 months. Test launch of the project Reaching break-even level + 12 months. + 6 months Reaching planned targets Reaching net profit + 6 months. + 3 months Making a decision to scale the project / exit the project + 3 months. Team
METHOD OF FINANCING THE PROJECT 31 1 Contribution to the Authorized Fund 30 million tenge (minimum required amount) 2 Next, the project can be funded in 2 main options or combinations thereof A. Direct financing B. Financing through a credit-deposit scheme in a bank. This scheme provides that the sum of the available limit and the loan balance is less than the deposit amount. Advantages - money always “works”, even if the MFO business has not yet reached the portfolio’s projected indicators. Indicative indicators: Deposit in tenge, deposit rate 10%, credit rate 13% Deposit in foreign currency, deposit rate 4%, credit rate 20% A mixed scheme is possible.
TEAM 32 Operations Management Director: Barak H.O. Role: Experience: Education: Salaried employees Outsourcing: IT Collection Partially marketing Chief accountant Credit officers Underwriters Operations Director: Unknown A.S. Role: Experience: Education: 4 Appraiser 5 Lawyer 6 SB
Allowed operations (2 of 2):
motivated to refuse to enter into a microloan agreement;
carry out other activities along with microfinance activities, taking into account the restrictions established by law, including issuing other loans and providing other services in the manner prescribed by federal laws and constituent documents;
attract funds in the form of loans, voluntary (charitable) contributions and donations, as well as in other forms not prohibited by federal laws, subject to the restrictions established by law.
It is worth noting that microfinance organizations have the right to provide the information they have to the credit history bureau.
Microfinance organizations (MFOs)
Operations prohibited:
Raise funds from individuals;
Act as a guarantor for the obligations of its founders;
Issue loans in foreign currency;
Unilaterally change interest rates and (or) the procedure for their determination
Apply to borrower, who has repaid the microloan amount in full or in part ahead of schedule and in advance in writing
who notified the microfinance organization of such intention at least ten calendar days in advance, penalties for early repayment of a microloan;
Carry out any types professional activity on the securities market;
Issue a microloan (microloans) to the borrower if the amount
principal debt of the borrower to the microfinance organization for
microloan agreements in case of provision of such microloan (microloans) will exceed one million rubles.
Types of microfinance organizations
Savings and loan associations.
They attract savings deposits and place them mainly in mortgage loans. Distributed in the USA
Credit unions. Created by a certain circle of founders close to the place of residence or professional activity ( for example, credit unions of doctors, teachers, miners, etc..). The goal is to increase the efficiency of using funds and provide preferential loans
Mutual credit societies are organizations
whose activities have common features with credit unions, but they unite legal entities, usually similar in professional affiliation.
Banking system
The banking system is
a set of banks and non-bank credit organizations operating in the economy within the framework of a single financial and credit system
and legal mechanism.
IN in accordance with Art. 2 of the Law “On Banks and Banking Activities”, the Russian banking system includes the Central Bank of the Russian Federation (Bank of Russia), credit organizations, as well as
representative offices Financial markets and banking business. USUE
Maramygin M.S.
Signs of classification |
banking systems (1 of 5) |
by the degree of state participation in banking |
accounting and distribution model of banking |
market model of the banking system. |
according to the order of relationships, |
developing between credit |
organizations: |
single-tier banking system; |
Maramygin M.S. |
Signs of classification of banking systems (2 of 5)
Accounting and distribution model of the banking system implies the monopoly right of the state to carry out banking operations.
Character traits:
● state monopoly on banking operations and the establishment of banking institutions;
● a single vertical in the banking system; ● unified policy of relations with clients;
● state responsibility for the performance of banks;
● administrative appointment of bank managers by government agencies;
● a narrow range of credit institutions in the country
Signs of classification of banking systems (3 of 5)
Market model of the banking system built on the principles of private property and competitiveness in the banking sector of the economy
Character traits:
● the role of the state is limited to establishing the basic principles and parameters of development.
● management of the banking sector is decentralized.
● the presence in the banking system of a significant number of private banks with the obligation of the state to maintain order in the national economy
Signs of classification of banking systems (4 of 5)
Single-level banking option
system is typical either for the initial stages of development of this activity, which presupposes the existence in the economy of a small number of banks of the same type. Or this is typical of a totalitarian economy, in which credit institutions operate only under state ownership.
Signs of classification of banking systems (5 out of 5)
Multi-level banking system
implies the division of credit institutions into several levels. Regardless of the number of allocated levels, The Central Bank is always first(or other body performing its functions).
Within the framework of the functioning of multi-level banking systems, we can distinguish
two-level and three-level systems
Multi-level banking system
Two-tier banking systemis the most common in the modern world.
The second level is represented by banks and special financial and credit institutions
Three-tier banking system.
The second level includes only banking institutions, and the third level contains special financial and credit institutions.
