South Korea: Can Microcredit Bank Make Profit?
Jae-won, K.

Smile Microcredit Bank (SMB) has provided financial services for low-credit and low-income families since December 2009. However, according to Korea Institute of Finance (KIF), the running expenses of the lender may exceed its operating profit from interest. The report, released by KIF, finds the running expenses of the lender will amount to between KRW100-110  billion (US$86-95Mln) a year, while the income from interest payment is estimated to be around KRW100 billion (US$86Mln). Salaries for human resources will occupy most of the expenses as they are estimated to be from KRW60-70 billion (US$51-60Mln), the report said.

“These programs deteriorate credit practices in the subprime lending market even further, not only by discouraging private financial institutions' efforts to cultivate competent credit practices, but also due to its financially-weak customer base,” the report said.

Read Full Article

Related Links:

South Korea: 'Smile' Microcredit Gives Few Smiles to Needy

About Us  |  Contact Us  |  Partners  |  Help  |  Site Map  |  Terms and Conditions  |  Privacy Policy  |  Manage Subscriptions

© CGAP 2012 ALL RIGHTS RESERVED