Banco Amigo to offer credit cards this month

- Friday, October 5, 2007

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Mexican microfinance entity Banco Amigo plans to start offering credit cards at the end of this month, CEO Juan Carlos García told BNamericas.

The Monterrey-based bank will be offering Visa and MasterCard (NYSE: MA) plastics and aims to issue around 50,000 credit cards this year, according to the executive.

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In a parallel move, Banco Amigo started offering low-income mortgages last month, said García, who heads a bank that launched operations last May to target low-income borrowers.

The mortgages are peso-denominated, require a 10% down payment, and charge a 12% annual fixed interest rate for a 20-year term.

"We expect to grant some 250-300 mortgages this year," said García, who expects a typical mortgage from Banco Amigo to amount to 150,000-350,000 pesos (US$13,700-32,000).

Housing financing is a key component of the bank's strategy. "Owning a home brings stability to a family. And getting a mortgage borrower is getting a client for many years," García said.

Around 70% of Banco Amigo clients do not own a home, according to the executive, who expects to finish 2007 with a client base of 250,000.

Mexican real estate group Landus owns 55% of Banco Amigo, while IFC holds an 18% stake and local family Canales Clariond 13%, with the rest split up among minority shareholders.

As of June 30, Banco Amigo held 578mn pesos in assets and 334mn pesos in equity.