Banco Amigo to offer credit cards this month

Friday, October 5, 2007

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.