Estado Looks to Raise Micro Lending 50%

- Wednesday, January 31, 2001

Estado Looks to Raise Micro Lending 50%

Chile's state-owned Banco del Estado has chosen the country's micro enterprises as its core segment this year and expects to increase lending to the segment to US$52.9mn from US$35.3mn last year, Estado general manager Jose Manuel Mena told BNamericas.com.

Estado plans to increase its number of micro enterprise clients from 30,000 to 50,000 by year-end, Mena said, adding that the bank is studying micro lending in other countries such as Italy, Germany and Bangladesh to incorporate elements from those countries into its program.

Rather than capturing new clients from other banks, Estado will offer loans to micro enterprises that have never had any dealings with a bank before, Mena said, adding that many of the new clients will be low income women starting their own micro venture.

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Banks such as Banco del Desarrollo and Santander Chile (NYSE: STD), through low-income unit Banefe, also have identified micro enterprises as part of their 2001 business focus, providing additional competition that Estado views as positive, he said.

The bank currently holds some 50% of the micro lending market, which Mena claims is still very fertile because traditionally it has been neglected by banks and supported by NGO financing.

However, while growing its micro lending market share Estado would strive to maintain risk awareness and would turn down one of every two applications, he said.

Estado is Latin America's best-ranked bank with investment grade rating from both Standard & Poor's and Moody's due to Chile's sovereign rating and the bank's ability to operate with a very low risk in segments classified as high risk, Mena concluded.

Estado is Chile's only state-owned bank and is the third largest in terms of loans.

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