credit bureau & smes lending in palestine ali faroun the world bank strengthening accountancy as...
TRANSCRIPT
Credit Bureau & SME’s Lending in PalestineAli Faroun
The World BankStrengthening Accountancy as a Foundation for MSME Sector
Development and Job Creation Dead Sea Resort Area of Amman, Jordan
June 18-20, 2013
Palestinian Banking System
Banking System as end of March/ 2013
Network of 232 branches & offices
Consists from 17 Banks
Credit/ Customers Deposits ratio 54%
Total Deposits
8.3 Billion USD
Total Credit
Portfolio 4.1
Billion USD
Total assets ~
9.9Billi
on USD
Total number of MFI’s (13)Total number of MFI’s branches (75)
Develop Credit Registry system
Develop Credit Scoring system
Develop Bounced Checks system
Develop Mortgage & Housing system
SME’s Database (under development)
PMA Credit Bureau Systems
Development Challenges
Willingness and Support Coordination Human Resources IT Systems Demographic and financial data Reporting Reporting Threshhold. Consent Clause Kick – off Date
Success Elements
Data Accuracy
Data Completeness
Data Updating
Systems Features
Online real time 24/7 Hybrid business module Response time within millisecond Zero reporting threshhold Updated demographic & financial data daily basis Two methodologies of credit rating (Manner of payment,
score card) Assign Credit Score for each Borrower and Guarantor, PD
within 12 months, Risk grades & Reason code Customer classification on Bounced checks system
Credit Registry & Credit Scoring systems
Cont….
Results:
Adoption of modern and appropriate CR combined with quality of credit information can allow lending institutions to:
Manage and mitigate credit risks Increase lending volume Accelerate access to finance Generate profits Improve the economic situation Lower cost of credit for good payers Reduction in credit shopping multiple lending, over-
indebtedness Improvement in borrower's responsibility and behavior
Encourage SME lending
Conduct conference in Feb, 2013 aim to Empower SMEs in Palestine
Initiate appropriate definition for SME’s Establish Committees to enhance SME’s
Technical committee led by PMANational committee led by Ministry of National Economy
Encourage SME lending by providing banks with incentives to increase their SMEs credit portfolio
(Waive the 10% of down payment for rescheduled loans, waive the 2% of general risk reserve requirements on the total SME credit portfolio)
Running Projects:SME’s Database
Banks Credit portfolio up by 129%
Achieved Results
2007 2008 2009 2010 09/2011
12/2011
03/2012
06/2012
09/2012
12/2012
credit/GDP ra-tio
0.26 0.310000000000001
0.37 0.48 0.54 0.580000000000001
0.55 0.580000000000001
0.48 0.5
5%15%25%35%45%55%65%
Financial Depth (Credit/GDP) ratio
Banks Credit Portfolio
#of Borrowers up by 51%Thousand
Million
37
#of Borrowers up by 112%
MFI’s Credit Portfolio
MFI’s Credit portfolio up by 86%
Cont….
Thousand
Million
(Average loan size is 3000$)
Number of SME’s up by 34%
SME’s VS Large enterprises
SME’s Credit Portfolio
Cont….
SME’s Portfolio up by 57%
Total Portfolio According to the size of Enterprises
Cont….
(57%up by)
( up by 70%)
Credit Facilities Granted to Youth and Womens
0
50
100
150
200
250
300
350
Th
ou
san
ds
Womens 76,672 76,527 78,853 106,893 118,304 127,155 164,569 172,825 182,905 211,463 238,688 251,189 237,162 254,412 266,712 277,769 282,809 287,381
Youth 76,930 76,872 79,218 107,739 119,851 129,692 168,199 177,560 189,216 218,913 248,408 262,264 249,860 271,216 286,623 303,926 311,988 321,730
12/2008 3/2009 6/2009 9/2009 12/2009 3/2010 6/2010 9/2010 12/2010 3/2011 6/2011 9/2011 12/2011 3/2012 6/2012 9/2012 12/2012 3/2013
The Impact of Credit Bureaus in Job Creation
Module Conducted by IFC in collaboration with PMA
Study inputs & Assumptions Loan size up to 1$m per borrower Loans used in in industrial, services and trade sectors CAPEX Loans Average weight of credit reporting Gross Fixed Investment per Labor unit
Expected Additional Direct Jobs to be Created in 2013 about 6,359
Create about 12% of total jobs required from the government
15
Thank You
For further information, please contact:
Palestine Monetary Authority
Nablus Street, AL-BirehRamallah, Palestine
Tel. +972 2 2415253
Fax.+972 2 2407074
Email: [email protected]
Website: www.pma.ps