III PREMIO A LA MUJER MICROEMPRESARIA

1
Banco del Trabajo - Perú
MAX CHION
2
Peruvian Market Growth and Market Potential
MARKET PENETRATION
MAIN INDICATORS
16
A GROWING MARKET - Outstanding loan volume 1/
103
In spite of the good results of the recent years
growth of the market, increase of the customer
base and of the number of player, there is still
a large market to develop and to serve.
Source Superintendence of Banking and Insurance
of Peru () Population older than 20 years that
has a familiar monthly income over 150
Source Superintendence of Banking and Insurance
of Peru
WITH MORE GROWTH TO COME
Billion
1/ Outstanding loans includes consumer,
microfinance, mortgage and credit cards. 2/
Compound annual growth rate Source The McKinsey
Quarterly. Financing Latin Americas Low-income
consumers 2005
3
Peruvian low income segments
ECONOMICALLY ACTIVE POPULATION, by enterprise
type. (2005)
BUSINESS DISTRIBUTION, by number of workers.
(2005)
Unemployed / Unskilled workers 9.4
Medium and Large Companies 11.1
Small Companies 11.3
Civil servants, self-employed Small, medium and
large company workers. 38.3
Microentrepreneurial 77.6
Microentrepreneurial (From 2 to 9 workers)
52.3 46 in the city 54 in the country
Microentrepreneurial (From 2 to 9 workers)
77.6 Small Companies (From 10 to 49 workers).
11.3 Medium and large Companies ( More than 49
workers) 11.1
Source The Ministry of Work
Source The Ministry of Work
ECONOMICALLY ACTIVE POPULATION, by sex and
monthly income. (2005)
Percentage
Source The Ministry of Work
4
TARGET MARKET
BANCO DEL TRABAJO
Focus on the middle and low income segments of
the population Segmentation by distribution
channel (own or trough strategic alliances) and
per source of income.
CONSUMER LENDING
MICROFINANCE
ALLIANCES

• Supply of new and specialized products.
• Short-term loans of a small amount.
• Flexible and easy approval conditions.
• Quick approval and disbursement.
• Flexibility in payment.
• Pre-Approved disbursement.
• Payment through payroll deduction.
• Debt acquisition.

• Development of informal markets
• Accurate solutions to their needs.
• Product simplification.
• Quick approval and disbursement.
• Pricing strategy. 1.5 million possible
  combination and the real price combination
  actually used are 200 thousand.
• Flexible collection process. Reward for payment
  on time.
• Additional loans for good customers
• Nearness to the client business personalized
  attention from the Sales force.

• Alliances with companies that own a large base
  of clients
• Being closer to the end customer and the
  purchasing decision.
• Being better informed over use and type of
  consumption.
• Attractive marketing campaigns.

Insurance. Life insurance / Technical support
insurances
Remittance. The bank subsidize the money transfer
costs. Business with Japan, USA, Spain and Chile
ATM / Debit card. Free Maintenance. / Four
transactions free of charge
Integrated financial solution loans, insurance,
credit cards, remittances and savings
COMPETITIVE ATTRIBUTES
Customization of the Financial Products
Time to market
Payment Flexibility
Requirement simplification
Risk Model
Short-term loans of a small amount, with
flexible payment conditions, and technical
support.
Large group of people who usually didnt have
access to financial supply.
5
Evolution of the Strategic Approach
FOCUS ON THE PRODUCT
CUSTOMER RELATIONSHIP
CONSUMER LENDING
CONSUMER LENDING MICROFINANCE
Migration from a sales organization to a client
focus organization.

• Personal Loans for employees.
• Payments in equal and fixed quotas.
• Emphasis in a great force of sales.

• A new customers segment Microfinance.
• Adaptation of the consumption model to
  microfinance.
• Beginning of product crosselling.
• Beginning of the Model of Financial Retail.

• Better knowledge of the client and segmentation
  of them.
• Models different from evaluation for consumption
  and microfinance.
• A new management model integration of sales,
  evaluation, collecting and customer retention
  processes. Aligned with the sales force
  incentives.
• Integral financial solution (personal or
  microfinance loans, credit cards, insurance,
  remittance, saving account, Debit card)

6
Banco del Trabajo - Business Strategy
VALUE CREATION TO THE CUSTOMERS
Strategy
Experience

• Segmented marketing campaigns by client,
  distribution channel or geography.
• Responding to microentrepreneurial needs
  according to their size and type of business
  (i.e. to define customer service and business
  opportunity).

• Middle and low income consumers, who usually
  dont have access to financial supply.
• Segmentation by distribution channel
  (traditional or thought strategic alliances) and
  source income.

Market Segmentation
Distribution Channels

• Cost Control.
• Proximity to the client
• Growth through strategic alliances, Own Forces
  of Sales and Channels.

• Being with the client at the decisive moment of
  purchase.
• Format of channels in alliances tailored to
  clients needs.

Product Portfolio

• Knowledge of client behavior.
• Product package Loans, insurance, credit cards,
  remittances and savings.
• Product innovation with greater options of
  payment

• Creating products that fit the clients everyday
  activities and needs, such as capital of work for
  merchandise, technical support insurances, credit
  lines from US 33.
• Supply of products to large groups of people
  with consumption. (e.g. self-construction)

Price

• Price flexibility.
• Segmented price.
• Relation Price - Risk

• Microprice strategy by type of product, client,
  term, geography, risk of the segment.

• Experience of the Risk Management needs of each
  type of client.
• Continuous monitoring to avoid fraud.
• Flexibilities in payment (e.g. payment zero,
  weekly payment, partial payments)
• Knowledge credit lines in sectors with low bank
  penetration.

• Different scoring (Origination Scoring and
  Collection Scoring).
• Integrated Risk Management Policy (e.g.
  segmentation / price)
• Creating an effective and flexible collection
  process
• Preventive Collection to 90 of the portfolio,
  prioritized by risk profile.

Risk Administration
ACHIVE A LARGER PARTICIPATION INTO THE SHARE OF
WALLET AND THE SHARE OF LIFE OF OUR CUSTOMERS.
7
Customer Focus

• Personal or microfinance loans
• Micro / Small enterprise loan (e.g. guarantee,
  commercial mortgage, plain loans, etc.)
• Term At least 3 years.
• Amount Up to US 20,000
• Use of proceeds Working Capital / Asset
  Financing
• Home Mortgage
• Term Up to 20 years.
• Amount Up to US 35,000
• Use of proceeds Home mortgage or commercial
  mortgage
• Credit Card
• Credit Lines since 200.
• Partial or total payment.
• Credit assessment.
• No insurance fees

• Insurance
• Life insurance.
• Muerte Accidental ? CoverUS 6 M
• Siempre a Mano ? Cover US 12,5 M
• Technical support insurances
• Remittance
• The bank covers with the money transfer costs
• Saving account
• Local currency or US.
• Competitive interest rates.
• Zero initial fee and minimum maintenance.
• ATM / Debit card
• Free Maintenance.
• Four transactions free of charge.

8
Banco del Trabajo in numbers
LOAN PORTFOLIO (MM US)
LOANS ORIGINATION (MM US)
2002 2007 (P)
GEOGRAPHICAL BRANCHES
10
31
59
13
38
21
32
11
P
CUSTOMERS
Loans Customers
Savings Customers
Thousand
Customers Growth 2007 (P) vs. 2001 Loans
? 166 Savings ? 206 Total Customers ?
177
9
Microfinance Evolution Interest Rates vs. Loans
Regulation Transparency of Information
Software to compare credits costs.
Microfinancial Institutions can offer services
nationwide.
Interest rates reduction associated to an
important loans growth, which are consequence of
the free market. Banks participation promote to
the acceleration of interest rates reduction.
Authorization to Municipal Saving and Credit
Institution to operate in Lima
Merger between BCP and Financiera Solución
Creation of Planning Management and customer
support areas
Microinsurance Regulation
Banks Number
Loans (MMUSD)
Interest Rates ()
Market Share Banks
Interest rates reduction - 55 Loans Growth
221
Competitors Number
2
2
3
3
4
6
7
20
23
39
46
49
50
32
43
45
45
44
43
43
43
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jul-01
Jul-02
Jul-03
Jul-04
Jul-05
Jul-06
10
Consumer Lending Evolution Interest Rates vs.
Loans
Regulation Transparency of Information
Authorization to Municipal Saving and Credit
Institution to operate in Lima
Merger between BCP and Financiera Solución
Microfinancial Institutions can offer services
nationwide.
Software to compare credits costs.
The reduction of the interest rates has occurred
mainly by Loans growth, because unlike the
microfinances Banks always have participated in
this segment.
Creation of Planning Management and customer
support areas
Microinsurance Regulation
Loans (MMUSD)
Banks Number
Interest Rates ()
Market Share Banks
Interest rates reduction - 32 Loans Growth
205
Competitors Number
15
15
14
14
12
11
11
83
78
75
75
75
77
75
46
40
40
42
45
44
46
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jul-01
Jul-02
Jul-03
Jul-04
Jul-05
Jul-06
11
Microfinance Evolution Delinquency Rate vs.
Loans
Norm of Credits Provision Standardization with
Financial System Norm of Refinanced Credits
Provision Norm of Credits Provision by credit
exchange risk
Creation Risks Managment in SBS
Creation Microfinancial Intendance
New Regulation for evaluation and classification
to defaulter.
The implementation of risks norms, the new credit
technologies (origination, behavior and
collecting scoring) have taken to the efficient
handling of delinquency rates.
Delinquency rate reduction - 60 Loans Growth
221
Norm for administration of the Overindebtedness
risk
Regulation for Microinsurance
Delinquency Rate ()
Banks Number
Loans (MMUSD)
Market Share Banks
Competitors Number
2
2
3
3
4
6
7
20
23
39
46
49
50
32
43
45
45
44
43
43
43
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jul-01
Jul-02
Jul-03
Jul-04
Jul-05
Jul-06
12
Credit Consumption Evolution Delinquency Rate
vs. Loans
Norm of Credits Provision Standardization with
Financial System Norm of Refinanced Credits
Provision Norm of Credits Provision by credit
exchange risk
Creation Risks Managment in SBS
Creation Microfinancial Intendance
New Regulation for evaluation and classification
to defaulter.
The continuous improvements to the tools of
credit risk have allowed to improve the
delinquency rate in this segment.
Delinquency Rate reduction - 71 Loans growth
205
Norm for administration of the Overindebtedness Ri
sk.
Banks Number
Delinquency Rate ()
Loans (MMUSD)
Microinsurance Regulation
Market Share Banks
Competitors Number
15
15
14
14
12
11
11
77
83
78
75
75
75
75
46
40
40
42
45
44
46
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jul-01
Jul-02
Jul-03
Jul-04
Jul-05
Jul-06
13
Microfinance Evolution Interest Rate vs.
Delinquency Rate
Authorization to Municipal Saving and Credit
Institution to operate in Lima
Merger between BCP and Financiera Solución
Microfinancial Institutions can offer services
nationwide.
Norm of Credits Provision Standardization with
Financial System Norm of Refinanced Credits
Provision Norm of Credits Provision by credit
exchange risk
Creation Risks Management in SBS
Creation of Planning Management and customer
support areas
Creation Microfinancial Intendance
Norm for administration of the Overindebtedness
risk.
New Regulation for evaluation and classification
to defaulter.
The reduction of the risk perception has allowed
to a parallel diminution of the delinquency rates
and the interest rate of the segment.
Regulation Transparency of Information
Interest Rate reduction - 55 Delinquency
Rate reduction - 60
Software to compare credits costs.
Banks Number
Interest Rate ()
Delinquency Rates ()
Market Share Banks
Competitors Number
2
2
3
3
4
6
7
20
23
39
46
49
50
32
43
45
45
44
43
43
43
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jul-01
Jul-02
Jul-03
Jul-04
Jul-05
Jul-06
14
Credit Consumption Evolution Interest Rate vs.
Delinquency Rate
Authorization to Municipal Saving and Credit
Intitutions to Lima
BCP Absorbed Financiera Solucion
Microfinancial Institutions can offer services
nationwide.
Norm of Credits Provision Standardization with
Financial System Norm of Refinanced Credits
Provision Norm of Credits Provision by credit
exchange risk
Creation Risks Management in SBS
Creation of Planning Management and customer
support areas
Creation Microfinancial Intendance
Norm for administration of the Overindebtedness Ri
sk.
New Regulation for evaluation and classification
to defaulter.
The knowledge of this segment has allowed a
greater reduction in delinquency rate a
diminution in the interest rate
Interest Rate reduction - 32 Delinquency Rate
reduction - 71
Regulation Transparency of Information
Interest Rate ()
Banks Number
Software to compare credits costs.
Market Share Banks
Delinquency Rates ()
Competitors Number
15
15
14
14
12
11
11
83
78
75
75
75
77
75
46
40
40
42
45
44
46
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jul-01
Jul-02
Jul-03
Jul-04
Jul-05
Jul-06
15
Learned Lessons as a Microfinancial Institution

• Creating synergies between the sales channels.
• Growth through alliances.
• Identifying necessities and risks by type of
  client.
• Economies of Scales in evaluation models and
  common processes.

To explore business core
ECONOMIES OF SCALES AND RISK DIVERSIFICATION
To develop a product portfolio

• Creating products that fit the clients everyday
  activities and needs.
• Develop bank assurance market.
• Cross selling products sales to clients. (E.g.
  Mortgage Loans)
• Product proposal to optimize return-risk.

MAINTAINING LOYAL CUSTOMERS

• Scoring Models (Origination, Collection and
  behavior) adapted for Microfinance and Consumer
  Lending.
• Economies of Scales in evaluation models and
  common processes.
• Flexible model of collection.

To implement a bundle risk model
LEARNING SYNERGIES
16
Learned Lessons as Market Development

• To reduce Barriers of formalization for the Mipes
  and Pymes (SME). E.g. .Cost of formalization.
• To create the necessary norms, rules and
  guarantees for the growth of the
  Microentrepreneurial sector. E.g. Risk Management
• To assure market competition

Government

• Suitable product offer for Microfinancial
  Institutions to the Mipes and Pymes (SME). E.g.
  Insurance, guarantees collaterals, structure
  loans, equities.
• Access to technologies and best practices.

Development Partners