Banco Compartamos Loans to Poor Mexicans Lift Stock

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The bank limited past-due loans by focusing on smaller loans to groups of self-employed women, and halting growth in other products, Alvarez said. In February, past-due loans made up 2.3 percent of the bank’s portfolio, according to Mexico’s banking and securities commission. London-based HSBC Plc’s local unit had a rate of 5.63 percent, according the commission.

Banco Compartamos rose 1.3 percent on April 17 to 35.31 pesos, topping Macias’s estimate for the year of 35 pesos. The shares declined 1.4 percent to 34.8 pesos today.

UBS cut the stock to “neutral” from “buy” on April 6, citing the bank’s valuations. Banco Compartamos shares fetch 13.5 times reported profit, more than twice the 6.5 price- earnings ratio of Monterrey-based Banorte.

Economy, Regulation

“The key risks to Compartamos Banco are the economy, as a weaker than expected economy may negatively impact on loan growth and asset quality, and regulation, as it could negatively affect the size of the spreads it charges for its products,” Partida wrote in a research note.

Legislation approved by Mexico’s Senate would allow the central bank to limit interest rates and fees that banks charge as the economy worsens. The lower house will begin debate on the bill April 21.

“The rate we charge is fair, and necessary to fund the size of the loans that we make,” Alvarez said. “If we can’t fund loans with interest, we might have to do it with fees.”

Mexico’s Bolsa index rose 8.3 percent to 22,234.84 last week, the biggest weekly gain in a month. Comercial Mexicana increased 19 percent to 5.05 pesos on optimism it will be able to reach a deal with its creditors.

Yields on Mexico’s 10 percent bond due December 2024 fell 15 basis points, or 0.15 percentage point, to 7.79 percent from the previous week. The bond’s price rose 1.55 centavos to 119.94 centavos per peso, according to Banco Santander SA.

Mexico’s peso fell 0.1 percent to 13.1282 per U.S. dollar, from 13.1162 on April 10.