Social impact investor and worldwide cooperative Oikocredit today published its annual results for 2018. Despite 2018 being a year of change for Oikocredit, the cooperative’s net income after taxation improved compared to 2017 with both lendable funds and the development financing portfolio showing growth.
- Net consolidated result of € 1.3 million (€18.4 million in 2017)
- Total assets up 6 % to € 1,292.9 million (€ 1,220.0 million in 2017)
- Development financing portfolio up 6.6% to €1,046.6 million (€ 981.7 million in 2017)
- 143 current and potential partners benefiting from capacity building programmes with a total spend of € 933,000 (€ 845,000 in 2017)
- Total lendable funds up 6.5% to € 1,228.2 million (€ 1,152.9 million in 2017)
- Operating costs decreased slightly by 1.3% to € 37.1 million (€ 37.6 million in 2017)
- Proposed 1% dividend (1% in 2017)
- Investors up to 57,000 (56,000 in 2017)
A growing portfolio and increased focus
Oikocredit’s total development financing portfolio (loans and equity investments) grew to € 1,046.6 million in 2018, up 6.6% from 2017. The portfolio’s growth affirms the social investor’s dedication to its partners working in financial inclusion, agriculture and renewable energy to help improve the lives of low-income people.
Investments in financial inclusion, which holds the majority of Oikocredit’s development finance portfolio, increased 5.5% to € 796.2 million. In addition to microfinance Oikocredit continued to support partners beyond traditional financial institutions, such as financial institutions catering to small to medium enterprises (SMEs) and partners using fintech (financial technology).
Oikocredit’s agriculture portfolio rose by 14.5% to € 168.8 million and now comprises 18.1% of the overall portfolio, compared to 15% in 2017. Though riskier, Oikocredit is a leading social investor in this sector which plays a major role in creating rural jobs, reducing poverty and contributing to local food security.
As part of its updated strategy, Oikocredit is focusing on off-grid renewable energy projects that improve access to energy for low-income communities such as solar home systems. This focus on achieving an even greater social impact has resulted in smaller loan approvals, keeping with the prevailing size of finance transactions in the off-grid sector. Therefore the renewable energy portfolio decreased by 1.4% from € 49.1 million to € 48.4 million.
Oikocredit’s equity portfolio grew strongly by 22.1% to € 162.5 million and now comprises 15.5% of the development financing portfolio, up from 13.6%, in line with objectives.
Modest results and improved income after taxation
As Oikocredit grows its development finance portfolio, its profitability continues to be affected by the prevailing low interest rate environment. In 2018 Oikocredit’s income after taxation showed a marked improvement on the previous year with a significantly reduced loss of € 1.3 million (2017: € 20.0 million). Local currency losses decreased substantially as a result of the new hedging and risk management policies, and Oikocredit only drew on € 2.8 million from its local currency risk fund (2017: € 38.6 million). Following this release from the fund, the net distributable income is a modest € 1.3 million (2017: € 18.4 million). Oikocredit’s Managing Board, with support from the Supervisory Board, will recommend the declaration of a 1 percent dividend to the cooperative’s members, who will make the decision on the dividend level at Oikocredit’s annual general meeting in June.
Inflow for impact and an increase in member capital
With 57,000 individuals and institutions investing, Oikocredit received a net inflow of lendable funds at € 77.9 million (compared with € 117.4 million in 2017), a pleasing result during a time of change. This brought total lendable funds to € 1,228.2 million (up 6.5% from 2017). Member capital increased by 6.9% to € 1,082.5 million.
In addition to funding, Oikocredit offers its partners capacity building to help them access new technology, knowledge and skills to support them in their growth and development. In 2018 the cooperative provided € 933,000 (€ 845,000 in 2017) to support 143 current and potential partner organisations with capacity building.
Oikocredit implements its updated strategy to maximise social impact
In 2018 Oikocredit started to implement its updated strategy to address issues such as the low interest rate environment and increasing competition. The strategy aims to improve Oikocredit’s financial results by focusing its work across key sectors and markets while reducing complexity and costs. Continuing in the sectors of financial inclusion, agriculture and renewable energy, the cooperative is now concentrating its efforts on 33 focus countries across Africa, Asia and Latin America.
Thos Gieskes, Managing Director at Oikocredit, said: “It’s a real achievement that we grew despite the external challenges facing development finance and during this time of transition for Oikocredit. This shows the passion and determination that our staff has to support our partners and more importantly, the clients they serve.
We are on track in delivering our updated strategy that is set to achieve an even greater social impact. You can already see some of the positive effects in our 2018 results. We expect to see even more of an improvement in our financial results after 2019 and are grateful for our investors who continue on this journey with us.”
Read Oikocredit’s annual report for the full 2018 results: https://www.oikocredit.coop/annual-report
Social impact investor and worldwide cooperative Oikocredit has over 40 years’ experience funding organisations active in financial inclusion, agriculture and renewable energy.
Oikocredit’s loans, equity investments and capacity building aim to enable people on low incomes in Africa, Asia and Latin America to sustainably improve their living standards.
Oikocredit finances 684 partners, with total outstanding capital of € 1,046.6 million (at December 2018). For more information: www.oikocredit.coop.