Return on authorized capital of the Russian micro finance and micro credit organizations

ranking 15/12/2016

Information agency Credinform prepared a ranking of the Russian micro finance and micro credit organizations in term of return on authorized capital.

We’ve already spoke about legislative changes in the financial market in our publication “Microcredits for business will increase”.

The Russian micro finance and micro credit organizations (Top-10) with the highest volume of revenue were selected for this ranking according to the data from the Statistical Register for the latest available period (for the year 2015). The enterprises were ranked by decrease in return on authorized capital (see table 1).

Return on authorized capital (%) indicates the efficiency of the authorized capital use and shows the amount of net profit accounting for one rouble of the authorized capital. The higher is the indicator, the more efficient is the usage of capital contributed to the authorized fund. However it is necessary to consider that too high indicators, exceeding in several times the average values for economy or sector may indicate low authorized capital at higher net profit.

For the most complete and objective view of the financial condition of the enterprise it is necessary to pay attention not only to the average rates in the industry, but also to the presented set of financial indicators and ratios of the company.

Table 1. Net profit. Revenue, return on authorized capital and solvency index Globas-i of micro finance and micro credit organizations (Top-10)
Name, INN, regionNet profit 2015, mln RUBRevenue 2015, mln RUBRevenue 2015 to 2014, (+/- %)Return on authorized capital, %Solvency index Globas-i
LLC MICROCREDIT COMPANY TSENTROFINANS GRUPP
INN 2902076410 Arkhangelsk region
88,8 749,9 95,0 888 120,00 295
High
LLC MICROFINANCE ORGANIZATION JUPITER 6
INN 7840460408 Saint-Petersburg
11,5 63,5 176,1 115 270,00 265
High
LLC MICROCREDIT COMPANY NEPTUN 8
INN 7801631988 Saint-Petersburg
8,1 85,3 500,7 80 630,00 283
High
LLC MICROFINANCE ORGANIZATION NAKTA-CREDIT-WEST
INN 5260319581 Nizhniy Novgorod region
9,8 133,3 8,0 49 140,00 298
High
LLC MICROFINANCE ORGANIZATION NAKTA-CREDIT-REGIONS
INN 5260228430 Nizhniy Novgorod region
8,4 126,6 2,4 41 805,00 287
High
LLC MICROCREDIT COMPANY SPEED FINANCIAL HELP
INN 0266031078 Republic of Bashkortostan
1,0 16,0 56,9 10 050,00 236
High
LLC MICROFINANCE ORGANIZATION JOY MONEY
INN 5407496776 Novosibirsk region
0,6 61,0 0,0 5 780,00 304
Satisfactory
LLC MICROFINANCE ORGANIZATION AGENCY OF LAW TECHNOLOGIES
INN 5260170290 Nizhniy Novgorod region
0,3 39,2 -38,5 2 038,46 260
High
LLC MICROCREDIT COMPANY PLUTON 5
INN 7801632011 Saint-Petersburg
-116,0 253,9 16826,7 -1 159 530,00 361
Satisfactory
MICROCREDIT COMPANY FUND OF ENTREPRENEURSHIP DEVELOPMENT OF VORONEZH REGION
INN 3666144160 Voronezh region
3,6 26,3 27,7 * 255
High

*) – indicator of return on authorized capital for MICROCREDIT COMPANY FUND OF ENTREPRENEURSHIP DEVELOPMENT OF VORONEZH REGION is not calculated due to the absence of authorized capital in accordance with the “Fund” legal form.

Average value of return on authorized capital for the Top-10 companies amounted to 3 700,38% in 2015. Average value without extreme values in Top-35 amounted to 9 596,22%.

Eight of ten companies in the Top got high solvency index Globas-i indicating their ability to timely and fully fulfill the debt liabilities.

LLC MICROFINANCE ORGANIZATION JOY MONEY and LLC MICROCREDIT COMPANY PLUTON 5 got satisfactory index due to the short time of activity.

Return on authorized capital and revenue of micro finance and micro credit organizations (Top-10)
Picture 1. Return on authorized capital and revenue of micro finance and micro credit organizations (Top-10)

Total revenue of the Top-10 companies for 2015 amounted to 1,6 bln RUB that is by 3% higher than in 2014. At the same time total net profit reduced by 56%. Four companies in the Top-10 (marked with red color in the Table 1) have reduction in net profit or loss in comparison with the previous period.

Increase in total revenue of Top-35 for the same period was 1% at decrease in total net profit by 53%.

Nine companies in Top-10 as well as for Top-35 have positive values of return on authorized capital.

Micro finance and micro credit organizations demonstrate super high values of this indicator, speaking about extremely high amounts of net profit to funds invested in the authorized capital. According to the experts, on the background of complicated economic situation, reduction in borrowings in banks by general public (Picture 2) and taking into account social significance of micro finance and micro credit organizations, the current situation may raise questions on perfection of legislative regulation of this activity.

Increase / decrease in borrowings, deposits and other invested assets granted to natural persons by banks, % (estimate based on the data of the Central Bank of Russia)
Picture 2. Increase / decrease in borrowings, deposits and other invested assets granted to natural persons by banks, % (estimate based on the data of the Central Bank of Russia)

Data for 10 months of 2016 are presented in comparison with the relevant period of 2015.

At the same time, total volume of borrowings and deposits to natural persons and other invested assets amounted to 10,6 tln RUB for 10 months of 2016.

For now this indicator exceeds fast growing volumes of micro crediting. According to the National bureau of credit histories, the volume of micro credits granted by 700 micro finance companies of Russia for IIIQ 2016 amounted to 109,8 bln RUB, 60,3 bln RUB of which were granted for consumer goods purchasing and 49,5 bln RUB as micro loans. For 9 months of 2016 the volume of micro credits increased by 23,2%.

As of October 1, 2016, 7,97 mln active loans were recorded. That is by 33,3% higher than in the second quarter of the current year. 45% in the structure of micro finance institutions’ portfolio account for micro loans, and 55% - for consumer goods credits. For the first time for three years overdue payment for micro credits have increased – from 21,2% to 21,9%; the average amount of these borrowings has decreased firstly for consumer goods from 21,1 th RUB to 18,3 th RUB. Currently about 10 mln people in Russia took micro credits.

There is no strongly marked concentration of micro finance and micro credit companies in the regions of Russia. However a few of them is observed in Moscow being the largest financial center of the country. According to the Information and analytical system Globas-i 35 of companies in the sector with the highest volume of revenue for 2015 are located in 15 regions of Russia (Picture 3).

Regional distribution of 35 micro finance and micro credit companies of Russia
Picture 3. Regional distribution of 35 micro finance and micro credit companies of Russia