Scotiabank targets small loans in Latin America

Tue Jan 22, 2013 4:13pm EST
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* Targeting loans valued less than $6,000

* Sees 100-million-strong market in four countries

* 2012 Mexican acquisition key to growth plans

* Strong growth contrasts with slow Canadian loan growth

Jan 22 (Reuters) - Bank of Nova Scotia is targeting growth in Latin American consumer loans and micro-financing, an area that offers wide profit margins at a time when the outlook for loan growth in Scotiabank's home market in Canada is lackluster.

Scotiabank, which is Canada's third-largest bank and which also has a big presence in Latin America and Asia, entered the small-loans business in Peru in 2007 with two acquisitions, and has since expanded. As of last year, its small-loan portfolio stood at C$3 billion ($3.02 billion) spread throughout Latin America.

Consumer and micro-finance loans are usually valued between $300 and $6,000 and made to individual borrowers and small lenders.

The bank now sees the area as a key lending segment and expects to ramp up growth following its 2012 purchase of Credito Familiar in Mexico, which added 246 branches in what is the largest market for micro-finance in the region, the bank says.

"We see the opportunity for certainly double-digit growth rates in net profit from this segment, and it will be a sizeable contributor to the division in retail profit overall," Wendy Hannam, the bank's executive vice president of Latin America, said at a bank presentation in Lima on Tuesday.   Continued...