MFO market grows in 2024 on account of companies related to largest marketplaces and banks
Microloans issued by microfinance organisations (MFOs) increased by more than 50% over 2024. The highest growth rate was shown by MFOs being part of groups of various financial companies. Moreover, 65% of microloans in this segment were accounted for by MFOs whose financial groups are based on major marketplaces and settlement non-bank credit institutions.
These dynamics of MFOs—financial group members are to a great extent associated with more affordable financing (from the group’s funds), which allows them to grant microloans at interest rates that are on average 25% lower than rates offered by other MFOs, making them attractive to households.
The quality of the MFO portfolio improved in 2024 as a result of both an increase in new microloans and the consistent tightening of the macroprudential limits restricting lending to high-risk borrowers. The share of microloans issued to borrowers with debt service-to-income ratios of
Further measures to limit households’ over-indebtedness will be phased in from 2025. The key measures include reducing the ratio of total interest and fees payable on a microloan from 130% to 100% of the principal and limiting the number of simultaneously existing expensive microloans. Now, 22% of households that are MFOs’ customers have three or more microloans concurrently. Outstanding microloans of these borrowers account for almost half of the MFO consumer portfolio.
More details are available in the publication MFO Market Trends in 2024.