Q4 2021 quarterly report: Achievement and recovery
Four times a year Oikocredit publishes key facts and figures on the previous quarter. Here we provide our investors and others with additional background context on developments during the fourth quarter of 2021.
Meeting our financial objectives
Q4 2021 concluded a successful year for Oikocredit. Our net result during the quarter brought the total consolidated result for the year to € 15.3 million, reversing 2020’s € 22.2 million loss.
Total member capital rose to € 1,129.0 million from € 1,125.4 million in Q3, representing a net inflow of € 3.6 million in Q4 and € 24.9 million over the year. We continue to be grateful for our cooperative members and investors’ loyalty and commitment. Net asset value (NAV) per share remained virtually unchanged at € 213.58 (Q3: € 213.87), while net liquidity reduced to close to pre-Covid-19 levels at 21.5% (Q3: 31.2%; Q4 2020: 33.1%).
Operational expenses, which remained within budget, increased due to the cost of developing and finalising several change initiatives including the new strategy. Additional one-off costs in the quarter involved tax payments due by Oikocredit’s Indian subsidiary, Maanaveeya, and pension contributions. Our portfolio of term investments (bonds) was impacted negatively compared to Q3 due to rising interest rates. The year’s loss amounted to € 4.3 million in Q4 (up from € 3.3 million in Q3).
Our development financing portfolio of credit and equity grew by 13.7% from € 875.8 million in Q3 to € 995.9 million as we continued to respond to strengthening demand for loans among current and new partners. Over the full year we achieved 17.8% portfolio growth, up from € 845.1 million in 2020.
Portfolio quality improved, with the PAR 90 ratio (the percentage of loans with repayments at least 90 days overdue) decreasing from 6.1% to 5.5%, acceptably below our target threshold of 6%. At the end of the quarter only five partners remained under temporary pandemic-related ‘payment holiday’ measures, representing 1.3% of the development financing portfolio (€ 10.7 million), compared with 12 partners in Q3 representing 2.5% of the portfolio (€ 18.6 million). Loan loss provisions on capital and interest and impairment of equity decreased during Q4 from 10.7% to 9.7% of development financing. Total partner numbers reduced from 527 to 517.
Among the pilot projects for our new 2022-2026 strategy’s community-focused approach we announced the launch of a collaboration with Opportunity International to support and increase access to quality affordable education in Africa.
Social performance and capacity building
In social performance, we finalised the report and findings of our first client self-perception survey. Responses from more than 2,500 clients of current and former partners indicated that, although many saw their income and savings reduce over the past year, mainly because of Covid-19, they continued to demonstrate resilience in their lives. A significant proportion of clients reported that extreme weather had impacted their incomes, and the survey also showed that more clients had access to the internet and smartphones than expected.
Highlights of our capacity building support to partners in Q4 included: completing the tea seedlings project for 2,000 smallholder farmers linked to our partner Karongi Tea Factory in Rwanda; launching our price risk management (PRM) programme in Africa with 11 coffee partners; stimulating entrepreneurship through the launch of the Women Innovation for Sustainable Enterprise (WISE) programme with five partners in Ghana and the Innovative Finance for Improved Livelihoods (IFIL) project with 37 farmer-based organisations in Kenya and Uganda; conducting a feasibility study for long-term savings products in Cambodia; working with peers to develop a social performance scoring tool for agriculture; and holding a digitalisation workshop for six partners in West Africa and a webinar on the Client Protection Pathway with 11 Southeast Asian partners.
Oikocredit held its first ever Extraordinary General Meeting (EGM) in Q4. This mainly online members’ meeting resulted in positive outcomes for the cooperative’s new capital-raising model and generated further insight into the community-focused strategy planned for 2022-2026.
The Supervisory Board appointed Mirjam ‘t Lam as Oikocredit’s new Managing Director with effect from 1 December 2021. Mirjam had previously served as Interim Managing Director and as Director of Finance & Risk. Recruitment began for a new Director of Finance & Risk and for a successor to Bart van Eyk as Director of Investments, who had announced his intention to leave the organisation (and left in February 2022).
There was also change on the Supervisory Board, with Maya Mungra deciding to leave the board effective 31 December 2021. Supervisory Board member Gaëlle Bonnieux took over from her as Vice-Chair. With several vacancies on the board, recruitment of new board members began.
At the Amersfoort office in the Netherlands, the hybrid working model introduced in Q3, with staff able to work half time in the office and half time at home, was suspended in Q4 as Covid-19 infections in Europe rose once again.
Oikocredit’s solid achievements in 2021 provide a sound basis for our cooperative’s future development in a currently uncertain world. We are deeply concerned for the people of Ukraine and all those affected by conflicts across the world. We condemn all acts of aggression and violence, and we will remain vigilant about the economic impact that the coronavirus pandemic may continue to have in our focus countries.
We plan to stay agile to respond effectively to new opportunities and challenges and to move ahead with two important changes to our business model so that we can serve our investors and partners ever better and amplify our social impact for our partners’ clients and members. One positive change will be the launch and implementation of the 2022-2026 strategy in mid-2022. This will include the creation of a global investor movement and a more holistic approach to development financing with projects that help low-income communities become more resilient in such sectors as housing, education, healthcare, and water and sanitation. We have begun to pilot a small number of such community-focused projects, which partners are very interested in, and we look forward to implementing this approach further. The second change involves moving forward with our new capital-raising model, which will be proposed to members at the next General Meeting in June.
More information is available in the Oikocredit 2021 Annual Report.
|Oikocredit in Q4-2021 (PDF)||1.3 MB||application/pdf|