Banco Real: Brazilian lender focuses on both profit and growth
Thursday, June 4, 2009
Jeronimo Ramos, a director at Banco Real in São Paulo, sounds like a man with a mission. “You have to operate inside local communities. You have to know your customer’s story at first hand. Because by giving people credit, you are creating well-being. About 70 per cent of people that get credit are lifted out of poverty as a result.”
Yet as Mr Ramos insists, Banco Real is not in the business of delivering social services. “We are not a philanthropic organisation,” he says. “You don’t just give people credit because they need it. They have to be able to pay. We’re here to make a profit.”
Banco Real was named Sustainable Bank of the Year by the FT in 2008, beating competition from banks in Europe, Asia and Africa where microfinance – lending small amounts to small and very small businesses – is more developed.
Yet Banco Real is not typical of low-income banking in Brazil as a whole. Its model is similar to that found in Asia, Africa and the rest of Latin America: giving loans to small businesses to promote development from the ground up. But the fastest expansion of low-income banking in Brazil has been in making small loans to consumers rather than to businesses.