The document is a presentation from the Microfinance Information Exchange (MIX) about the microfinance market in Nepal in 2012. It summarizes that the market has experienced significant growth in gross loan portfolio, borrowers, and average loan size between 2008-2011. This growth has been driven by rural banks and credit unions. It also notes that Nepali microfinance institutions have steadily increasing profitability, stable costs, and decreasing loan default rates during this period.

1. Microfinance Information Exchange
2012 Nepal Snapshot
CMF Nepal Microfinance Conference, Feb 14, 2013, Yak and Yeti Hotel, Kathmandu, Nepal
By Deepika Kumari and Liz Larson
The Premier Source for Microfinance
Data and Analysis
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.

2. Contents of the presentation
MIX Basics
Introduction
Profitability
Efficiency
Funding
Risk
What can we learn about Nepal’s microfinance market with MIX data?
2
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.

3. What is MIX?
MIX Basics
2,100+ MFIs
MFI Networks
150 Networks
Donors and
Investors
200 Funders
MFI
300 Service
Regulators Providers
Raters
What can we learn about Nepal’s microfinance market with MIX data?
3
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.

4. Nepal in South Asia
Nepal's MIX MFIs
38
37
36
35
34
33
32
31
30
29
2008 2009 2010 2011
Avg Loan Size:
21,671 NPR Rising
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presentation without MIX’s prior written permission is strictly prohibited.

5. Growth rates in key areas
1,713 Crore NRS
212 Million USD 37 %
807,312 9%
741 Crore NRS
91 Million USD 53 %
1.4 Million 40 %
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presentation without MIX’s prior written permission is strictly prohibited.

6. What institutions are driving this growth?
GLP by Legal Status
250
GLP USD Millions
200
150
Rural Bank
100
Bank
50 Credit Union /
Cooperative
NGO
-
2008 2009 2010 2011
• Growth driven by Rural Banks
• All legal form growing
The GLP and Borrowers Graphs depicts the Totals of the Balanced Panel of 24 MFI’s reported through 2008 to 2011 on MM
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.

7. Are loan sizes contributing to this growth?
Average Loan Balance
400 80%
350 70%
300 60%
250 50%
ALB USD
200 40%
150 30%
ALBGNI
100 20%
50 10%
0 0%
2008 2009 2010 2011
• Average loan balance growing
• In context of economic growth, not much difference
The ALB GNI is the Weighted Average % of the Balanced Panel of 24 MFI’s reported through 2008 to 2011 on MM
The ALB USD is the Average Loan Balance (ALB USD= Totals of GLP divided by Total of Borrowers) of the Balanced Panel of 24 MFI’s reported through
2008 to 2011 on MM
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.

8. How profitable are Nepali MFIs?
ROE, top 10 Countries
Nepal, ROA and ROE
30.0% 5.0% Uzbekistan
4.5%
25.0% Indonesia
4.0%
3.5% Nepal
20.0%
3.0%
Ghana
Percent
15.0% 2.5% ROE
ROA Benin
2.0%
10.0% ROE
1.5% Georgia
1.0%
5.0% Nigeria
0.5%
Brazil
0.0% 0.0%
2008 2009 2010 2011
Cambodia
Kyrgyzstan
• ROA and ROE steadily increasing
0% 10% 20% 30% 40%
• Global context: high ROE
The ROA Graphs is the weighted Average of a Balanced Panel of 24 MFI’s reported through 2008 to 2011 on MM
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.

9. Efficiency: an analysis of costs
Deconstruction of Expenses
20.0%
18.0%
16.0%
14.0%
12.0% Financial Expense
Provision for Impairment Loss
10.0%
Personnel Expense
8.0%
Administriative Expense
6.0% Financial Revenue
4.0%
2.0%
0.0%
2008 2009 2010 2011
• MFIs’ cost of funds increasing, but not dramatically
• Yields rising in tandem
• All other expense categories extremely stable
The Expense Graph depicts Totals of the Balanced Panel of 24 MFI’s reported through 2008 to 2011 on MM
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.

10. A deeper look at funding…..
Liabilities and Equity Structure
100%
• Some institutions now
90% allowed to mobilize public
80% deposits
70% • Domestic borrowings and
60%
deprived sector lending still
Deposits key
50%
Borrowings • Slight increase in equity,
40%
Equity
likely due to Nepal’s stellar
30%
ROE
20%
10%
0%
2008 2009 2010 2011
The Liabilities and Equity Structure Graphs depicts Totals of the Balanced Panel of 24 MFI’s reported through 2008 to 2011 on MM
The Borrowings (USD) is the Totals of data extract from FSDB tools on MM- unbalanced Panel of MFI’s in Year 2011 only.
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.

11. A deeper look at funding…..II
Funding interest rates trend
9%
8%
7%
6%
5% DFI
Government
4%
Other
3% Financial Institution
2%
1%
0%
2008 2009 2010 2011
• Huge increase between 2009 and 2010
• Slight decrease last year as liquidity crisis subsided
The above table is an extract from the FSDB tool on Mix Market representing all the MFI’s in 2011.
The Borrowings of MFI (USD) is the Totals of data extract from FSDB tools on MM- unbalanced Panel of all MFI’s in Year 2011.
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.

12. How risky are microfinance clients in Nepal?
PAR > 30
18%
16%
14%
12%
10%
%
8% Bangladesh:
6% 6.5%
4%
Pakistan: 5%
2%
0%
2008 2009 2010 2011
• PAR decreasing dramatically in recent
years
The PAR Graphs is the weighted Average of a Balanced Panel of 24 MFI’s reported through 2008 to 2011 on MM
This presentation is the proprietary and/or confidential information of MIX, and all rights are reserved by MIX. Any dissemination, distribution or copying of this
presentation without MIX’s prior written permission is strictly prohibited.

13. In conclusion . . .
Thank you
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presentation without MIX’s prior written permission is strictly prohibited.

14. MIX Global and Project Partners
MIX partners with a dedicated group of industry leaders:
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presentation without MIX’s prior written permission is strictly prohibited.

15. Microfinance Information Exchange
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Washington, D.C. 20006 USA Visit us on the Web:
www.themix.org www.mixmarket.org
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