Expectations for the 2023 Christmas Campaign: Financial Entities Anticipate Limited Growth in Loans

Although financial entities have varied expectations regarding the 2023 Christmas campaign, none consider relevant growth in loans, but rather slight increases, maintenance or lesser advances compared to similar previous campaigns.

He central business manager Cusco BoxWalter Rojas, projected that the 2023 Christmas campaign will be smaller than that of 2022, and loans to MSEs for this time of year will also follow that path. This is because people’s income was reduced by inflation and, in addition, the sales of mypes are not moving as before, he added.

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To mypes, for example, in production or manufacturing, which go into debt between September and October to produce their products per campaign, “They seem very slow and cautious in taking on debt; “Some of them are taking on small amounts of debt.”he indicated.

Even these producing mypes – he explained – are taking on debt for longer terms. During the Christmas season, it was normal to borrow for a maximum of 30 or 90 days, and now they do it for six or 12 months (to have flexibility in managing their businesses).

Likewise, in the case of mypes in the commerce sector, whose debt per campaign occurs between October and November, they are also cautious to take loans because they are not very optimistic about this 2023 campaign.

“Perhaps a sector that has movement (in this Christmas campaign) is that of (businesses related to) services for bonuses, release of savings for Compensation for Time of Service (CTS), among others”I note.

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Credit level caps

For the central business manager of Caja Trujillo, José Camachomypes are conservative when it comes to taking on debt or ask for smaller amounts in light of the current economic situation and the proximity of an El Niño phenomenon.

“The purchasing power of consumers is diminished, mypes sell less and accessing their inputs to produce is more expensive for them. “This impacted their level of sales and income, and therefore, their expectations for more debt.”said.

Microfinance entities – he indicated – are also adopting more prudent policies to grant loans to microentrepreneurs in this Christmas campaign, one of them being: placing limits on the staggering of their level of indebtedness (in the system).

“If a client who maintains S/ 10,000 of debt in the last 12 months requests S/ 30,000 or S/ 40,000 for this Christmas campaign – that is, who scales three or four times his debt amount – he will be limited to two times ( the amount it has in the system) due to the economic situation and the risk of the upcoming weather event”he explained.

In that sense, we are trying to get micro-businesses to go through the Impulsa MyPerú program so that their loans are covered, especially clients who are more exposed to the onslaught of the climate due to their geographical location, Camacho said.

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Less debt capacity

He president of the Peruvian Federation of Municipal Savings and Credit Banks (Fepcmac), Jorge Solíspredicted that loan placements to MSEs in this Christmas campaign will be similar to those of 2022 and lower than those of 2021, due to caution in granting credits due to payment problems and loss of purchasing capacity.

“Thus, if before a microenterprise, at this time of year, qualified for a loan of S/ 1,000 because the situation and the nature of the business guaranteed repayment, now it is only granted S/ 800 due to its lower payment capacity, even “Mypes themselves are requesting fewer (amounts of) credit.”said.

So, “If there is no consumption and income decreased due to inflation, it will be a fairly “parsimonious” campaign and I believe it will represent 80% of what the 2021 campaign was.”noted the also president of the board of directors of Caja Huancayo.

Credits for the Christmas campaign are being granted to mypes with terms of six to nine months, which are shorter, since longer terms were previously granted, he said.

According to Mibanco, own capital and loans from the financial system remain the main sources of funding for the country’s microentrepreneurs for the current Christmas campaign.

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Less pessimistic

There is also a less pessimistic view, but it does not foresee great growth either. The manager of Small and Medium Enterprise Banking (SME) of BBVA Peru, Augusto Pérez-Lópezexpressed that “Small business customers believe that this year’s Christmas campaign will be the same or a little better than that of 2022.”, held. Furthermore, from their perspective, the terms of these working capital loans, which range between four to five months, are maintained.

For him Central Business Manager of Caja Maynas, Edgar Berrocal, microentrepreneurs are betting on a better Christmas campaign. Despite this, the loan placement for this season would be only slightly better than that of 2022.

“Since July we have observed a slightly better demand and starting in August we started the campaign, financing with working capital, because there are those who produce and have to stock up (inputs) to distribute between November and December. But the greatest demand from merchants (for financing) still comes between October and November.”I note.

According to Mibanco, 60% of business owners are confident that their sales will improve this time of year, although they are aware of the political uncertainty and the El Niño phenomenon in the country.