Banco Caja Social/Colmena

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Banco Caja Social is a $510 million bank focusing on lower income clients. It is the 10th largest bank in the Colombian system in terms of total assets. Despite a strong capital adequacy ratio and the second best quality portfolio in the system, BCS has historically been among the most profitable banks in the Colombian banking system. As of August 2001, its profitability ratios of 25.6% ROE and 4% ROA were the highest in the system. BCS has developed a hybrid business model of good consumer banking practices and innovative microfinance underwriting.95% of BCS clients are individuals, either salaried or self-employed. 78% of clients make less than $5,000 per year and 70% have only a basic education. Households and businesses represent the largest use of loans, followed by vehicle loans, then unrestricted loans, and finally, working capital loans.The project will have a positive development impact, including: 1) increasing the availability and safety of savings products for the poor; 2) increasing the availability of formal productive credit and lowering the cost of this credit to low income borrowers; 3) increasing the geographic reach of BCS and 4) allowing BCS to move into markets that have been underserved following the collapse of many of Colombia''s cooperatives. The availability of credits will allow small entrepreneurs to expand their operations, in turn generating employment. The home improvement loans and business loans allow clients to begin to accumulate assets, in turn allowing them to better withstand economic downturns.The client is also eager to benefit from IFC''s growing expertise in low-income banking. IFC could play an important role in trying to get BCS''s low- income banking methodology implemented in other countries. BCS and IFC have discussed the implementation of sound environmental and social policies and BCS will be receiving additional training in this subject in February.