COVID-19 is hurting LatAm fintech lenders’ non-performing loan rates, as well as other metrics, according to new Iupana study
Among the surveyed fintechs that lend to individuals, the proportion of the portfolio overdue by more than three months has nearly doubled. The figure rose from an average of 4% a year ago, to 7% today. These lenders say they expect the bad loan ratio to get even worse in the following months. At the same time, fintechs that lend to SMEs and other businesses reported a three-month NPL rate of 1% a year ago. Today, they forecast that that could rise to 5% by the middle of the year. Lending fintechs are also employing much more caution in their new disbursements, the survey showed. Asked about the strategies their are using to mitigate the impact of the crisis, most said they had tightened their lending criteria. Extending loan tenors, to give clients more time to repay borrowing, was another common strategy. Freezing the accumulation of interest charges was a less-used measure. When it comes to financing their own portfolios, a quarter of respondents said they saw little change. However, 60% reported there was less financing available for their portfolios.