Case Study on Profitability of Microfinance in Commercial Banks: Hatton National Bank

  • Date Posted: June 2, 2010
  • Authors: Lynne Curran, Nancy Natilson, Robin Young (ed.)
  • Organizations/Projects: Development Alternatives
  • Document Types: Case Study or Vignette
  • Donor Type: U.S. Agency for International Development

Although an increasing number of specialized microfinance institutions have shown that microfinance can be profitable (usually following years of subsidies for start-up and innovation) and an increasing number of banks have entered the microfinance market, literature and data on the profitability of microfinance in commercial banks are essentially non-existent. Under the AMAP Financial Services Knowledge Generation project, DAI and ACCION completed case studies of two institutions, Hatton National Bank in Sri Lanka and CREDIFE, the service company of Banco del Pinchincha (see related content) with the objective of measuring the profitability of each institution's microfinance unit. The two case studies present the initial efforts with the two banks in accurately costing and measuring the profitability of their microcredit products.