Opening Markets through Strategic Partnerships--CREDIFE

By mid-2004, CREDIFE operated in 30 locations throughout Ecuador, primarily in areas where there is a dense concentration of micro-entrepreneurs. Many of these areas were depressed, leading to branch profitability concerns, making them candidates for closure. The arrival of CREDIFE has helped generate more business for these branches, now flourishing and better meeting the needs of their communities.

The objective of this case study is to measure the profitability of a microfinance unit. CREDIFE, an Ecuadorian service company, was chosen as the subject of the study because its experience and relationship with the financial institution and majority owner, Banco del Pichincha, are straightforward and transparent. CREDIFE’s success in terms of rapid growth and contribution to Banco del Pichincha’s profitability show how a private commercial bank can become a significant player in the microfinance market in a relatively short time.