Reverting the Tendency in Developing Finance: The Case of "Banrural S.A." in Guatemala
This paper presents the case of BANRURAL S.A. - a bank which transformed from a traditional agricultural public development bank, the National Bank for Agricultural Development/Banco Nacional de Desarrollo Agricola (BANDESA) in Guatemala into a profitable rural bank, the Bank for Rural Development Inc./Banco de Desarrollo Rural S.A. (BANRURAL S.A.).
The author states that while government owned banks often register losses in their operations, BANRURAL S.A. has experienced a significant and sustainable increase in its profits - having more than doubled profits in four years, from 14,488.7 thousand quetzales in 1997 (base year) to 34,481.7 thousand quetzales in 2001.
The author identifies following highlights of the bank's performance:
- Extensive and deep outreach;
- Good quality service with no subsidies;
- Economies of scale as a result of high volume operations;
- Excellent performance in generating revenues from other services;
- Adequate cover against inflation to capital.
Finally, the author attributes the following reasons for the bank's success:
- Good leadership with clearly articulated vision, mission and values;
- Diversified products and services to cater to different market segments;
- Capital and administrative structures;
- Market based interest rates;
- Good portfolio quality;
- Efficient operations.
