What were the highlights for CFN in 2014?
Last year was a success for CFN. We worked at facilitating public policy with financial instruments that have proven useful for our clients, namely the private sector of Ecuador, and the productive sector, which received $700 million. As for financial figures, we had a good return on equity and assets, and are sustainable in terms of delivering returns. Though we are a development bank and non profit-oriented, we do need to turn a profit to reinvest our resources in special programs and not depend on government funding. The return on assets was 1.37%, which is an efficient print. We strongly believe that efficiency is a must for a development institution such as ours. We have to be more efficient than private banks, always bearing in mind that our role is, to complement them, rather than displace them. As part of having a lean institution, we began by focusing on shortening credit approval time; we cut it down from an average of 260 days to 100 days. Total assets have risen notably; our loan book has gone up, as well as equity. The increase in liabilities is a positive indicator.
What is the aim of the Progresar program, and what is its effect on the shift in the production matrix?
In 2014 we worked extensively with the productive sector through the Progresar program. According to the latest figures as of April of 2015, projects included in this facility totaled investments of $122 million, of which fixed assets were $90 million. Investment in fixed assets (capex-capital expenditures) gives you a true grasp of the commitment of entrepreneurs with a long-term vision that is beneficial for our nation. That is why Progresar is particularly useful and has the potential to succeed. The Development Bank of Latin America (CAF) has been of great help to CFN, which is why we can extend long-term loans with grace periods to clients on a project-by-project basis. Repayment of loans run up to 15 years with up to two-year grace period at a 6.9% fixed interest rate. This is unique, particularly in South America. Our government is firmly committed to fostering the productive sector. The objectives of the Progresar program are to increase exports, if possible with value added, substitute imports, and improve productivity. I can cite two examples of the tuna industry and tourism sector.
How is CFN supporting the real estate and construction sectors?
We are heavily focused on public housing, but only within the $40,000 to $70,000 price bracket, where we cater to the middle class and young professionals. This is part of a harmonized action led by the Coordinator Ministry of Political Economy to put together financing offers and demand for housing, working with the appropriate private financial institutions and public financial entities on this. The private sector extends housing loans to individuals at 4.99% for up to 15-20 years, and we fund the offer of houses to constructors. Since we have been traditionally working with the productive sector, materials used may come from our clients, leading to a win-win situation for all involved. Over the coming year we will be launching several new products. Factoring is a tool that can be applied usefully to many businesses and is particularly convenient for SMEs. There are other sectors of interest, but I should mention an important one for development in Ecuador, which is forestry. Numerous investors recently gathered in Guayaquil and praised the potent incentives and legal framework that has been developed for commercial forestry. Finally, we are working to finance innovation in entrepreneurship. In general there is a valuable presence of development banks, some believe that public financial institutions should analyze and approve projects as part of their daily business, which I dispute. The focus should essentially be on investing.