Comments on: Despite controversy, Costa Rica’s women’s-only bank, Banca Kristal gained thousands of customers in first month

By: Andrew

Andrew — Wed, 27 Jan 2016 14:40:00 +0000

Extending credit to a Tica is tantamount to trusting a Tica. Banca Kristal could save time and money processing these “loans” by simply having the borrower sign an I.O.U. and then ” besoing” that money “adios”.

By: Ken Morris

Ken Morris — Tue, 12 Jan 2016 22:50:00 +0000

What country are you living in? I myself have a credit card secured by a CD paying 2% interest on which the interest rate is 40-some percent–and that is the best deal I could find after asking two banks. Credit deals of all kinds in Costa Rica are terrible for the small fry customers, who for the most part are faced with a “take it or leave it” choice.

Also, you aren’t cynical enough. Extending credit to poor people is enormously profitable. There’s a reason the US has thousands of payday loan outfits, as well as why the tax prep businesses offer quick refunds at up to 500% interest. Heck, according to The Economist, Western Union works with a “mouth watering” 28% margin on remittances. Plus, poor women are probably easier to hound into paying than poor men. The women often have kids to deal with and can’t move as easily as the poor men.

I say that if Banca Kristal can get its customer base up to where it forecasts it can be, and avoid the obvious discrimination legal challenges, it will be very profitable. It won’t be so great for the customers, though, who on the infrequent occasions they actually receive a child support payment will have to turn it over to the bank for interest and fees.

By: Timothy Williams

Timothy Williams — Tue, 12 Jan 2016 22:19:00 +0000

Great point, Ken. I noticed this myself when doing the writeup. One must wonder though what the default rate will end up being on these, what amount to micro-loans. And that isn’t because it is a women’s bank – you just have to wonder about the financial soundness of people (men or women, but in this case, women) taking out credit cards with 36 percent interest rates and the bank itself only extending about $300 on those cards. Sounds like a recipe for a financial meltdown (both for customers and the bank) more than a solid business strategy, though perhaps I am just cynical.

By: Ken Morris

Ken Morris — Tue, 12 Jan 2016 22:12:00 +0000

To judge from the average amount of credit extended–around a $300 limit on credit cards and $600 for loans–the bank seems to be targeting a fairly low-income customer base.

Looked at this way, Banca Kristal may be more of a way to tap into a low-income and perhaps currently un-banked market than it is to women.