Mexican President Andrés Manuel López Obrador's plan of providing interest-free loans to small businesses could harm the market of local microfinance company Gentera SAB de CV, El Economista reported, citing data by Barclays.
The analysis wing of the London-based bank sees a negative potential for the company as it competes with Obrador's project which will provide loans on easier terms such as a lower initial amount and a zero interest rate.
"We see this as a negative potential for Gentera, since the program seems to be aimed at its target market, with a lower initial amount, but in drastically different terms (the interest rate), which could result in lower demand for said commercial loans," analysts at Barclays said.
At the close of Jan. 15, Gentera's local market dropped 1.5%, after AMLO announced that his government will provide one million loans to small merchants.
In the third quarter of 2018, the firm booked a 6.4% year-over-year increase in its loan portfolio to 33.23 billion Mexican pesos.
As of Jan. 16, US$1 was equivalent to 18.98 Mexican pesos.