Q1 2025 quarterly report: Maintaining our purpose in turbulent times

Unpredictability intensifies

In Q1 2025, the early actions of the new United States administration had major consequences for Oikocredit and our markets, as they have had worldwide for investors, markets and development practitioners. The unpredictable global context became more unstable as the Trump administration’s tariff announcements and other measures, like the abolition of USAID, took effect. Amid so much uncertainty, many partner organisations, potential partners, members, investors and potential investors are understandably hesitant about the future.

Depreciation of the US dollar against the euro weakened the value of our cooperative’s development financing portfolio. Most of our portfolio is denominated in dollars and dollar-linked currencies (chiefly in Latin America and the Caribbean). The dollar’s depreciation and declining interest rates across our portfolio reduced our portfolio income and were the main reasons for the loss we posted for the quarter.

Implementing our 2022-2026 strategy

In Q1, following our mid-term strategy review, we published a new strategy brochure and presented the outcomes to our stakeholders. While our overriding goal of fostering community resilience for low-income people remains unchanged, we are embracing four specific strategic post-review objectives:

• Adjust the portfolio to better balance impact, risk and return, realise modest growth, and embed solutions to address and mitigate climate impact.
• Build impactful partnerships to create solutions that drive meaningful change, generate additional funding or reduce risk.
• Consolidate and then sustainably grow member and investor capital while developing propositions aimed at wealth transfer and attracting new investors.
• Promote responsible investing through capital-raising campaigns and global learning initiatives in target markets.

As a key component of the post-review strategy, working with our support associations we launched our first Global Learning for Transformation and Advocacy campaign, focused on climate action. We are rolling out this awareness-raising campaign across the countries in Europe where we raise most of our capital.

Financial performance and portfolio development

The further-changing contextual factors mentioned above, including falling interest rates, inevitably affected our impact investing portfolio during Q1. Outstanding credit and equity contracted to EUR 1,045.2 million from EUR 1,105.3 million in Q4 2024, with disbursements lower than partners’ repayments and loan write-offs, and foreign exchange effects also a consideration.

The quarter’s net result was a EUR 0.9 million loss, due to lower interest income and higher foreign exchange hedging premiums. Total operating income was EUR 17.2 million. Equity income contributed a positive EUR 0.4 million to the net result.

The ratio of operating costs to total assets rose slightly this quarter to 4.1% from 4.0% at end-2024, while liquidity increased to 15.4% from 14.8%, a fully satisfactory level for honouring redemptions and making new disbursements. Net asset value per participation decreased marginally to EUR 211.45 from EUR 211.74.

Portfolio quality showed improvement, with portfolio at risk (measured by our PAR 90 ratio representing the percentage of loans with payments more than 90 days overdue) decreasing – although still above our internal threshold of 6% – to 6.4% from 8.3%. Here the two main factors were the write-off of EUR 19 million in loans and our extra monitoring of and support for partners in difficulty. The proportion of partners repaying loans on time rose to 89.3% from 87.5%.

Within the portfolio, our community-focused investing in strategic partnerships and projects in education, water and sanitation, housing and community infrastructure decreased to EUR 80.9 million from EUR 84.4 million due to repayments.

Member and investor capital reduced to EUR 964.5 million from EUR 967.0 million, as redemptions continued to exceed capital inflow, largely in line with our forecasts.

The number of active partners fell to 472 from 487 at end-2024. The average environmental, social and governance (ESG) scores of partners with new loan approvals rose to 72.3% from 72.2% and remained well above our 65% target.

Early in the quarter, the mediation process involving Oikocredit and three NGOs, supported by the Dutch National Contact Point for the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct, came to a close. As this dialogue about over-indebtedness and related challenges in Cambodia’s microfinance sector ends, we remain committed to supporting Cambodians on low incomes in improving their lives.

Organisational developments

This is Oikocredit’s 50th anniversary year, and we marked the start of this major milestone by launching our cooperative’s new branding and website. Our new-look logo and colour palette honour our roots while embodying the energy, diversity and optimism that propel us forward. And the new website – designed to create a seamless online experience for everyone – brings together all our work in a single unified digital space that replaces our former 26 individual country websites.

In Q1, our Supervisory Board agreed on a new leadership structure for the cooperative, for implementation in Q2.

Led by a core team of member representatives, we have continued with what we call the cooperative identity process. This is an open discussion about the future of our cooperative, its governance, membership, mission and vision, ecumenical roots and business activities.

Following the establishment of our first regional partner service centre in 2024, in Latin America, we now have a second regional service centre operational, in Africa.

During the quarter, Arpita Pal Agrawal was elected as the new Chair of the Supervisory Board and Gaston Aussems as Vice-Chair. This leadership transition follows the conclusion of Cheryl Jackson’s second and final term as Chair, during which time she has made a major contribution to Oikocredit’s strategic development. We announced the changes on 1 April and published an interview with our former Chair Cheryl Jackson.

Future outlook

Oikocredit’s work faces a high degree of uncertainty. We will intensify our regular monitoring and analysis of the financial markets and the potential impacts of external developments on our balance sheet and results, on our partners’ performance, and on the people we serve – partners’ clients and their communities. This requires scenario planning involving an optimistic, a neutral and a pessimistic outlook, reviewed and adjusted monthly according to events.

We expect partners’ appetite for credit to remain cautious in the near future. But the longer-term outlook for impact investing that addresses key global challenges such as inequality, climate change and biodiversity loss remains positive. We aim to continue co-creating innovative, sustainable solutions and proving that meaningful change is possible when we prioritise people and communities.

We welcome and look forward to working with our new Supervisory Board Chair and Vice-Chair. Equally, we look forward to welcoming two new Managing Board members in Q2, and to implementing the cooperative’s new leadership structure to enhance our execution of the strategy