Compartamos Bad Loans to Rise to Record on Recession

By Veronica Espinosa

June 9 (Bloomberg) -- Banco Compartamos SA, Mexico’s second-best performing stock the past six months, expects past- due loans to rise to the highest in its 19-year history as the recession sparks layoffs and curbs migrant-worker remittances, Chief Executive Officer Carlos Labarthe said.

Non-performing loans at the Mexico City-based bank, which targets the nation’s poorest borrowers, will climb to about 2.5 percent of its portfolio by year-end from 1.9 percent in March, he said. The bank will open 20 branches this year, down from 60 in 2008, and will stop adding loan officers in cities to keep costs down, Labarthe said.

“Maintaining the quality of the portfolio is one of our biggest challenges,â€