2016 FINCA Int Consolidated IFRS Final

FINCA
International, Inc.
Consolidated Financial Statements as of and
for the Years Ended December 31, 2016 and 2015,
and Independent Auditors’ Report
FINCA INTERNATIONAL, INC.
TABLE OF CONTENTS
Page
INDEPENDENT AUDITORS’ REPORT 1–2
CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE

YEARS ENDED DECEMBER 31, 2016 AND 2015:
Statements of Financial Position 3
Statements of Profit or Loss 4
Statements of Other Comprehensive Loss 5
Statements of Changes in Equity 6
Statements of Cash Flows 7–8
Notes to Consolidated Financial Statements 9–62

INDEPENDENT AUDITORS’ REPORT
To the Board of Directors and Members of

FINCA International, Inc.
Washington, D.C.
We have audited the accompanying consolidated financial statements of FINCA

International, Inc. and its subsidiaries (the “Company”), which comprise the consolidated
statements of financial position as of December 31, 2016 and 2015, and the related
consolidated statements of profit or loss, other comprehensive loss, changes in equity, and
of cash flows for the years then ended, and the related notes to the consolidated financial
statements.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated
financial statements in accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair
presentation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based

on our audits. We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the consolidated financial statements. The procedures selected depend on the
auditor’s judgment, including the assessment of the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the Company’s preparation
and fair presentation of the consolidated financial statements in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Company’s internal control. Accordingly, we express
no such opinion. An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of significant accounting estimates made by management, as
well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of FINCA International, Inc. and its subsidiaries as
of December 31, 2016 and 2015, and the results of their operations and their cash flows for
the years then ended in accordance with International Financial Reporting Standards as
issued by the International Accounting Standards Board.
July 17, 2017
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CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

AS OF DECEMBER 31, 2016 AND 2015
2016 2015
ASSETS
Cash and cash equivalents $ 140,797,035 $ 137,325,636

Restricted cash and cash equivalents (Note 12) 26,428,949 24,876,413
Available for sale financial assets (Note 13) 7,670,352 6,916,967
Financial assets held-to-maturity (Note 14) 25,360,625 12,981,994
Financial assets at fair value through profit or loss (Note 15) 19,491,195 29,973,025
Loans receivable-net of allowance (Note 16) 741,756,202 793,927,099
Due from banks 7,610,297 3,933,334
Other receivables, prepaid, and other assets (Note 17) 32,305,818 22,475,965
Property and equipment (Note 18) 30,556,863 31,056,503
Intangible assets (Note 19) 8,058,153 11,058,837
Goodwill 1,042,135 1,041,608
Deferred tax assets (Note 11) 2,469,769 6,901,755
Assets of disposal group classified as held for sale (Note 27) - 11,089,682
TOTAL $ 1,043,547,393 $ 1,093,558,818
LIABILITIES AND EQUITY
LIABILITIES:
Accounts payable and other accrued liabilities (Note 20) $ 27,869,722 $ 32,992,028
Financial liability at fair value through profit and loss (Note 15) 8,259,574 1,152,086
Client deposits (Note 21) 262,340,157 168,340,679
Bank deposits 38,341,223 19,704,318
Notes payable (Note 22) 455,536,704 584,814,387
Subordinated debt (Note 23) 5,598,931 24,453,715
Deferred revenue (Note 24) 5,593,390 6,038,938
Employee benefits (Note 25) 3,707,898 3,599,046
Current income tax liability 9,154,377 3,880,606
Deferred tax liabilities (Note 11) 2,119,289 997,302
Liabilities of disposal group classified as held for sale (Note 27) - 3,035,692
Total liabilities 818,521,265 849,008,797
EQUITY:
Reserves 18,458,417 16,837,266
Retained earnings 176,281,639 190,871,939
Currency translation reserve (58,472,480) (59,795,383)
Equity attributable to owners of the parent company 136,267,576 147,913,822
Noncontrolling interest 88,758,552 96,636,199
Total equity 225,026,128 244,550,021
TOTAL $ 1,043,547,393 $ 1,093,558,818
See notes to consolidated financial statements.
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CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
2016 2015
Interest income $ 287,783,222 $ 322,766,895

Interest expense (71,004,366) (91,610,351)
Net interest income (Note 7) 216,778,856 231,156,544
Impairment losses on loans (Note 16) (57,333,825) (35,797,344)
Net interest income after provision for impairment losses

on loans 159,445,031 195,359,200
Other operating income (Note 8) 29,099,563 14,811,273
Net operating income 188,544,594 210,170,473
(Loss) gain on financial assets and liabilities at fair value

through profit or loss (5,785,999) 25,333,519
Personnel expenses (Note 9) (112,204,926) (133,985,874)

Other operating expenses (Note 10) (86,804,671) (88,767,794)
Depreciation and amortization (Notes 18 and 19) (10,777,162) (11,281,198)
Total expenses (209,786,759) (234,034,866)
(Loss) profit before other income (expenses) (27,028,164) 1,469,126
Other income (expenses):

Grants and donations 22,497,497 27,418,532
Foreign exchange gains/(losses) 3,242,633 (25,884,981)
Nonoperating expenses (2,229,907) (360,109)
(Loss) profit before income tax (3,517,941) 2,642,568
Income tax (Note 11) (17,562,140) (8,199,484)
Loss for the year from continuing operations $ (21,080,081) $ (5,556,916)
(Loss) profit for the year from discontinued

operations (Note 27) $ (513,989) $ 2,741,143
(Loss) profit for the year attributable to:

The parent $ (13,043,454) $ 1,486,922
Noncontrolling interest (8,550,616) (4,302,695)
Total loss for the year $ (21,594,070) $ (2,815,773)
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CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE LOSS

2016 2015
Loss for the year $ (21,594,070) $ (2,815,773)
Other comprehensive income (loss):

Foreign currency movement during the year 2,103,521 (50,248,616)
Fair value revaluation reserve 141,448 (41,937)
Benefit plan fair value adjustment (Note 25) (13,792) 93,838
Total other comprehensive income (loss) 2,231,177 (50,196,715)
Total comprehensive loss for the year $ (19,362,893) $ (53,012,488)
Total comprehensive loss for the year

attributable to:
The parent $ (11,646,246) $ (29,941,243)
Noncontrolling interest (7,716,647) (23,071,245)
$ (19,362,893) $ (53,012,488)
Total comprehensive (loss) profit attributable

to the parent company arises from:
Continuing operations $ (11,322,793) $ (32,682,386)
Discontinued operations (323,453) 2,741,143
$ (11,646,246) $ (29,941,243)
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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

Currency
Retained Translation Noncontrolling
Reserves Earnings Reserve Total Interest Total Equity
BALANCE—December 31, 2014 $ 17,706,184 $ 188,448,532 $ (28,299,651) $ 177,855,065 $ 119,559,445 $ 297,414,510
Comprehensive income or loss:

Profit (loss) for the year - 1,486,922 - 1,486,922 (4,302,696) (2,815,774)
Foreign currency movement during the year - - (31,495,732) (31,495,732) (18,752,884) (50,248,616)
Fair value revaluation reserve - (26,271) - (26,271) (15,666) (41,937)
Benefit plan fair value adjustment - 93,838 - 93,838 - 93,838
Total comprehensive income or loss - 1,554,489 (31,495,732) (29,941,243) (23,071,246) (53,012,489)
Issue of ordinary shares by subsidiary - - - - 148,000 148,000
Transfer to reserve (868,918) 868,918 - - - -
BALANCE—December 31, 2015 16,837,266 190,871,939 (59,795,383) 147,913,822 96,636,199 244,550,021
Comprehensive income or loss:

Loss for the year - (13,043,454) - (13,043,454) (8,550,616) (21,594,070)
Foreign currency movement during the year - - 1,322,903 1,322,903 780,618 2,103,521
Fair value revaluation reserve - 88,097 - 88,097 53,351 141,448
Benefit plan fair value adjustment - (13,792) - (13,792) - (13,792)
Total comprehensive income or loss - (12,969,149) 1,322,903 (11,646,246) (7,716,647) (19,362,893)
Dividends to noncontrolling interest - - - - (161,000) (161,000)
Transfer to reserve 1,621,151 (1,621,151) - - - -
BALANCE—December 31, 2016 $ 18,458,417 $ 176,281,639 $ (58,472,480) $ 136,267,576 $ 88,758,552 $ 225,026,128
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CONSOLIDATED STATEMENTS OF CASH FLOWS

2016 2015
CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss for the period after tax $ (21,594,070) $ (2,815,774)
Adjustments to reconcile net loss for the period after tax to
net cash used in operating activities:
Depreciation and amortization 12,824,660 12,229,982
Loss on disposal of fixed assets and intangibles 828,419 157,043
Impairment on loan losses and other financial assets 60,649,024 40,894,280
Impairment on other assets 2,449,501 1,896,096
Foreign exchange losses 7,824,262 25,957,601
Changes in deferred tax assets and liabilities 3,344,210 2,487,719
Gain on disposal of subsidiaries before tax (9,032,489)
Other noncash adjustments (2,024,274) (12,986,942)
(Decrease) increase of assets and liabilities from operating
activities after noncash items:
Change in loans receivable, including interest receivables (39,974,826) (74,262,169)
Change in due from banks (3,727,694) (3,933,332)
Change in other receivables and other assets 4,582,318 4,905,353
Change in other liabilities (65,702) 2,489,637
Change in client deposits 99,747,105 53,186,572
Change in bank deposits 19,215,624 17,062,048
Change in deferred revenue (1,505,981) (4,562,224)
Change in employee benefits 261,807 (916,824)
Net cash provided by operating activities 133,801,894 61,789,066
CASH FLOWS FROM INVESTING ACTIVITIES:

(Purchase) of/proceeds from financial assets (15,180,110) 17,286,280
Purchase of property and equipment (11,156,347) (12,784,178)
Purchase of intangible assets (2,890,808) (3,615,480)
Proceeds from sales/disposal of fixed assets 501,006 857,838
Net cash inflow on disposal of subsidiaries 14,944,775 -
Principal collection from note receivable 5,320,662 -
Net cash (used in)/provided by investing activities (8,460,822) 1,744,460
CASH FLOWS FROM FINANCING ACTIVITIES:

Issue of shares - 148,000
Proceeds from lenders 232,092,248 297,126,207
Repayment of loans and borrowings to lenders (347,440,683) (361,942,205)
Net cash used in financing activities (115,348,435) (64,667,997)
(Continued)
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CONSOLIDATED STATEMENTS OF CASH FLOWS

2016 2015
Net increase/(decrease) in cash and cash equivalents $ 9,992,637 $ (1,134,471)
Cash and cash equivalents—beginning of the year 137,325,636 149,154,910

Cash held for sale—beginning of the year 892,988 -
Total cash and cash equivalents—beginning

of the year 138,218,624 149,154,910
Effect of exchange rate changes on cash and cash equivalents (7,414,226) (9,801,815)
Cash held for sale (Note 27) - (892,988)
Cash and cash equivalents—end of the year $ 140,797,035 $ 137,325,636
SUPPLEMENTAL DISCLOSURES TO CASH FLOWS FROM

OPERATING ACTIVITIES:
Interest received $ 267,329,591 $ 344,248,793
Interest paid $ (73,426,243) $ (90,596,230)
Income taxes paid $ (4,244,371) $ (7,089,947)
See notes to consolidated financial statements. (Concluded)
-8-
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

AS OF AND FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015
1. NATURE OF ACTIVITIES
FINCA International, Inc. (FINCA or “FINCA International” or the “Company”) is a not-for-

profit corporation, incorporated in the state of New York, United States of America (USA),
that has received a determination letter from the United States Internal Revenue Service
classifying it as a tax-exempt public charity described in Section 501(c)(3) of the United
States Internal Revenue Code of 1986, as amended. Founded in 1984, FINCA’s mission is
to alleviate poverty through lasting solutions that help people build assets, create jobs, and
raise their standard of living. FINCA’s headquarters is located in Washington, D.C., USA.
In October 2010, FINCA formed a 100% owned limited liability company subsidiary, FINCA
Microfinance Holding Company, LLC (FMH), incorporated in the state of Delaware, USA. In
December 2011, FINCA reorganized its structure by placing all of its microfinance
institutions under FMH, the holding company through which it could obtain additional
capital for expansion of FINCA’s mission. Upon completion of this group reorganization,
FMH obtained equity funding of approximately $70.3 million from external parties. FINCA
International is the substantial majority shareholder, with minority positions held by social
and development institutions. In exchange for its majority ownership in FMH, FINCA
contributed the ownership of all of its microfinance operating subsidiaries to FMH, in which
all operating subsidiaries became wholly owned subsidiaries of FMH. In 2013, FMH
completed its second capital raise and received $50 million in additional equity primarily
from its existing shareholders. In 2014, one of the existing members contributed an
additional $1.7 million in equity to FMH. The proceeds are used by FINCA to expand
outreach, enter additional countries, and provide a greater range of needed products,
including savings accounts.
Since 2011, FMH and its subsidiaries have been operated and managed by FINCA, its
ultimate parent company, through terms set out in a management services agreement
(MSA). Under the MSA, FINCA manages and protects FMH’s capital investments in the
microfinance operating subsidiaries. FINCA maintains FMH’s compliance with regulatory,
tax, and other legal requirements applicable to FMH. FINCA operates FMH with existing
FINCA employees and provides stewardship services that include management, finance
and accounting, administrative, personnel, and legal functions. Additionally, oversight of
FMH’s shareholder, policy enforcement, system, personnel, and coordination functions are
provided by FINCA as set out in the terms of the MSA. Provision of these services,
intangibles, and other activities with regard to facilitation of financing to its subsidiaries
generate related-party transactions between FMH and its subsidiaries. The MSA between
FMH and FINCA expired on December 31, 2016. FMH follows FINCA’s mission of poverty
alleviation, and no changes may be made to the corporate purpose without the consent of
FINCA. In order to ensure complete alignment of interests with the microentrepreneur
clients that it serves, no FINCA employee, board member, or officer may hold any equity
interest in FMH or any of the subsidiaries. FINCA, as the controlling entity, remains a not-
for-profit corporation and maintains its designation as a Section 501(c)(3) charitable
entity.
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At present, FINCA through FMH operates in 21 developing countries in Latin America
(Ecuador, Guatemala, Haiti, Honduras, and Nicaragua), Africa (Democratic Republic of the
Congo, Malawi, Nigeria, Tanzania, Uganda, and Zambia), Eurasia (Armenia, Azerbaijan,
Georgia, Kosovo, Kyrgyzstan, Russia, and Tajikistan), and the Middle East (Afghanistan,
Jordan, and Pakistan). FINCA operates through local entities (“subsidiaries”) that are
owned and/or controlled by FINCA through FMH, including predominantly corporations and,
in some cases, nongovernmental organizations, or as branches of FINCA International.
Subsidiaries principally provide small loans to individuals and to groups of individuals that
lack access to traditional financial institutions. In most cases, FINCA loans are made to
either groups, individuals, or small and medium-sized enterprises (“SME”). Other loans
consist of agricultural loans, education loans, and other microfinance loans. Group and
village loans consist of individuals that know each other, guarantee each other’s loans, and
provide a network of support for the group members. Individual loans, typically larger in
size, are made where individual small businesses demonstrate adequate need and
creditworthiness. In addition to loans, FINCA provides other financial services needed by
the working poor through a growing number of its subsidiaries, including savings deposits,
remittances, and microinsurance.
Approximately half of FINCA’s clients worldwide are women who often lack the ability to
secure adequate formal employment and in many cultures, are the primary providers for a
family. FINCA’s loans are a renewable resource that can improve the economy of an entire
community. FINCA operates on a twin bottom line approach of sustainability and social
outreach.
2. BASIS OF PREPARATION
The consolidated financial statements have been prepared in accordance with International
Financial Reporting Standards issued by the International Accounting Standards Board
(IASB) and Interpretations issued by the IFRS Interpretations Committee (IFRIC) together
(IFRS) and stated in U.S. dollars (USD), the functional currency of FINCA.
The consolidated financial statements were approved by the board of directors on July 10,
2017.
Basis of Measurement—The consolidated financial statements have been prepared on

the historical cost basis, except for the following:
• Financial instruments at fair value through profit or loss (FVTPL) are measured at fair
value;
• Available-for-sale (AFS) financial assets are measured at fair value; and
• Held-for-sale assets are measured at fair value, less cost of sale.
Historical cost is generally based on the fair value of the consideration given in exchange
for goods and services.
3. SIGNIFICANT ACCOUNTING POLICIES
Management has discussed with the FINCA’s audit committee the development, selection,
and disclosure of FINCA’s significant accounting estimates and judgments and the
application of these policies and estimates.
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Principles of Consolidation—The consolidated financial statements consolidate the
financial statements of FINCA and entities controlled by FINCA and its subsidiaries. Control
is achieved when FINCA:
• has power over the investee;
• is exposed, or has rights, to variable returns from its involvement with the investee;
and
• has the ability to use its power to affect its returns.
FINCA reassesses whether it controls an investee if facts and circumstances indicate that
there are changes to one or more of the three elements of control listed above.
Consolidation of a subsidiary begins when FINCA obtains control over the subsidiary and
ceases when FINCA loses control of the subsidiary. Specifically, income and expenses of a
subsidiary acquired or disposed of during the year are included in the consolidated
statements of profit or loss and other comprehensive loss from the date FINCA gains
control until the date when FINCA ceases to control the subsidiary.
Noncontrolling Interests—Noncontrolling interests represent the portion of profit or loss

and net assets of subsidiaries not owned, directly or indirectly, by FINCA. Noncontrolling
interests are presented separately in the consolidated statements of profit or loss and
other comprehensive income and within equity in the consolidated statements of financial
position.
Estimates and Assumptions—Preparing consolidated financial statements requires

management to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenue, and expenses. Examples of estimates include loss
contingencies; the fair value of and/or potential impairment of goodwill for our
subsidiaries; useful lives of our tangible and intangible assets; allowances for loan losses;
and impairment of investments. Examples of assumptions include the future performance
of loan portfolios and their related default rate and collectibility, the potential outcome of
future tax consequences of events that have been recognized in our consolidated financial
statements or tax returns, and the determination of investment impairments that are other
than temporary. Actual results and outcomes may differ from management’s estimates and
assumptions.
Goodwill—Goodwill arising on an acquisition of a business is carried at cost as established

at the date of acquisition of the business, less accumulated impairment losses, if any.
For the purposes of impairment testing, goodwill is allocated to the Company’s cash-
generating unit that is expected to benefit from the synergies of the combination.
A cash-generating unit to which goodwill has been allocated is tested for impairment
annually or more frequently when there is evidence that the unit may be impaired. If the
recoverable amount of the cash-generating unit is less than its carrying amount, the
impairment loss is allocated first to reduce the goodwill allocated to the cash-generating
unit and then to the other assets of the unit pro rata based on the carrying amount of each
asset in the unit. Any impairment loss for goodwill is recognized directly in profit or loss.
An impairment loss recognized for goodwill is not reversed in subsequent periods.
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On disposal of the relevant cash-generating unit, the attributable amount of goodwill is
included in the determination of the profit or loss on disposal.
Goodwill arose in the acquisition of FINCA Microfinance Bank Ltd. (Pakistan) in 2013
because the consideration paid for the combination effectively included amounts in relation
to the benefit of expected synergies, revenue growth, future market development, and the
assembled workforce of FINCA Microfinance Bank Ltd.
FINCA performed its annual impairment testing of goodwill in December 2016 by

comparing the recoverable amount of the cash-generating unit with its carrying value. The
recoverable amount of the cash-generating unit exceeds its carrying value and, therefore,
management concluded that goodwill was not impaired.
Assets of Disposal Group Classified as Held for Sale and Discontinued

Operations—Assets of disposal group classified as held for sale are classified as held for
sale if their carrying amount will be recovered principally through a sale transaction rather
than through continuing use. This condition is regarded as met only when the asset (or
disposal group) is available for immediate sale in its present condition subject only to
terms that are usual and customary for sales of such asset (or disposal group) and its sale
is highly probable. Management must be committed to the sale, which should be expected
to qualify for recognition as a completed sale within one year from the date of
classification.
In the consolidated statements of profit or loss of the reporting period and other
comparable period of the previous year, income and expenses from discontinued
operations are reported separately from income and expenses from continuing operations
even when the Company retains a noncontrolling interest in the subsidiary after the sale.
The resulting profit or loss (after taxes) is reported separately in the statements of profit
or loss. When the Company is committed to a sale plan involving loss of control of a
subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale
when the criteria described above are met, regardless of whether the Company will retain
a noncontrolling interest in its former subsidiary after the sale.
Noncurrent assets (and disposal groups) classified as held for sale are measured at the
lower of their carrying amount and fair value, less costs to sell.
Revenue Recognition
Net Interest Income—Interest income from a financial asset is recognized when it is

probable that the economic benefits will flow to the Company and the amount of income
can be measured reliably. Interest income and expense are recognized on an accrual basis
using the effective interest method. The effective interest rate is the rate that discounts
estimated future cash receipts (including all fees paid or received that form an integral part
of the effective interest rate, transaction costs, and other premiums or discounts) through
the expected life of the financial asset or, where appropriate, a shorter period, to the net
carrying amount on initial recognition.
Fair value changes on other financial assets and liabilities carried at FVTPL are presented
within the “nonoperating income” line in the consolidated statements of profit or loss.
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Other Operating Income—Other operating income includes fees and commission income
that is recognized on an accrual basis when the service has been provided. Loan
origination fees are deferred and recognized as an adjustment to the effective interest rate
on the loan. Loan servicing fees are recognized as revenue as the services are provided.
Grant and Donations—Grant revenue is recognized when there is reasonable assurance

that FINCA has complied with the terms and conditions associated with the grant and that
grants will be received. Grants are recognized in profit or loss over the periods in which the
underlying grant expense is recognized.
Donations received are recorded as revenue when the amount can be reliably measured
and there is reasonable assurance that it will be received.
Foreign Currency
Foreign Currency Transactions and Balances—In preparing the financial statements of

each individual subsidiary, transactions in currencies other than FINCA’s functional
currency (foreign currencies) are recognized at the rates of exchange prevailing at the
dates of the transactions. At the end of each reporting period, monetary items
denominated in foreign currencies are retranslated at the rates prevailing at that date.
Nonmonetary items carried at fair value that are denominated in foreign currencies are
retranslated at the rates prevailing at the date when the fair value was determined.
Nonmonetary items that are measured in terms of historical cost in a foreign currency are
not retranslated. Exchange differences on monetary items are recognized in profit or loss
in the period in which they arise.
Income Tax Expense—FINCA is exempt from federal income tax under

Section 501(c)(3) of the United States Internal Revenue Code of 1986, as amended;
however, income from certain activities not directly related to the tax-exempt purpose is
subject to taxation as unrelated business taxable income. Accordingly, no provision for
income taxes is made in the consolidated financial statements. However, some of the
foreign operations of the subsidiaries are subject to local income tax in the jurisdictions
where they operate, and certain cross-border payments are subject to foreign withholding
taxes.
Income tax expense comprises current and deferred tax. Income tax expense is recognized
in the consolidated statements of profit or loss, except to the extent that it relates to items
recognized directly in equity, in which case it is recognized in equity. The current tax is
calculated using tax rates that have been enacted, or substantively enacted, by the end of
the reporting period in the respective jurisdictions.
Deferred tax is provided using the balance sheet method, providing for temporary
differences between the carrying amounts of assets and liabilities in the consolidated
financial statements and the corresponding tax basis used. Deferred tax assets are
generally recognized for all deductible temporary differences to the extent that it is
probable that taxable profits will be available against which those deductible temporary
differences can be utilized. The carrying amount of deferred tax assets is reviewed at the
end of each reporting period and reduced to the extent that it is no longer probable that
sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax liabilities are generally recognized for all taxable temporary differences.
However, deferred tax liabilities are not recognized for the following temporary differences:
the initial recognition of goodwill, the initial recognition of assets or liabilities in a
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transaction that is not a business combination and that affects neither accounting nor
taxable profit, and differences relating to investments in subsidiaries to the extent that
FINCA is able to control the reversal of temporary difference and it is probable that the
temporary difference will not reverse in the foreseeable future.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply
in the period in which the liability is settled or the asset realized, based on tax rates (and
tax laws) that have been enacted or substantively enacted by the end of the reporting
period.
The measurement of deferred tax liabilities and assets reflects the tax consequences that
FINCA would expect to occur if it were recover or settle the carrying amount of its assets
and liabilities at the end of the reporting period.
Financial Assets—FINCA recognizes its financial assets within the following specified
categories: FVTPL, AFS, held-to-maturity (HTM), and loans receivable. The classification
depends on the nature and purpose for which the financial assets were acquired and is
determined at the time of initial recognition.
Financial Assets at FVTPL—Financial assets are classified as at FVTPL when the financial
asset is either held for trading or it is designated as FVTPL and:
• it has been acquired principally for the purpose of selling it in the near term or
• it is a derivative that is not designated nor effective as a hedging instrument.
A financial asset other than a financial asset held for trading may be designated as at
FVTPL upon initial recognition if:
• such designation eliminates or significantly reduces a measurement or recognition

inconsistency that would otherwise arise;
• the financial asset forms part of a group of financial assets or financial liabilities or
both, which is managed, and its performance is evaluated on a fair value basis, in
accordance with FINCA’s documented risk management or investment strategy, and
information about the grouping is provided internally on that basis; or
• it forms part of a contract containing one or more embedded derivatives and

International Accounting Standards (IAS) 39, Financial Instruments: Recognition and
Measurement, which permits the entire combined contract to be designated as at
FVTPL.
Financial assets at FVTPL are stated at fair value, with remeasurement gains or losses
recognized in profit or loss. The net gain or loss recognized in profit or loss incorporates
any dividend or interest earned on the financial asset and is included in the (loss) gain on
financial assets and liabilities at FVTPL. Fair value is determined in the manner described in
Note 6.
HTM Investments—HTM investments are nonderivative financial assets with fixed or

determinable payments and fixed maturities that the Company has positive intent and
ability to hold to maturity. Subsequent to initial recognition, HTM investments are
measured at amortized cost using the effective interest method, less any impairment.
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AFS Financial Assets—AFS are nonderivatives that are either designated as AFS or are
not classified as (a) loans and receivables, (b) HTM investments, or (c) financial assets as
at FVTPL. AFS are stated at fair value at the end of reporting period. Changes in the
carrying amount of AFS monetary financial assets relating to changes in foreign currency
rates, interest income calculated using the effective interest method, and dividends on AFS
equity investments are recognized in the profit or loss. Other changes in the carrying
amount of AFS are recognized in the other comprehensive income and accumulated under
the investment valuation reserve. When the investment is disposed of or is determined to
be impaired, the cumulative gain or loss previously accumulated in the revaluation reserve
is reclassified to profit or loss.
Loans Receivable—Net of Allowance—Loans receivable are nonderivative financial

assets with fixed or determinable payments and that FINCA does not intend to sell
immediately or in the near term.
Loans receivable are initially measured at fair value, plus directly attributable transaction
costs, and subsequently measured at their amortized cost using the effective interest
method, less any impairment.
Impairment of Loans—FINCA assesses at each balance sheet date whether there is

objective evidence that its loans receivable are impaired. If there is objective evidence of
impairment of a credit exposure or a portfolio of credit exposures has occurred that
influences the future cash flow of the financial assets, the respective losses are
immediately recognized. Depending on the size or type of the credit exposure, such losses
are either calculated on an individual credit exposure basis or are collectively assessed for
a portfolio of credit exposures. The carrying amount of the loan is reduced through the use
of an allowance account and the amount of the loss is recognized in the consolidated
statements of profit or loss through impairment losses on loans. FINCA does not recognize
losses from expected future events.
Individually Assessed Loans—Credit exposures are considered individually significant if

they have a certain size, partly depending on the individual subsidiary. As a FINCA-wide
rule, all credit exposures over a country-specific threshold are individually assessed for
impairment. For such credit exposures, it is assessed whether objective evidence of
impairment exists, i.e., any factors that might influence the client’s ability to fulfill his
contractual payment obligations towards the individual subsidiary, such as:
• Delinquencies in contractual payments of interest or principal
• Breach of covenants or conditions
• Initiation of bankruptcy proceedings
• Any specific information on the client’s business (e. g., reflected by cash flow
difficulties experienced by the client)
• Changes in the client’s market environment
• The general economic situation
Additionally, the aggregate exposure to the client and the realizable value of collateral held
are taken into account when deciding on the allowance for impairment. If there is objective
evidence that an impairment loss has been incurred, the amount of the loss is measured as
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the difference between the asset’s carrying amount and the present value of its estimated
future cash flows discounted at the financial asset’s original effective interest rate (specific
impairment). If a credit exposure has a variable interest rate, the discount rate for
measuring any impairment loss is the current effective interest rate determined under the
contract. The calculation of the present value of the estimated future cash flow of a
collateralized financial asset reflects the cash flow that may result from foreclosure, less
costs for obtaining and selling the collateral.
If FINCA determines that no objective evidence of impairment exists for an individually

assessed loans receivable whether individually significant or not, it includes the loans
receivable asset in a group of financial assets with similar credit risk characteristics and
collectively assesses them for impairment (impairment for collectively assessed credit
exposures).
Collectively Assessed Loans—There are two cases in which credit exposures are
collectively assessed for impairment:
• Individually insignificant credit exposures that show objective evidence of impairment
• Credit exposures that do not show signs of impairment, in order to cover all losses
that have already been incurred, but not yet detected on an individual credit exposure
basis
For the purpose of the evaluation of impairment of individually insignificant credit

exposures, the credit exposures are grouped on the basis of similar credit risk
characteristics, i.e., according to the number of days they are in arrears. Arrears of more
than 30 days are considered to be a sign of impairment. This characteristic is relevant for
the estimation of future cash flows for the defined groups of such assets, based on
historical loss experiences with loans that showed similar characteristics. The collective
assessment of impairment for individually insignificant credit exposures and for unimpaired
credit exposures belonging to a group of financial assets is based on a quantitative analysis
of historical default rates for loan portfolios with similar risk characteristics in the individual
subsidiary (migration analysis), grouped into geographical segments with a comparable
risk profile. After a qualitative analysis of this statistical data, FINCA management
approves appropriate rates as the basis for their portfolio-based impairment allowances.
Deviations from this guideline are allowed at the discretion of FINCA management.
Future cash flows in a group of financial assets that are collectively evaluated for
impairment are estimated on the basis of the contractual cash flows of the assets in the
group and historical loss experience for assets with credit risk characteristics similar to
those in the group. Historical loss experience is adjusted on the basis of current observable
data to reflect the effects of current conditions that did not affect the period on which the
historical loss experience is based and to remove the effects of conditions in the historical
period that do not exist currently. The methodology and assumptions used for estimating
future cash flows are reviewed regularly by FINCA to reduce any differences between loss
estimates and actual loss experience.
Writing off Loans—When a loan is determined uncollectible, it is written off against the
related allowance for loan impairment. Such loans are written off after all the necessary
procedures have been completed and the amount of the loss has been determined.
Subsequent recoveries of amounts previously written off decrease the amount of the
provision for loan impairment in the consolidated statements of profit or loss.
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FINCA writes off a loan (and any related provision for impairment losses) when FINCA’s
credit committees and a subsidiary’s audit committee determines that the loans are
uncollectible. This determination is reached after considering information, such as the
occurrence of significant changes in a client’s financial position, such that the client can no
longer pay the obligation, or that proceeds from collateral, if any, will not be sufficient to
pay back the entire exposure. For smaller balance standardized loans, charge-off decisions
are generally based on a product-specific past due status.
Derecognition of Financial Assets—FINCA derecognizes a financial asset when the

contractual rights to the cash flow for the asset expire or when it transfers the financial
asset and substantially all the risks and rewards of ownership of the asset to another
party. On derecognition of the financial asset, the difference between the asset’s carrying
amount and the sum of consideration received and receivable as well as the cumulative
gain or loss that had been recognized in other comprehensive income and accumulated in
equity is recognized in profit or loss.
FINCA also derecognizes certain assets when it charges off balances pertaining to the
assets deemed to be uncollectible (see Note 5). Any interest in transferred financial assets
that is created or retained by FINCA is recognized as a separate asset or liability.
Impairment of Financial Assets—At each balance sheet date, FINCA assesses whether
there is objective evidence that financial assets not carried at FVTPL are impaired. Financial
assets are impaired when objective evidence demonstrates that a loss event has occurred
after the initial recognition of the asset and that the loss event has an impact on the future
cash flows of the asset that can be reliably estimated.
For AFS equity investments, a significant or prolonged decline in the fair value of the
security below its cost is considered to be objective evidence of impairment.
Impairment losses on assets carried at amortized cost are measured as the difference
between the carrying amount of the financial assets and the present value of estimated
cash flows discounted at the assets’ original effective interest rate. Losses are recognized
in the consolidated statements of profit or loss and reflected in an allowance account
against the financial assets.
When a subsequent event causes the amount of impairment loss to decrease, the
impairment loss is reversed through profit or loss.
Financial Liabilities—Financial liabilities are classified as either financial liabilities ‘at

FVTPL’ or ‘other financial liabilities.’
Financial Liabilities at FVTPL—Financial liabilities are classified as ‘at FVTPL’ when the
financial liability is held for trading or it is designated as ‘at FVTPL.’ FINCA did not have any
financial liabilities held for trading at December 31, 2016 and 2015.
A financial liability other than a financial liability held for trading may be designated at
FVTPL upon initial recognition if:
• it has been incurred principally for the purpose of repurchasing it in the near term;
• on initial recognition, it is part of a portfolio of identified financial instruments that

FINCA manages together and has a recent actual pattern of short-term profit taking;
- 17 -
• it is a derivative that is not designated and effective as a hedging instrument, such
designation eliminates or significantly reduces a measurement or recognition
inconsistency that would otherwise arise;
• the financial asset forms part of a group of financial assets or financial liabilities or
both, which is managed, and its performance is evaluated on a fair value basis, in
accordance with FINCA’s documented risk management or investment strategy, and
information about the grouping is provided internally on that basis; or
• it forms part of a contract containing one or more embedded derivatives and IAS 39
permits the entire combined contract to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value with remeasurement gains or losses
recognized in consolidated statements of profit or loss in (loss) gain on financial assets at
FVTPL. The net gain or loss recognized in profit or loss incorporates any interest paid on
the financial liability and is included in the “other gains or losses” line item.
Accounts Payable and Other Accrued Liabilities—Accounts payable and other accrued
liabilities are measured at amortized cost using the effective interest method.
Notes Payable—Notes payable are recognized initially at fair value, net of transaction
costs incurred. Notes payable are subsequently carried at amortized cost; any difference
between the proceeds (net of transaction costs) and the redemption value is recognized in
the consolidated statements of profit or loss over the period of the borrowings using the
effective interest method. Fees paid on the establishment of loan facilities are recognized
as transaction costs of the loan to the extent that it is probable that some or all of the
facility will be drawn down. In this case, the fees is deferred until the drawdown occurs. To
the extent there is no evidence that it is probable that some or all of the facility will be
drawn down, the fees is capitalized as a prepayment for liquidity services and amortized
over the period of the facility to which it relates.
Subordinated Debt—Subordinated debt consists mainly of liabilities to other international

financial institutions, which in the event of insolvency or liquidation are not repaid until all
nonsubordinated creditors have been satisfied. There is no obligation to repay early.
Following initial recognition at acquisition cost, the subordinated debt is recognized at
amortized cost. Premiums and discounts are amortized over the respective terms in the
consolidated statements of profit or loss under “net interest income.”
Client Deposits—Client deposits are recognized initially at fair value, net of transaction
costs incurred. Changes to client deposits are subsequently stated at amortized cost; any
difference between proceeds net of transaction costs and the redemption value is
recognized in the consolidated statements of profit or loss over the period of the
borrowings using the effective interest rate method.
Financial Guarantee Contracts—Financial guarantee contracts issued by FINCA are

initially measured at their fair value and if not designated as ‘at FVTPL’ are subsequently
measured at the higher of:
• The amount of obligation under the contract as determined in accordance with IAS 37,
Provisions, Contingent Liabilities and Contingent Assets.
• The amount initially recognized, less, where appropriate, cumulative amortization

recognized, in accordance with the revenue recognition policies.
- 18 -
Derecognition of Financial Liabilities—Financial liabilities are derecognized when they
have been redeemed or otherwise extinguished. All financial liabilities are derecognized
when they are extinguished—that is, when the obligation is discharged, canceled, or
expires. The difference between the carrying amount of financial liability derecognized and
consideration paid is recognized in the consolidated statements of profit or loss.
Derivatives—The Company enters into a variety of derivative financial instruments to

manage its exposure to interest rate and foreign exchange risk, including foreign exchange
forward contracts, interest rate, and foreign exchange swaps.
Derivative instruments are initially recognized at fair value at the date the derivative
contracts are entered into and are subsequently remeasured to their fair value at the end
of each reporting period. The resulting gain or loss is recognized in profit or loss
immediately. FINCA does not designate any of the hedging instruments for the purposes of
qualifying for hedge accounting.
Offsetting—Financial assets and liabilities are offset and the net amount is presented in
the consolidated statements of financial position when, and only when, FINCA has a legal
right to offset the amounts and intends either to settle on a net basis or to realize the
asset and settle the liability simultaneously.
Income and expenses are presented on a net basis only when permitted by the accounting
standards or for gains and losses arising from a group of similar transactions.
Property and Equipment—Items of property and equipment are measured at cost, less
accumulated depreciation and recognized impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset. The
cost of self-constructed assets includes the cost of materials and direct labor, any other
costs directly attributable to bringing the asset to a working condition for its intended use,
and the costs of dismantling and removing the items and restoring the site on which they
are located. Purchased software that is integral to the functionality of the related
equipment is capitalized as part of that equipment.
The cost to replace an item of property or equipment is recognized in the carrying amount
of the item if it is probable that the future economic benefits embodied within the part will
flow to FINCA and its cost can be reliably measured.
Depreciation is recognized in the consolidated statements of profit or loss on a straight-line

basis over the estimated useful lives of each part of an item of property and equipment:
Buildings and offices 20–50 years

Computer equipment 2–5 years
Furniture and office equipment 5–7 years
Vehicles 3–5 years
Other 2–5 years
Leasehold improvements are depreciated over the shorter of the lease term or their useful
lives. When necessary, assets are componentized to address different useful lives of the
component.
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Depreciation methods, useful lives, and residual values are reassessed at each reporting
date.
Intangible Assets—Costs associated with maintaining computer software programs are

recognized as an expense as incurred. Development costs that are directly attributable to
the design and testing of identifiable and unique software products controlled by FINCA are
recognized as intangible assets when the following criteria are met:
• It is technically feasible to complete the software product so that it will be available

for use;
• Management intends to complete the software product and use it;
• There is an ability to use or sell the software product;
• It can be demonstrated how the software product will generate probable future
economic benefits;
• Adequate technical, financial, and other resources to complete the development and
to use or sell the software product are available; and
• The expenditure attributable to the software product during its development can be
reliably measured.
Directly attributable costs that are capitalized as part of the software product include the
software development employee costs and an appropriate portion of the overhead costs.
Other development expenditures that do not meet these criteria are recognized as an
expense as incurred. Development costs previously recognized as an expense are not
recognized as an asset in a subsequent period.
Computer software development costs recognized as assets are amortized over their useful
lives, which is three to five years depending on facts and circumstances. Capital work in
progress is represented by capitalized costs of information systems implementation in
process. Capital work in progress is not amortized.
Impairment of Nonfinancial Assets—The carrying amounts of FINCA’s nonfinancial

assets are reviewed on an annual basis or whenever a triggering event has been observed
to determine whether there is any indication of impairment. If any such indication exists,
the asset’s recoverable amount is estimated to determine the extent of the impairment
loss (if any).
An impairment loss is recognized if the carrying amount of an asset or its cash-generating

unit exceeds its recoverable amount. A cash-generating unit is the smallest identifiable
asset group that generates cash flows that are largely independent from other assets and
groups. Impairment losses are recognized in the consolidated statements of profit or loss.
The recoverable amount of an asset or cash-generating unit is the higher of its value in use
and its fair value, less cost to sell. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pretax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset
for which the estimates of future cash flows have not been adjusted.
- 20 -
Impairment losses recognized in prior periods are assessed at each reporting date for any
indications that the loss has decreased or no longer exists. Such impairment loss is
reversed if there has been a change in the estimates used to determine the recoverable
amount. Such an impairment loss is reversed only to the extent that the asset’s carrying
amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortization, if no impairment loss had been recognized in previous years.
Government and Other Grants—Grants are accounted for in accordance with IAS 20,
Accounting for Government Grants and Disclosure of Government Assistance, following the
gross approach, where the money received and the obligation to use the money for
ongoing expenses is not offset. The liability to fulfill the obligation, recognized as deferred
revenue in the consolidated statements of financial position, is amortized through the
consolidated statements of profit or loss at the same time as funds are spent to cover
expenditures. When donor contributions are used to purchase assets, the assets are
recognized as property and equipment or intangible assets in the consolidated statements
of financial position. Another liability is recognized to reflect the obligation to use the funds
for restricted purposes. The liability is amortized through the consolidated statements of
profit or loss at which time the expenses are incurred for program activities.
Awards not yet received are accrued to the extent unreimbursed expenses have been
incurred for the purposes specified by an approved award. FINCA defers award revenue
received under approved awards to the extent they exceed expenses incurred for the
purposes specified under the awards’ restrictions. Proceeds from monetization of
commodities inventory are also reported as refundable advances until proceeds are used
for program expenses.
Application of New and Revised IFRSs
New and Revised IFRSs in Issue, but Not Yet Effective—FINCA has not applied the
following new and revised IFRSs that have been issued, but are not yet effective:
Effective for annual periods beginning on or after January 1, 2018, with earlier application
permitted.
• IFRS 9, Financial Instruments, and

• IFRS 15, Revenue from Contracts with Customers.
IFRS 9 Financial Instruments (as revised in 2014)
Effective for annual periods beginning on or after January 1, 2018.
In July 2014, the IASB finalized the reform of financial instruments accounting and issued
IFRS 9 (as revised in 2014), which contains the requirements for a) the classification and
measurement of financial assets and financial liabilities, b) impairment methodology, and
c) general hedge accounting. IFRS 9 (as revised in 2014) will supersede IAS 39 upon its
effective date.
Phase 1: Classification and Measurement of Financial Assets and Financial Liabilities
- 21 -
With respect to the classification and measurement, the number of categories of financial
assets under IFRS 9 has been reduced; all recognized financial assets that are currently
within the scope of IAS 39 will be subsequently measured at either amortized cost or fair
value under IFRS 9. Specifically:
• a debt instrument that (i) is held within a business model whose objective is to collect
the contractual cash flows and (ii) has contractual cash flows that are solely payments
of principal and interest on the principal amount outstanding must be measured at
amortized cost (net of any write down for impairment), unless the asset is designated
at FVTPL under the fair value option;
• a debt instrument that (i) is held within a business model whose objective is achieved
both by collecting contractual cash flows and selling financial assets and (ii) has
contractual terms that give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding must be
measured at fair value through other comprehensive income (FVTOCI), unless the
asset is designated at FVTPL under the fair value option;
• all other debt instruments must be measured at FVTPL; and
• all equity investments are to be measured in the consolidated statements of financial

position at fair value, with gains and losses recognized in profit or loss, except that if
an equity investment is not held for trading, an irrevocable election can be made at
initial recognition to measure the investment at FVTOCI, with dividend income
recognized in profit or loss.
IFRS 9 also contains requirements for the classification and measurement of financial
liabilities and derecognition requirements. One major change from IAS 39 relates to the
presentation of changes in the fair value of a financial liability designated as at FVTPL
attributable to changes in the credit risk of that liability. Under IFRS 9, such changes are
presented in other comprehensive income, unless the presentation of the effect of the
change in the liability’s credit risk in other comprehensive income would create or enlarge
an accounting mismatch in profit or loss. Changes in fair value attributable to a financial
liability’s credit risk are not subsequently reclassified to profit or loss. Under IAS 39, the
entire amount of the change in the fair value of the financial liability designated as FVTPL is
presented in profit or loss.
Phase 2: Impairment Methodology
The impairment model under IFRS 9 reflects expected credit losses, as opposed to incurred
credit losses under IAS 39. Under the impairment approach in IFRS 9, it is no longer
necessary for a credit event to have occurred before credit losses are recognized. Instead,
an entity always accounts for expected credit losses and changes in those expected credit
losses. The amount of expected credit losses should be updated at each reporting date to
reflect changes in credit risk since initial recognition.
Phase 3: Hedge Accounting
The general hedge accounting requirements of IFRS 9 retain the three types of hedge
accounting mechanisms in IAS 39. However, greater flexibility has been introduced to the
types of transactions eligible for hedge accounting, specifically broadening the types of
instruments that qualify as hedging instruments and the types of risk components of
nonfinancial items that are eligible for hedge accounting. In addition, the effectiveness test
- 22 -
has been overhauled and replaced with the principle of an ‘economic relationship.’
Retrospective assessment of hedge effectiveness is no longer required. Far more disclosure
requirements about an entity’s risk management activities have been introduced.
The work on macro hedging by the IASB is still at a preliminary stage—a discussion paper
was issued in April 2014 to gather preliminary views and direction from constituents with a
comment period that ended on October 17, 2014. The project is under redeliberation at the
time of writing.
Transitional Provisions
IFRS 9 (as revised in 2014) is effective for annual periods beginning on or after January 1,
2018, with earlier application permitted. If an entity elects to apply IFRS 9 early, it must
apply all of the requirements in IFRS 9 at the same time, except for those relating to:
1. the presentation of fair value gains and losses attributable to changes in the credit risk
of financial liabilities designated as at FVTPL, the requirements for which an entity
may early apply without applying the other requirements in IFRS 9 and
2. hedge accounting, for which an entity may choose to continue to apply the hedge
accounting requirements of IAS 39 instead of the requirements of IFRS 9.
It is not practicable to provide a reasonable estimate of the effect of IFRS 9 until FINCA
performs a detailed review.
IFRS 15
IFRS 15 establishes a single comprehensive model for entities to use in accounting for
revenue arising from contracts with customers. It will supersede the following revenue
standards and interpretations upon its effective date:
• IAS 18, Revenue;
• IAS 11, Construction Contracts;
• IFRIC 13, Customer Loyalty Programs;
• IFRIC 15, Agreements for the Construction of Real Estate;
• IFRIC 18, Transfers of Assets from Customers; and
• Standard Interpretation Committee Interpretation 31, Revenue—Barter Transactions

Involving Advertising Services.
As suggested by the title of the new revenue standard, IFRS 15 will only cover revenue
arising from contracts with customers. Under IFRS 15, a customer of an entity is a party
that has contracted with the entity to obtain goods or services that are an output of the
entity’s ordinary activities in exchange for consideration. Unlike the scope of IAS 18, the
recognition and measurement of interest income and dividend income from debt and
equity investments are no longer within the scope of IFRS 15. Instead, they are within the
scope of IAS 39 (or IFRS 9 if IFRS 9 is early adopted).
- 23 -
As mentioned above, the new revenue standard has a single model to deal with revenue
from contracts with customers. Its core principle is that an entity should recognize revenue
to depict the transfer of promised goods or services to customers in an amount that
reflects the consideration to which the entity expects to be entitled in exchange for those
goods or services.
The new revenue standard introduces a five-step approach to revenue recognition and
measurement:
Step 1: Identify the contract(s) with a customer.
Step 2: Identify the performance obligations in the contract.
Step 3: Determine the transaction price.
Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation.
Under IFRS 15, an entity recognizes revenue when (or as) a performance obligation is
satisfied, i.e., when ‘control’ of the goods or services underlying the particular performance
obligation is transferred to the customer. Far more prescriptive guidance has been added
in IFRS 15 to deal with specific scenarios. Furthermore, extensive disclosures are required
by IFRS 15.
It is not practicable to provide a reasonable estimate of the effect of IFRS 15 until FINCA
performs a detailed review.
Amendments to IFRS 11
The amendments to IFRS 11 provide guidance on how to account for the acquisition of a
joint operation that constitutes a business as defined in IFRS 3, Business Combinations.
Specifically, the amendments state that the relevant principles of accounting for business
combinations in IFRS 3 and other standards (e.g., IAS 36, Impairment of Assets, regarding
impairment testing of a cash-generating unit to which goodwill on acquisition of a joint
operation has been allocated) should be applied. The same requirements should be applied
to the formation of a joint operation if and only if one of the parties that participate in the
joint operation contributes an existing business to the joint operation.
A joint operator is also required to disclose the relevant information required by IFRS 3 and
other standards for business combinations.
Amendments to IAS 16 and IAS 38—The amendments to IAS 16, Property, Plant, and
Equipment, prohibit entities from using a revenue-based depreciation method for items of
property, plant, and equipment. The amendments to IAS 38, Intangible Assets, introduce a
rebuttable presumption that revenue is not an appropriate basis for amortization of an
intangible asset. This presumption can only be rebutted in the following two limited
circumstances:
a) when the intangible asset is expressed as a measure of revenue or
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b) when it can be demonstrated that revenue and consumption of the economic benefits
of the intangible asset are highly correlated.
The amendments apply for annual periods beginning on or after January 1, 2016.
Currently, FINCA uses the straight-line method for depreciation and amortization for its
property, plant, and equipment and intangible assets. The management of FINCA believes
that the straight-line method is the most appropriate method to reflect the consumption of
economic benefits inherent in the respective assets.
Amendments to IFRS 10 and IAS 28
The amendments deal with situations where there is a sale or contribution of assets
between an investor and its associate or joint venture.
IAS 28, Investments in Associates, has been amended to reflect the following:
• Gains and losses resulting from transactions involving assets that do not constitute a
business between an investor and its associate or joint venture are recognized to the
extent of unrelated investors’ interests in the associate or joint venture.
• Gains or losses from downstream transactions involving assets that constitute a

business between an investor and its associate or joint venture should be recognized
in full in the investor’s consolidated financial statements.
IFRS 10, Consolidated Financial Statements, has been amended to reflect the following:
Gains or losses resulting from the loss of control of a subsidiary that does not contain a
business in a transaction with an associate or a joint venture that is accounted for using
the equity method are recognized in the parent’s profit or loss only to the extent of the
unrelated investors’ interests in that associate or joint venture. Similarly, gains and losses
resulting from the remeasurement of investments retained in any former subsidiary (that
has become an associate or a joint venture that is accounted for using the equity method)
to fair value are recognized in the former parent’s profit or loss only to the extent of the
unrelated investors’ interests in the new associate or joint venture.
The application of these amendments did not have a significant impact on FINCA’s
consolidated financial statements.
Amendments to IFRS 10, IFRS 12, and IAS 28
The amendments clarify that the exemption from preparing consolidated financial
statements is available to a parent entity that is a subsidiary of an investment entity, even
if the investment entity measures all its subsidiaries at fair value in accordance with
IFRS 10. Consequential amendments have also been made to IAS 28 to clarify that the
exemption from applying the equity method is also applicable to an investor in an
associate or joint venture if that investor is a subsidiary of an investment entity that
measures all its subsidiaries at fair value.
- 25 -
The amendments further clarify that the requirement for an investment entity to
consolidate a subsidiary providing services related to the former’s investment activities
applies only to subsidiaries that are not investment entities themselves.
Moreover, the amendments clarify that in applying the equity method of accounting to an
associate or a joint venture that is an investment entity, an investor may retain the fair
value measurements that the associate or joint venture used for its subsidiaries.
Lastly, clarification is also made that an investment entity that measures all its subsidiaries
at fair value should provide the disclosures required by IFRS 12, Disclosures of Interests in
Other Entities.
These amendments did not have a significant impact on FINCA’s consolidated financial
statements since FINCA does not have subsidiaries that are investment entities.
4. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
Allowances for Credit Impairment—The specific counterparty component of the total

allowances for impairment applies to claims evaluated individually for impairment and is
based upon management’s best estimate of the present value of the cash flows that are
expected to be received. In estimating these cash flows, management makes judgments
about a counterparty’s financial situation and the net realizable value of any underlying
collateral. Each impaired asset is assessed on its merits, and the workout strategy and
estimate of cash flows considered recoverable are independently approved by FINCA
management.
Collectively assessed impairment allowances cover credit losses inherent in portfolios of

claims with similar economic characteristics when there is objective evidence to suggest
that they contain impaired claims, but the individual impaired items cannot yet be
identified. A component of collectively assessed allowances is for country risks. In
assessing the need for collective loan credit loss allowances, management considers
factors, such as credit quality, portfolio size, concentrations, and economic factors. In
order to estimate the required allowance, assumptions are made to define the way
inherent losses are modeled and to determine the required input parameters, based on
historical experience and current economic conditions. The accuracy of the allowances
depends on how well these estimated future cash flows for specific counterparty
allowances are forecast and the model assumptions and parameters used in determining
collective allowances.
Income Taxes—FINCA is subject to income tax in several international jurisdictions and

significant judgment is required in determining the provision for income taxes. During the
ordinary course of business, there are transactions and calculations for which the ultimate
tax determination is uncertain. As a result, FINCA recognizes tax liabilities based on
estimates of whether additional taxes and interest will be due. These tax liabilities are
recognized when, despite FINCA’s belief that its tax return positions are supportable,
FINCA believes that certain positions are likely to be challenged and may not be fully
sustained upon review by tax authorities. FINCA believes that its accruals for tax liabilities
are adequate for all open audit years based on its assessment of many factors, including
past experience and interpretations of tax law. This assessment relies on estimates and
assumptions and may involve a series of complex judgments about future events. To the
extent that the final tax outcome of these matters is different than the amounts recorded,
such differences will impact income tax expense in the period in which such determination
is made.
- 26 -
5. FINANCIAL RISK MANAGEMENT
FINCA believes that effective risk management is of primary importance to its overall
operations. Accordingly, FINCA’s risk management process has been designed to monitor,
evaluate, and manage the principal risks it assumes in conducting its activities.
Specifically, the activities that FINCA engages in, and the risks those activities generate,
must be consistent with FINCA’s underlying goal of serving the world’s lowest income
entrepreneurs.
FINCA’s risks are generally categorized into:
• Credit risk
• Market risk
– Interest rate risk
– Foreign currency risk
• Liquidity risk
• Third-party risk
In today’s environment, FINCA has placed primary emphasis on solvency, liquidity, anti-
money laundering, treasury, budgeting and planning, and capital adequacy.
FINCA’s financial risks are mitigated through three programs: (i) business management,
(ii) independent control functions, and (iii) internal audit.
• Business Management—Each of FINCA’s subsidiaries, including in-business risk

personnel, own and manage the risks, including compliance risks, inherent in or
arising from the business, and are responsible for having controls in place to mitigate
key risks and promoting a culture of compliance and control.
• Independent Control Functions—FINCA’s independent control functions, including

finance, legal, and risk, set standards according to which FINCA and its businesses are
expected to manage and oversee risks, including compliance with applicable laws,
regulatory requirements, and policies and standards of ethical conduct. In addition,
among other things, the independent control functions provide advice and training to
FINCA’s businesses and establish tools, methodologies, processes, and oversight of
controls used by the businesses to foster a culture of compliance and control and to
satisfy those standards.
• Internal Audit—FINCA’s internal audit function independently reviews activities of

the first two lines of defense discussed above based on a risk-based audit plan and
methodology approved by the FINCA’s board of directors.
FINCA has maintained a minimum capital policy that requires subsidiaries to maintain
common tangible equity equal to at least 20% of total assets. Certain subsidiaries were
granted approval from FMH’s audit committee to lower their minimum tangible equity level
to 15% (this lowering was coordinated with relevant lenders). FINCA’s capital ratios
exceeded this minimum policy level in 2016 and 2015.
Credit Risk—Credit risk is the potential for financial loss resulting from the failure of a
client or counterparty to honor its financial or contractual obligations. Credit risk arises
from FINCA’s microfinance activities.
- 27 -
FINCA’s loan portfolio is made up entirely of loans made to individuals, groups of
individuals, and Small and Mid-Sized Enterprises for a specific purpose and is sufficiently
diversified to reduce concentration risk. At December 31, 2016 and 2015, FINCA had
0.9 million and 1.2 million borrowers, respectively.
FINCA’s aggregate loan portfolio was $784.6 million and $818.9 million as of December 31,
2016 and 2015, respectively (see Note 16). FINCA’s total allowance for impairments
totaled $42.9 million, a coverage ratio of 5.5% of total loans, and $24.9 million, a
coverage ratio of 3.0% of total loans, as of December 31, 2016 and 2015, respectively.
Regionally, impairment losses on loans approximate 1.9% to 10.1% and 1.8% to 5.5% of
the average total loan portfolio at December 31, 2016 and 2015, respectively. 2015
includes operations that were discontinued in 2016.
Impairment Losses
Impairment Losses Average Gross as Percentage of Average
on Loans Loans to Customers Gross Loans
2016 2015 2016 2015 2016 2015
Eurasia $ 37,472,821 $ 23,904,084 $ 370,437,331 $ 489,901,816 10.1 % 4.9 %

Latin America 6,438,828 9,084,152 128,878,059 164,670,801 5.0 5.5
Africa 11,174,980 6,116,054 161,856,200 148,049,311 6.9 4.1
MESA 2,247,196 1,538,989 120,301,645 85,030,669 1.9 1.8
FINCA conducts biannual historical loan loss migration analysis across its subsidiary
network in order to determine the probability of default, defined as all loans in arrears in
excess of 180 days, as well as an examination of other current observable factors (e.g.,
macroeconomic, operational, policy and systems changes, political risk) in order to
establish subsidiary credit reserves. The loan loss migration data is used to form the
statistical base of the credit risk calculation in order to estimate the probability of default
over a six-month period.
The regional segmentation by arrears category for gross loans and allowances at
December 31, 2016, is as follows:
Total Gross Loans for Each Portfolio-Aging Segment

Gross Loan Portfolio Total Gross
Current 1–30 31–60 61–90 91–180 180+ Loan Portfolio
Eurasia $ 269,428,810 $ 10,738,716 $ 6,164,643 $ 5,144,013 $ 13,081,589 $ 30,187,421 $ 334,745,192

Latin America 126,916,142 2,319,243 1,177,709 1,011,717 2,136,172 439,736 134,000,719
Africa 153,867,922 5,329,790 2,524,532 1,647,639 3,368,948 2,998,776 169,737,607
MESA 142,335,309 1,733,524 606,227 431,799 1,048,577 - 146,155,436
Total $ 692,548,183 $ 20,121,273 $ 10,473,111 $ 8,235,168 $ 19,635,286 $ 33,625,933 $ 784,638,954
Aging of Allowance for Impairment

Total Allowance
Current 1–30 31–60 61–90 91–180 180+ for Impairment
Eurasia $ 2,273,357 $ 2,660,040 $ 2,287,999 $ 2,063,864 $ 5,899,804 $ 15,027,508 $ 30,212,572

Latin America 1,460,855 162,162 303,956 471,599 1,031,158 219,615 3,649,345
Africa 1,986,704 617,861 844,839 599,715 1,535,198 1,953,816 7,538,133
MESA 112,928 164,976 195,745 220,082 788,971 - 1,482,702
Total $ 5,833,844 $ 3,605,039 $ 3,632,539 $ 3,355,260 $ 9,255,131 $ 17,200,939 $ 42,882,752
- 28 -
The regional segmentation by arrears category for gross loans and allowances at
December 31, 2015, is as follows:
Total Gross Loans for Each Portfolio Aging Segment

Total Gross
Current 1–30 Days 31–60 Days 61–90 Days 91–180 Days 180+ Days Loan Portfolio
Eurasia $ 371,928,829 $ 19,407,605 $ 4,803,184 $ 3,334,223 $ 3,525,822 $ 3,129,810 $ 406,129,473

Latin America 154,551,784 3,339,435 1,414,954 1,162,878 3,194,037 635,607 164,298,695
Africa 145,036,312 3,628,824 1,452,409 864,978 1,761,663 1,230,609 153,974,795
MESA 90,719,473 1,589,149 707,686 409,131 1,022,415 - 94,447,854
Total $ 762,236,398 $ 27,965,013 $ 8,378,233 $ 5,771,210 $ 9,503,937 $ 4,996,026 $ 818,850,817
Aging of the Allowances for Impairment

Total Allowance
Current 1–30 Days 31–60 Days 61–90 Days 91–180 Days 180+ Days for Impairment
Eurasia $ 2,124,771 $ 1,480,625 $ 3,629,914 $ 1,282,351 $ 2,458,905 $ 3,065,065 $ 14,041,631

Latin America 881,541 504,105 543,537 668,815 2,276,753 638,547 5,513,298
Africa 485,048 476,055 552,966 507,678 1,399,532 908,413 4,329,692
MESA 89,323 136,866 215,166 192,706 405,036 - 1,039,097
Total $ 3,580,683 $ 2,597,651 $ 4,941,583 $ 2,651,550 $ 6,540,226 $ 4,612,025 $ 24,923,718
Market Risk—Market risk includes price risk, foreign exchange risk, and liquidity risk,
which arise in the normal course of FINCA’s business:
• Price risk is the risk to earnings from changes in interest rates
• Foreign exchange rate risk arises from the different markets in which FINCA operates,
which are mostly developing countries with so called exotic currencies
FINCA’s financial performance is subject to some degree of risk due to changes in interest
rates; however, FINCA’s subsidiaries’ balance sheets have significantly less interest rate
risk than that of a traditional financial institution as:
• Neither the assets nor the liabilities of the subsidiaries are tied to one specific short-
term market index and, therefore, are unlikely to automatically “reprice” during their
stated tenor and
• The short-term tenor of subsidiaries’ loans to its clients mean that changes in market
rates will have little or no impact on prepayment activity.
- 29 -
The consideration of interest rate risk by term of asset and liability as of December 31,
2016, is as follows:
Non-Interest
Up to More than 3 Sensitive 2016
3 Months 3–6 Months 7–12 Months 1–3 Years Years Balances Total
Cash and cash

equivalents $ 28,852,945 $ - $ - $ - $ - $ 111,944,090 $ 140,797,035
Restricted cash
and cash
equivalents 16,062,158 3,601 1,160,000 50,000 - 9,153,190 26,428,949
AFS financial
assets 5,490,187 - 11,925 - - 2,168,239 7,670,352
Financial
assets HTM 16,855,821 2,248,156 5,530,111 471,513 255,024 - 25,360,625
Financial assets
at FVTPL 997,445 9,195,564 1,789,005 828,242 - 6,680,939 19,491,195
Loans
receivable, net 125,240,836 154,538,186 232,685,940 212,487,596 16,803,644 - 741,756,202
Due from banks 2,667,265 1,574,133 1,305,821 - - 2,063,078 7,610,297
Other
receivables,
prepaid, and
other assets 12,458,937 279,345 35,317 - - 19,532,219 32,305,818
Property and
equipment, net - - - - - 30,556,863 30,556,863
Intangible
assets, net - - - - - 8,058,153 8,058,153
Goodwill - - - - - 1,042,135 1,042,135
Deferred tax
assets - - - - - 2,469,769 2,469,769
Assets of disposal
group classified
as held for sale - - - - - - -
Total
assets 208,625,594 167,838,985 242,518,119 213,837,351 17,058,668 193,668,675 1,043,547,393
Accounts payable
and other
accrued liabilities 373,947 - 29,614 - - 27,466,161 27,869,722
Financial liability
at FVTPL 250,379 7,869,650 - 92,257 - 47,288 8,259,574
Client deposits 129,232,050 23,542,847 42,316,305 44,604,042 5,802,484 16,842,429 262,340,157
Bank deposits 17,969,580 9,866,487 10,220,843 256,332 - 27,981 38,341,223
Notes payable 163,125,928 32,395,771 92,467,927 147,699,113 19,847,965 - 455,536,704
Subordinated debt - - 94,263 2,437,396 - 3,067,272 5,598,931
Deferred revenue 7,999 - - - - 5,585,391 5,593,390
Employee benefits - - 689,563 1,075,720 1,942,615 - 3,707,898
Current income
tax liability - - - - - 9,154,377 9,154,377
Deferred tax
liabilities 68,854 - - - - 2,050,435 2,119,289
Liabilities of disposal
group classified
as held for sale - - - - - - -
Total
liabilities 311,028,737 73,674,755 145,818,515 196,164,860 27,593,064 64,241,334 818,521,265
Open position $ (102,403,143) $ 94,164,230 $ 96,699,604 $ 17,672,491 $ (10,534,396) $ 129,427,341 $ 225,026,128
- 30 -
The consideration of interest rate risk by term of asset and liability as of December 31,
2015 is as follows:
Non-Interest
Up to More than 3 Sensitive 2015
3 Months 3–6 Months 7–12 Months 1–3 Years Years Balances Total
Cash and cash

equivalents $ 29,365,525 $ 592,967 $ - $ - $ - $ 107,367,144 $ 137,325,636
Restricted cash
and cash
equivalents 20,204,543 607,587 - 50,000 - 4,014,283 24,876,413
AFS financial
assets 4,763,714 500,000 814,770 70,327 - 768,156 6,916,967
Financial
assets HTM 8,435,196 1,906,532 1,555,461 281,849 802,956 - 12,981,994
Financial assets
at FVTPL 4,488,287 6,591,139 3,599,217 5,254,649 599,731 9,440,002 29,973,025
Loans
receivable, net 182,311,448 178,563,978 230,738,541 190,877,574 11,435,558 - 793,927,099
Due from banks 2,129,670 622,615 1,181,049 - - - 3,933,334
Other
receivables,
prepaid and
other assets 394,131 334,765 162,400 351,441 - 21,233,228 22,475,965
Property and
equipment, net - - - - - 31,056,503 31,056,503
Intangible
assets, net - - - - - 11,058,837 11,058,837
Goodwill - - - - - 1,041,608 1,041,608
Deferred tax
assets 55,814 - - - - 6,845,941 6,901,755
Assets of disposal
group classified
as held for sale - - - - - 11,089,682 11,089,682
Total
assets 252,148,328 189,719,583 238,051,438 196,885,840 12,838,245 203,915,384 1,093,558,818
Accounts payable
and other
accrued liabilities 338,084 748,799 - - - 31,905,145 32,992,028
Financial liability
at FVTPL 34,714 927,210 - 190,162 - - 1,152,086
Client deposits 83,665,611 17,556,382 34,223,176 20,229,189 2,089,381 10,576,940 168,340,679
Bank deposits 8,524,961 2,817,940 7,231,603 1,129,814 - - 19,704,318
Notes payable 218,529,020 73,581,198 74,201,067 151,775,041 66,728,061 - 584,814,387
Subordinated debt 12,978,457 163,699 7,738,670 1,500,000 2,072,889 - 24,453,715
Deferred revenue 49,647 - - - - 5,989,291 6,038,938
Employee benefits - - 133,903 946,068 2,519,075 - 3,599,046
Current income
tax liability 42,631 - - - - 3,837,975 3,880,606
Deferred tax
liabilities - - - - - 997,302 997,302
Liabilities of disposal
group classified
as held for sale - - - - - 3,035,692 3,035,692
Total
liabilities 324,163,125 95,795,228 123,528,419 175,770,274 73,409,406 56,342,345 849,008,797
Open position $ (72,014,797) $ 93,924,355 $ 114,523,019 $ 21,115,566 $ (60,571,161) $ 147,573,039 $ 244,550,021
FINCA has performed interest rate simulations based on the gap analysis to estimate the
effect on net interest margin and on the longer-term economic value of equity for differing
levels of immediate and ongoing changes to market interest rates. A gap analysis consists
of separating FINCA’s consolidated balance sheets into different time frames in which
assets or liabilities mature. FINCA can influence certain interest rates, e.g., deposit and
lending rates, whereas other interest rates are determined by exogenous factors in the
global macroeconomy.
- 31 -
On a group level, the network-wide impacts from simultaneous interest rate shocks of 200
basis points (bps) for USD and EUR and the weighted average of local currency shocks are
considered. The effect on net interest income for the year and consolidated net
consolidated equity from these assumed interest rate shocks are as follows:
2016
USD/EUR net interest income impact @ 200 bps (in USD millions) (1.38)
Local current net interest income impact (in USD millions) 4.48
Total 3.10
Total as a percentage of total capital 1.4 %
Since FINCA’s interest-sensitive assets reprice more quickly than its interest-sensitive
liabilities, increases in market interest rates result in higher net interest income (and the
opposite is also true).
Impacts to the economic value of equity of the longer time bands are also estimated
according to the guidance set forth by the Basel Committee on Bank Supervision under the
Basel Accords recommendations on bank capital adequacy.
Economic
Shock Value Impact
As of December 31, 2016 (Average) (in Millions)
USD/EUR 200 bps 0.91

Local 764 bps 3.78
Total 4.69
Total as a percentage of total capital 2.1 %
Foreign Currency Risk—Foreign currency risk exists at both FINCA and at the
subsidiaries level. Subsidiaries are exposed to exchange rate risk when their liabilities or
assets are denominated in a currency that differs from their functional currency (the
nonfunctional currency is typically the USD). Subsidiaries are not exposed to any exchange
rate risk on either assets or liabilities that are denominated in their functional currency.
Certain subsidiaries have no foreign currency risk either because all of their assets and
liabilities in their statements of financial position are denominated in their functional
currency, their functional currency is the USD, or their functional currency is pegged to the
USD.
Subsidiaries match their nonfunctional currency assets with their nonfunctional currency
liabilities to the fullest possible extent, thereby minimizing or reducing any foreign
currency risk. This matching occurs either by converting nonfunctional currency borrowings
into functional currency borrowings, by lending in nonfunctional currency, or by
maintaining other assets in nonfunctional currency. It is FINCA’s policy not to allow
speculative open currency positions; rather, each subsidiary’s open currency position is
maintained within prescribed limits relative to the subsidiary’s capital. Currency positions
are measured and reported to each subsidiary’s Asset and Liability Committees (ALCO) on
- 32 -
a monthly basis. At the consolidated level, FINCA experienced transaction gains of
$3.2 million in 2016 in comparison to transaction losses of $25.9 million in 2015,
representing about 0.30% and -2.26% of average total assets in 2016 and 2015,
respectively. For assessment of the group foreign exchange risk, a Value-at-Risk (VaR)
analysis is performed on a quarterly basis. The VaR measure estimates the potential loss in
capital over a given holding period for a specified confidence level. The VaR is a statistically
defined, probability-based approach that takes into account market volatilities as well as
risk diversification by recognizing offsetting positions and correlations between markets.
Risks can be measured consistently across all markets, and risk measures can be
aggregated to arrive at a single risk number. The methodology employed is the variance-
covariance approach, also known as the delta-normal approach. The holding period is one
year, and the look-back period is 3.5 years. A limitation of the variance-covariance, or
delta-normal, approach is the assumption of a standard normal (or Gaussian) distribution
of portfolio returns, and therefore the methodology may underestimate the proportion of
outliers and hence the VaR.
The results are shown in the following table:
95% Confidence 99% Confidence
As of December 31, 2016 $16.6 million $23.5 million
95% Confidence 99% Confidence
As of December 31, 2015 $18.8 million $26.5 million
FINCA’s portfolio VaR decreased in 2016 primarily due to a $11.9 million reduction of net
peso assets in Mexico. The most notable increase in individual currency volatility was in
Nigeria. Overall correlation among FINCA’s basket of currencies held stable.
Liquidity Risk—Liquidity risk management includes the identification, measurement, and

establishment of limits on potential losses arising from the difficulty of renewing liabilities
under normal market conditions. FMH’s funding and liquidity objective is to fund its
existing asset base (and maintain sufficient excess liquidity), so that it can operate under
unusual or adverse market conditions. At the aggregate level, FMH’s goal is to ensure that
there is sufficient funding in amount and tenor so that adequate liquid resources are
available for all operating entities. The liquidity framework requires that entities be liquidity
self-sufficient or net providers of liquidity. The primary sources of funding are (i) client and
bank deposits, (ii) medium- and long-term borrowings, (iii) credit lines from local banks,
and (iv) shareholders’ equity.
FINCA works to ensure that the structural tenor of these funding sources is sufficiently long
in relation to the tenor of its asset base. The goal of FINCA’s asset-liability management is
to ensure that there is excess tenor in the liability structure to provide excess liquidity to
fund all assets. The excess liquidity resulting from a longer-term liability tenor can
effectively offset potential downward pressures on liquidity that may occur under market
stress. This excess funding is held in the form of bank deposits and, to lesser extent,
unencumbered liquid securities.
- 33 -
Total cash and cash equivalents totaled $140.8 million as of December 31, 2016,
compared to $137.3 million as of December 31, 2015. FINCA has maintained total cash
balance equal to 13.5% and 12.6% of total assets as of December 31, 2016 and 2015,
respectively.
Liquidity Risk Management—FINCA runs a centralized treasury model where the overall
balance sheet is managed by the Treasury department through subsidiaries’ ALCO. Day-to-
day liquidity and funding are managed by subsidiaries’ Chief Financial or Finance Officers
(CFOs) and treasurers at the country level and are monitored by subsidiary ALCO and
FINCA treasury on a monthly basis.
Liquidity management is the responsibility of senior management through FINCA’s

consolidated ALCO and is overseen by the board of directors through its audit and finance
committee. ALCOs are established at each of FINCA’s microfinance operating subsidiaries.
Regulated savings deposit taking subsidiaries maintain legal reserve requirements in
accordance with local regulations.
FINCA’s microfinance operating subsidiaries are required to comply with a liquidity policy
that specifies a minimum amount of liquid assets (cash and cash equivalents) that is to be
maintained at all times. This minimum liquidity policy requires that approximately 5.0% of
total assets be held in cash and cash equivalents. As of December 31, 2016, the ratio of
subsidiaries’ unrestricted cash and cash equivalents to total subsidiaries’ assets was
10.5%, compared with 10.0% as of December 31, 2015.
- 34 -
A traditional view of FINCA’s liquidity is provided by a gap analysis. Considering the
contractual terms of client loans, FINCA has a substantial amount of excess liquidity in the
under one-year time frame (gap < one year of $181 million in 2016 and $231 million in
2015). Due to the short-term nature of the loan portfolio (69.1% of which matures within
one year), the negative liquidity in years three to five will be covered by the normal course
of business operations as new loans are disbursed.
Up to 1 Year to More than

At December 31, 2016 1 Year 3 Years 3 Years Total
Cash and cash equivalents $ 140,797,035 $ - $ - $ 140,797,035

Restricted cash and cash
equivalents 26,026,969 377,083 24,897 26,428,949
Available for sale financial
assets 7,116,713 - 553,639 7,670,352
Financial assets
held-to-maturity 24,634,088 471,513 255,024 25,360,625
Financial assets at fair value
through profit and loss 18,662,953 44,151 784,091 19,491,195
Loans receivable—net 512,464,962 212,487,596 16,803,644 741,756,202
Due from banks 7,610,297 - - 7,610,297
Other financial assets 17,350,161 - 28,787 17,378,948
754,663,178 213,380,343 18,450,082 986,493,603
Other financial liabilities 27,708,115 504,647 2,045,371 30,258,133

Financial liability at fair value
through profit and loss 8,123,166 136,408 - 8,259,574
Clients deposits 211,933,633 44,597,393 5,809,131 262,340,157
Bank deposits 38,084,892 256,331 - 38,341,223
Notes payable 287,989,629 147,699,112 19,847,963 455,536,704
Subordinated debt 94,263 2,437,396 3,067,272 5,598,931
573,933,698 195,631,287 30,769,737 800,334,722
Liquidity gap $ 180,729,480 $ 17,749,056 $ (12,319,655) $ 186,158,881
- 35 -
Up to 1 Year to 3 Years to
At December 31, 2015 1 Year 3 Years 5 Years Total
Cash and cash equivalents $ 137,325,636 $ - $ - $ 137,325,636

Restricted cash and cash
equivalents 24,803,022 50,000 23,391 24,876,413
Available for sale financial
assets 6,148,811 7,584 760,572 6,916,967
Financial assets
held-to-maturity 11,897,189 281,849 802,956 12,981,994
Financial assets at fair value
through profit and loss 16,901,901 13,071,124 - 29,973,025
Loans receivable—net 591,613,967 190,877,574 11,435,558 793,927,099
Due from banks 3,933,334 - - 3,933,334
Other financial assets 10,359,809 - 82,003 10,441,812
802,983,669 204,288,131 13,104,480 1,020,376,281
Other financial liabilities 18,901,126 - - 18,901,126

Financial liability at fair value
through profit and loss 961,924 190,162 - 1,152,086
Clients deposits 146,022,109 20,229,189 2,089,381 168,340,679
Bank deposits 18,574,504 1,129,814 - 19,704,318
Notes payable 366,311,286 151,775,040 66,728,061 584,814,387
Subordinated debt 20,852,472 1,528,354 2,072,889 24,453,715
571,623,421 174,852,559 70,890,331 817,366,311
Liquidity gap $ 231,360,248 $ 29,435,572 $ (57,785,851) $ 203,009,969
The traditional gap view may overstate the amount of near-term liquidity since it does not
take into consideration the behavioral characteristics of FINCA’s client loan portfolio as well
the diversified nature of FINCA’s clients deposit base. From a behavioral perspective,
FINCA’s clients are able to renew their loans for multiple terms, which lessens the amount
of short-term liquidity (lowers the positive gap in that time frame). A significant portion of
small-scale deposits based on historical behavior may be deemed as a stable source of
funding and can be allocated beyond the one-year time frame. FMH’s consolidated
statements of financial position remain liquid in all time frames owing to the diversified
nature of customer deposits and short asset tenor as well as to the fact that client loans
amortize. FMH’s borrowings are predominately two-year tenor with principal repaid at
maturity.
Third-Party Risk—New risks emerge as FINCA’s business model continues to evolve. In

particular, FINCA may engage third-party relationships in the delivery of services to our
clients that brings with it a commensurate emphasis on third-party/vendor risk
management. Third-party risk management is conducted to assess the ongoing behavior,
performance, and risks that each third-party relationship introduces. This includes
corporate and social responsibility compliance; reputational, operational, and
regulatory/legal compliance; information security; technology; and financial risks. Each
third-party/vendor engagement requires specific due diligence and ongoing monitoring
activities depending on the nature of the services being provided. This includes all phases
of the vendor relationship, including review of proposals, implementation, system
integration, and performance monitoring of the third-party services.
- 36 -
6. FINANCIAL ASSETS AND LIABILITIES—FAIR VALUE MEASUREMENTS
FINCA applies IFRS 13, Fair Value Measurement, guidance on fair value measurement that
established a framework for measuring and disclosing fair value. As defined in the
guidance, fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date.
FINCA utilizes market data or assumptions that market participants would use in pricing
the asset or liability, including assumptions about risk and the risks inherent in the inputs
to the valuation technique.
Fair value is the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date, regardless
of whether that price is directly observable or estimated using another valuation technique.
In estimating the fair value of an asset or a liability, FINCA takes into account the
characteristics of the asset or liability if market participants would take those
characteristics into account when pricing the asset or liability at the measurement date.
Fair value for measurement and/or disclosure purposes in these consolidated financial
statements is determined on such a basis, except for leasing transactions that are within
the scope of IAS 17, Leases, and measurements that have some similarities to fair value,
but are not fair value, such as value in use in IAS 36. The following tables set forth, by
level within the fair value hierarchy, the fair value of FINCA’s financial assets and liabilities
as of December 31, 2016 and 2015. This table includes both financial assets and liabilities
accounted for at fair value on a recurring basis and amortized cost. As required by the
guidance, financial assets and liabilities are classified in their entirety based on the lowest
level of input that is significant to the fair value measurement. FINCA’s assessment of the
significance of a particular input to the fair value measurement requires the exercise of
judgment and may affect the valuation of fair value assets and liabilities and their
placement within the fair value hierarchy levels.
FINCA classifies its fair value balances in the fair value hierarchy based on the observability
of the inputs used in the fair value calculation as follows:
Level 1—Quoted prices are available in active markets for identical assets or liabilities as
of the reporting date. Active markets are those in which transactions for the asset or
liability occur in sufficient frequency and volume to provide pricing information on an
ongoing basis.
Level 2—Pricing inputs are other than quoted prices in active markets included in Level 1,
which are either directly or indirectly observable as of the reporting date. Level 2 includes
those financial instruments that are valued using broker quotes in liquid markets and other
observable data. Level 2 also includes those financial instruments that are valued using
methodologies that have been corroborated by observable market data through correlation
or by other means. Significant assumptions are observable in the marketplace throughout
the full term of the instrument and can be derived from observable data or are supported
by observable levels at which transactions are executed in the marketplace.
FVTPL assets, categorized as Level 2, consist of foreign exchange forward and cross-
currency interest rate swaps. These financial instruments are categorized as Level 2 assets
because they are valued based on the indirectly observable inputs, including forward
exchange rates, interest rate yield curves, and counterparty credit risk.
- 37 -
The fair value of loans receivable, notes payable, deposits from clients, and subordinated
debt categorized as Level 2 are based on a blend of quoted prices for the instruments and
quoted prices for similar instruments on the measurement date. FINCA adjusted the
discount rate on notes payable by using a credit margin that reflects the credit risk rating
for companies similar to FINCA.
Level 3—Pricing inputs that are significant and generally less observable than those from
objective sources. Level 3 includes those financial instruments that are valued using
models or other valuation methodologies.
Except as detailed in the following table, management considers that the carrying amounts
of financial assets and financial liabilities recognized in the consolidated financial
statements approximate their fair values and are categorized as Level 2.
2016 2015
Carrying Carrying
Amount Fair Value Amount Fair Value
Financial Assets
Loans receivable $ 741,756,202 $ 763,784,531 $ 793,927,099 $ 809,811,356

AFS financial assets 530,036 553,639 761,142 761,142
Financial Liabilities
Financial liabilities held at

amortized cost:
Deposits from clients $ 262,340,157 $ 260,875,587 $ 168,340,679 $ 168,396,446
Notes payable 455,536,704 456,177,202 584,814,387 588,305,417
Subordinated debt 5,598,931 5,621,172 24,453,715 24,846,814
Fair value hierarchy at December 31, 2016, is as follows:
Level 1 Level 2 Level 3 Total

Financial Assets
Loans receivable $ - $ 763,784,531 $ - $ 763,784,531

AFS financial assets (Note 13) - - 553,639 553,639
Financial Liabilities
Financial liabilities held at

amortized cost:
Deposits from clients $ - $ 260,875,587 $ - $ 260,875,587
Notes payable - 456,177,202 - 456,177,202
Subordinated debt - 5,621,172 - 5,621,172
- 38 -
Fair Value as at December 31 Relationship of
2016 2015 Valuation Significant Unobservable
Financial Assets/ Asset Asset Fair Value Techniques and Unobservable Inputs to
Financial liabilities (Liability) (Liability) Hierarchy Key Inputs Inputs Fair Value
1) Foreign currency $ 5,733,680 $ 9,402,790 2 Discounted cash flow. Future N/A N/A
forward contracts (13,798) cash flows are estimated based
measured at on forward exchange rates (spot
FVTPL (Note 15) exchange rate at the end of the
reporting period) and contract
forward rates, discounted at a
rate that reflects the credit risk
of the counterpart in the
contract
2) Foreign exchange 13,757,515 20,570,235 2 Discounted cash flow. Future N/A N/A
swaps measured (8,245,776) (1,152,086) cash flows are estimated based
at FVTPL (Note 15) on forward exchange rates (spot
exchange rate at the end of the
reporting period) and contract
forward rates, discounted at a
rate that reflects the credit risk
of the counterpart in the
contract
3) AFS financial 2,620,655 1,961,697 1 Quoted bid prices in an N/A N/A

assets—Treasury active market
bills (Note 13)
4) AFS financial 4,496,058 4,194,128 2 Quoted prices of similar N/A N/A

assets—time instruments traded in
deposits (Note 13) active markets
There were no transfers between Levels 1 and 2 or Levels 2 and 3 during the year.
7. NET INTEREST INCOME BEFORE PROVISION FOR IMPAIRMENT LOSSES ON LOANS
Net interest income for the years ended December 31, 2016 and 2015, is as follows:
2016 2015
Interest income:
Cash and cash equivalents and investments $ 8,126,438 $ 9,413,897
Loans to clients 279,656,784 313,352,998
Total interest income 287,783,222 322,766,895
Interest expense:
Deposits from clients 20,197,311 10,917,711
Notes payable and subordinated debt 50,807,055 80,692,640
Total interest expense 71,004,366 91,610,351
Net interest income $ 216,778,856 $ 231,156,544
8. OTHER OPERATING INCOME
Total other operating income for the years ended December 31, 2016 and 2015, was
$29.1 million and $14.8 million, respectively. Included in this amount is $5.8 million and
$5.5 million of fines and penalties income and $1.3 million and $2.1 million of insurance
income for the years ended December 31, 2016 and 2015, respectively and includes
principal forgiveness for certain debt obligations of FINCA Azerbaijan totaling $9.4 million
for the year ended December 31, 2016.
- 39 -
9. PERSONNEL EXPENSES
Personnel expenses for the years ended December 31, 2016 and 2015, consist of the
following:
2016 2015
Wages and salaries $ 88,257,270 $ 104,289,746

Compulsory social security obligations 8,109,618 11,237,790
Allowances, incentives, and other benefits 11,443,301 12,810,956
Health insurance 4,394,737 4,315,949
Increase in liability for long-term service leave - 1,103,083
Increase in liability for employee benefits - 228,350
Total $ 112,204,926 $ 133,985,874
10. OTHER OPERATING EXPENSES
Other operating expenses for the years ended December 31, 2016 and 2015, consist of the
following:
2016 2015
Professional fees $ 20,605,903 $ 17,181,263

Rent/utilities 14,823,393 16,333,395
Travel 10,464,802 9,680,297
Consumables and office supply 3,908,317 7,178,437
Communication 6,111,707 5,689,192
Taxes other than income 2,564,782 3,466,262
Security 4,473,809 5,529,711
License/memberships/meetings 3,742,981 5,501,595
Marketing 4,303,325 4,332,279
Repairs and maintenance 2,277,990 3,557,149
Training and hiring 2,077,995 2,083,050
Bank charges 1,933,131 2,451,634
Motor vehicles expenses 1,481,511 1,827,600
Insurance 1,272,032 1,399,036
Impairment on assets held for use 1,024,180 -
Other expenditures 5,738,813 2,556,894
$ 86,804,671 $ 88,767,794
- 40 -
11. INCOME TAX
Income tax expense for the years ended December 31, 2016 and 2015, were as follows:
2016 2015
Current tax expense $ 13,743,746 $ 8,081,375

Deferred tax expense 3,818,394 118,109
Total income tax expense $ 17,562,140 $ 8,199,484
In calculating both the current tax and the deferred tax, the respective country-specific tax
rates are applied. The total income tax expense includes the local country income taxes for
the subsidiaries and foreign withholding taxes on certain cross-border payments. The
average actual income tax rate for the subsidiaries remained the same at 26.1% in 2015
and 2016. FINCA is exempt from taxes on income, except unrelated business taxable
income, under provision of Section 501(c)(3) of the United States Internal Revenue Code
and the applicable income tax regulations of the District of Columbia. For 2015, the current
income tax expense includes $0.7 million of tax benefit for the reversal of a tax provision
related to the transfer of one of FINCA’s subsidiaries to FINCA Microfinance Cooperatief
U.A. (FMC) during the 2011 reorganization of its organizational structure.
Reconciliation of income tax expense for the years ended December 31, 2016 and 2015, is
as follows:
2016 2015
(Loss)/income before income tax expense $ (3,517,941) $ 2,642,568

Income tax expense (17,562,140) (8,199,484)
(Loss)/profit for the year $ (21,080,081) $ (5,556,916)
2016 2015
Tax rate using domestic tax rate of FINCA

(exempt on taxes on income) $ - $ -
Foreign income tax (taxable subsidiaries) at
local statutory rates (1,150,701) 686,858
Expenses not deductible for tax purposes 3,902,926 3,986,018
Tax-exempt loss (income) (155,478) 172,530
Recognition of previously unrecognized tax
losses (90,055) (234,420)
Adjustment for under provision in previous
periods 871,840 389,625
Foreign withholding taxes 3,412,049 3,081,392
Effect of unused tax losses and tax offsets
not recognized as deferred tax assets 7,399,341 783,592
Other 3,372,218 (666,111)
Total income tax expense $ 17,562,140 $ (8,199,484)
- 41 -
Deferred income taxes are calculated, under the consolidated statements of financial
position method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts, using the applicable tax rate as stipulated by the tax
legislation of the respective countries.
The movements in deferred tax assets and liabilities (the balances are offset within the
same jurisdiction as permitted by IAS 12, Income Taxes, and shown on a net basis by
subsidiaries), details of the deferred tax liability, amounts charged or credited directly to
profit or loss during the period, and amounts charged or credited directly to equity during
the period are shown below.
In 2016, FINCA recorded $2.1 million of income tax expense on $18.5 million of temporary
differences associated with FINCA’s investments in subsidiaries because it was probable
that the temporary differences associated with the distribution of retained earnings
through payments of dividends will reverse in the foreseeable future. The temporary
differences of $18.5 million include $14.3 million of expected distributions of retained
earnings from 2016 and $4.2 million for an increase of expected distributions of retained
earnings from prior years. In 2015, FINCA recorded $0.2 million of income tax expense on
$(2.0) million of temporary differences associated with FINCA’s investments in subsidiaries
because it was probable that the temporary differences associated with the distribution of
retained earnings through payments of dividends would reverse in the foreseeable future.
The temporary differences of $(2.0) million include $4.3 million of expected distributions of
retained earnings from 2015 and $(6.3) million for a reversal of expected distributions of
retained earnings from prior years. The deferred tax liability related to the future
distributions of retained earnings by subsidiaries is $1.8 million and $0.5 million as of
December 31, 2016 and 2015, respectively.
Deferred Tax Assets—Deferred tax assets were recognized by the subsidiaries in the
following jurisdictions in 2016: Armenia, Georgia, Tajikistan, Honduras, Democratic
Republic of Congo (DRC), Tanzania, and Pakistan (2015—USA, Armenia, Azerbaijan,
Georgia, Tajikistan, Honduras, Mexico, DRC, Malawi, Tanzania, Uganda, and Pakistan).
(Charged)
Assets Credited to Credited Credited to
2016 (Liabilities) Profit or Loss to Equity Disc Ops
Property and equipment

and software $ (123,763) $ 86,816 $ (23,494) $ 14,867
Provision for loan-loss
impairment 2,004,029 38,548 (147,986) (715,361)
Cash flow hedges (980,957) 720,101 19,414 -
Deferred income/accrued
interest 777,855 (552,781) (26,630) -
Tax loss carryforwards 119,663 (3,193,018) (44,295) -
Other 672,942 161,586 (12,681) (757,073)
Net tax assets $ 2,469,769 $ (2,738,748) $(235,672) $ (1,457,567)
- 42 -
(Charged)
Assets Credited to Credited
2015 (Liabilities) Profit or Loss to Equity
Property and equipment and

software $ (201,953) $ 182,847 $ (484,571)
Provision for loan-loss
impairment 2,828,828 2,021,304 (1,371,083)
Cash flow hedges (1,720,472) (2,938,328) 773,855
Deferred income/accrued
interest 1,357,267 174,510 (413,759)
Tax loss carryforwards 3,356,975 193,241 (831,829)
Other 1,281,110 (216,637) 98,547
Net tax assets $ 6,901,755 $ (583,063) $ (2,228,840)
Deferred Tax Liabilities—Deferred tax liabilities are recorded by FMH, the Netherlands,
USA, Kyrgyzstan, Ecuador, Nicaragua, Malawi, and Uganda in 2016 (2015—FMH, the
Netherlands, Kyrgyzstan, Ecuador, Nicaragua, and Zambia) as follows:
(Charged)

software $ (258,623) $ (134,165) $ (3,170)
Provision for loan-loss impairment (260,474) (1,956) (26,567)
Deferred income/accrued interest 11,440 133,662 388
Tax loss carryforwards 57,780 (6,548) 6,398
Future distribution of retained
earnings (1,760,873) (1,284,995) 1
Other 91,461 214,356 (19,391)
Net tax (liabilities) assets $ (2,119,289) $ (1,079,646) $ (42,341)
(Charged)

software $ (121,288) $ (91,067) $ 50,430
Provision for loan-loss impairment (231,951) 284,411 62,971
Deferred income/accrued interest (122,610) (85,442) 4,147
Tax loss carryforwards 57,930 (40,984) (87,144)
Future distribution of retained
earnings (475,879) 59,340 -
Other (103,504) 172,111 1,751
Net tax (liabilities) assets $ (997,302) $ 298,369 $ 32,155
- 43 -
12. RESTRICTED CASH AND CASH EQUIVALENTS
Restricted cash balances of $26.4 million and $24.9 million as of December 31, 2016 and
2015, respectively, comprise undisbursed grant funds to be used in lending and
operations, cash balances for country-specific regulatory requirements, and pledged
collateral related to local borrowings and deposits, all of which can be contractually
released within 12 months.
13. AFS FINANCIAL ASSETS
2016 2015
Certificates of deposit and other $ 7,670,352 $ 6,916,967
Total $ 7,670,352 $ 6,916,967
Certificates of deposit with maturity over three months are qualified and reported as AFS
financial assets in the consolidated statements of financial position.
14. FINANCIAL ASSETS HTM
Financial assets HTM in the amount of $25.4 million and $13.0 million at December 31,
2016 and 2015, respectively. Assets at December, 31 2016, include $17.9 million of
market Treasury bills issued by State Bank of Pakistan, of which $16.5 million mature
within three months of the balance sheet date and $7.3 million of Georgia Ministry of
Finance Treasury Bills, of which $6.5 million mature within 12 months of the balance sheet
date. Assets at December, 31 2015, include $9.9 million of market Treasury bills issued by
State Bank of Pakistan and $1.7 million of Georgia Ministry of Finance Treasury Bills.
As of December 31, 2015, FINCA held an investment in the FINCA microfinance fund. The
microfinance fund provided $20.6 million in subordinated loans to a number of
subsidiaries. The notes matured in November 2016 at which time available funds were
insufficient to pay in full all amounts due on the notes. The fund was wound up and
liquidated and the investment was written off. The total impairment, including accrued
unpaid interest, was $1.4 million and was written off through the impairment loss line item
in the consolidated statements of profit or loss.
15. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
The financial assets and liabilities at FVTPL are represented by the following balances:
Notional Fair Value Fair Value

2016 Amount Assets Liabilities
Fair value from derivatives with

third parties:
Foreign exchange swaps $ 60,581,978 $ 13,757,515 $ 8,245,776
Foreign exchange forwards 20,094,840 5,733,680 13,798
Total derivatives with third

parties $ 80,676,818 $ 19,491,195 $ 8,259,574
- 44 -
Notional Fair Value Fair Value
2015 Amount Assets Liabilities
Fair value from derivatives

with third parties:
Foreign exchange swaps $ 82,066,838 $ 20,570,235 $ 1,152,086
Foreign exchange forwards 34,381,405 9,402,790 -
Total derivatives with third

parties $ 116,448,243 $ 29,973,025 $ 1,152,086
Neither of the above balances related to hedge transactions qualified for hedge accounting.
16. LOANS RECEIVABLE—NET
Loans receivable as at December 31, 2016 and 2015, consist of the following:
2016 2015
Gross loans to clients $ 784,638,954 $ 818,850,817

Less allowances for impairment (42,882,752) (24,923,718)
Loans receivable $ 741,756,202 $ 793,927,099
2016 2015
Allowances for impairments—balance

at January 1 $ 24,923,718 $ 17,533,632
Discontinued operations (2,421,037) -
Impairment loss for the year:
Charge for the year 57,333,825 40,643,279
Amounts written off—net of recovery (35,111,860) (26,912,121)
Reclass to other assets and assets held
for sale - (508,303)
Effect of foreign currency movements (1,841,894) (5,832,769)
Balance at December 31 $ 42,882,752 $ 24,923,718
2015 includes operations that were discontinued in 2016.
While not all products require collateral, and collateral requirements vary by country,
FINCA utilizes several methods for clients to collateralize their loans, including mandatory
savings, real estate, fixed assets, or an additional guarantor.
Collateral
Two forms of collateral may be applied against impairment losses, cash and marketable
precious metals. Compulsory cash collateral is required from the clients in some
subsidiaries. The use of precious metals is mainly presented in the Pakistan subsidiary.
Where local law allows, voluntary client deposits are also considered collateral for the
purposes of provisioning.
- 45 -
Collateral as at December 31, 2016 and 2015, is represented as follows:
Effect of
Balance at Foreign Balance at
Outstanding January 1, Discontinued Collateral Collateral Currency December 31,
Amount of Loan 2016 Operations Accepted Released Movements 2016
Up to $1,000 $ 17,218,477 $ (602,312) $ 4,283,191 $ (10,616,209) $ 65,886 $ 10,349,033

$1,001–$5,000 22,202,829 (2,056) 9,312,641 (19,154,396) 2,280,545 14,639,563
$5,001–$10,000 13,267,922 - 3,555,313 (10,236,548) 47,882 6,634,569
more than $10,001 25,132,211 - 7,286,441 (17,387,095) (4,020,840) 11,010,717
Total $ 77,821,439 $ (604,368) $ 24,437,586 $ (57,394,248) $ (1,626,527) $ 42,633,882
Effect of
Balance at Foreign Balance at
Outstanding January 1, Collateral Collateral Currency December 31,
Amount of Loan 2015 Accepted Released Movements 2015
Up to $1,000 $ 16,157,890 $ 20,402,255 $ (17,496,084) $ (1,845,584) $ 17,218,477

$1,001–$5,000 22,965,584 18,228,746 (13,130,875) (5,860,626) 22,202,829
$5,001–$10,000 21,205,425 15,724,267 (17,648,250) (6,013,520) 13,267,922
more than $10,001 39,078,136 30,305,451 (35,528,374) (8,723,002) 25,132,211
Total $ 99,407,035 $ 84,660,719 $ (83,803,583) $ (22,442,732) $ 77,821,439
17. OTHER RECEIVABLES, PREPAID, AND OTHER ASSETS
The balances represent other receivables, prepaid, and other assets at December 31, 2016
and 2015, as follows:
2016 2015
Receivable from money remittance and other

agencies $ 1,863,609 $ 788,480
Grants receivable - 3,797,035
Deposit with Internal Revenue Service and other
fiduciary agencies 998,980 779,670
Receivable commission, rebates, and refunds
from banks and agencies 191,774 2,436,038
Receivables from sales of discontinued
operations 12,113,000 -
Current income tax asset 3,400,776 2,851,581
Prepaid rent 2,485,785 2,738,951
Office supplies 1,232,698 868,597
Prepaid taxes 1,148,435 3,348,840
Investment property 1,080,792 1,080,249
Staff advances and loans 564,389 649,764
Other prepayments and debtors 7,225,580 3,136,760
Total $ 32,305,818 $ 22,475,965
- 46 -
18. PROPERTY AND EQUIPMENT
Depreciation and amortization expense charged for the years ended December 31, 2016
and 2015, were $7.8 million and $8.3 million, respectively. Depreciation expense in 2015
includes operations that were discontinued in 2016.
- 47 -
Property and equipment at December 31, 2016 and 2015, are as follows:
Furniture and
Buildings Construction Leasehold Computer Office
Total and Offices in Progress Improvements Equipment Equipment Vehicles Other
Cost
Balance—January 1, 2015 $ 65,235,911 $ 5,437,185 $ 3,509,516 $ 12,609,224 $ 19,377,192 $ 14,796,673 $ 4,814,080 $ 4,692,041
Acquisitions 16,468,179 2,488,035 3,325,397 3,557,444 3,627,093 2,681,334 422,601 366,275
Disposals (7,959,915) (1,222,128) (3,409,413) (715,976) (715,940) (427,711) (564,108) (904,639)
Currency translation (9,893,096) (367,411) (543,754) (1,734,954) (2,602,178) (3,141,634) (651,993) (851,172)
Disposal of held for sale assets (836,356) (109,560) - (10,480) (253,143) (221,318) (197,474) (44,381)
Balance—December 31, 2015 $ 63,014,723 $ 6,226,121 $ 2,881,746 $ 13,705,258 $ 19,433,024 $ 13,687,344 $ 3,823,106 $ 3,258,124
Balance—January 1, 2016 $ 63,014,723 $ 6,226,121 $ 2,881,746 $ 13,705,258 $ 19,433,024 $ 13,687,344 $ 3,823,106 $ 3,258,124
Acquisitions 11,255,963 2,756,649 1,748,934 1,814,201 2,172,014 2,138,805 527,710 97,650
Disposals (5,417,921) 1,185,208 (1,466,592) (1,835,082) (1,838,118) (655,432) (444,536) (363,369)
Currency translation (843,750) (27,580) 115,522 (315,812) (212,832) (288,766) (96,642) (17,640)
Disposal related to discontinued operations (3,797,022) - - (804,938) (1,117,117) (781,618) (688,678) (404,671)
Balance—December 31, 2016 $ 64,211,993 $ 10,140,398 $ 3,279,610 $ 12,563,627 $ 18,436,971 $ 14,100,333 $ 3,120,960 $ 2,570,094
Depreciation and Impairment Losses
Balance—January 1, 2015 $ 31,727,870 $ 1,338,834 $ - $ 5,067,724 $ 11,423,356 $ 9,521,194 $ 3,406,624 $ 970,138

Depreciation and amortization 8,287,633 456,873 - 1,649,717 2,918,770 2,205,600 558,548 498,125
Disposals (2,313,493) (7,341) - (553,320) (781,688) (414,235) (462,808) (94,101)
Currency translation (5,092,521) (38,160) - (811,788) (1,761,587) (1,790,318) (463,831) (226,837)
Disposal of held for sale assets (651,269) (74,414) - (4,367) (244,285) (218,370) (71,579) (38,254)
Balance—December 31, 2015 $ 31,958,220 $ 1,675,792 $ - $ 5,347,966 $ 11,554,566 $ 9,303,871 $ 2,966,954 $ 1,109,071
Balance—January 1, 2016 $ 31,958,220 $ 1,675,792 $ - $ 5,347,966 $ 11,554,566 $ 9,303,871 $ 2,966,954 $ 1,109,071

Depreciation and amortization 7,777,515 471,656 - 1,516,537 3,037,111 1,975,804 456,140 320,267
Disposals (2,642,658) 8,811 - (499,055) (847,829) (614,186) (423,213) (267,186)
Currency translation (510,126) (2,912) - (87,770) (205,252) (135,671) (62,119) (16,402)
Disposal related to discontinued operations (2,927,821) - - (549,641) (1,039,196) (459,797) (685,689) (193,498)
Balance—December 31, 2016 $ 33,655,130 $ 2,153,347 $ - $ 5,728,037 $ 12,499,400 $ 10,070,021 $ 2,252,073 $ 952,252
Net Carrying Amounts
Balance—January 1, 2015 $ 33,508,041 $ 4,098,351 $ 3,509,516 $ 7,541,500 $ 7,953,836 $ 5,275,479 $ 1,407,456 $ 3,721,903
Balance—December 31, 2015 $ 31,056,503 $ 4,550,329 $ 2,881,746 $ 8,357,292 $ 7,878,458 $ 4,383,473 $ 856,152 $ 2,149,053
Balance—December 31, 2016 $ 30,556,863 $ 7,987,051 $ 3,279,610 $ 6,835,590 $ 5,937,571 $ 4,030,312 $ 868,887 $ 1,617,842
- 48 -
19. INTANGIBLE ASSETS
Amortization expense for the years ended December 31, 2016 and 2015, amounts to
$3.0 million and $4.1 million, respectively. Amortization expense in 2015 includes
operations that were discontinued in 2016.
Intangible assets at December 31, 2016 and 2015, consist of the following:
Capitalized Capital Work-

Total Software In-Progress Other
Costs
Balance—January 1, 2015 $ 24,628,485 $ 22,865,806 $ 1,011,305 $ 751,374

Acquisition 4,317,887 3,448,610 869,277 -
Disposals (797,797) (675,040) (122,757) -
Currency translation (4,827,666) (4,676,937) (150,729) -
Disposal of held for sale (13,099) (13,099) - -
Balance—December 31, 2015 $ 23,307,810 $ 20,949,340 $ 1,607,096 $ 751,374
Balance—January 1, 2016 $ 23,307,810 $ 20,949,340 $ 1,607,096 $ 751,374

Acquisition 3,332,292 2,482,377 849,915 -
Disposals (5,868,396) (3,920,844) (1,947,552) -
Currency translation (109,505) (74,857) (34,648) -
Disposal related to discontinued
operations (2,627,181) (2,627,181) - -
Balance—December 31, 2016 $ 18,035,020 $ 16,808,835 $ 474,811 $ 751,374
Amortization and Impairment
Balance—January 1, 2015 $ 11,666,125 $ 11,200,653 $ - $ 465,472

Amortization for the year 4,075,062 3,920,796 - 154,266
Disposals (92,566) (92,566) - -
Currency translation (3,396,823) (3,396,823) - -
Disposal of held for sale (2,825) (2,825) - -
Balance—December 31, 2015 $ 12,248,973 $ 11,629,235 $ - $ 619,738
Balance—January 1, 2016 $ 12,248,973 $ 11,629,235 $ - $ 619,738

Amortization for the year 2,999,647 2,895,953 49,223 54,471
Disposals (3,875,269) (3,867,240) (8,029) -
Impairment loss (254,693) (254,693) - -
Currency translation 20,963 20,963 - -
Disposal related to discontinued
operations (1,162,754) (1,162,754) - -
Net Carrying Amounts
Balance—January 1, 2015 $ 12,962,360 $ 11,665,153 $ 1,011,305 $ 285,902
Balance—December 31, 2015 $ 11,058,837 $ 9,320,105 $ 1,607,096 $ 131,636
- 49 -
20. ACCOUNTS PAYABLE AND OTHER ACCRUED LIABILITIES
Accounts payable and other accrued liabilities at December 31, 2016 and 2015, are as
follows:
2016 2015
Personnel $ 7,927,635 $ 12,957,797

Professional services 3,447,568 4,006,455
Office supplies 1,633,775 905,240
Other accounts payable and accrued expenses 6,754,085 6,378,753
Interest refundable to clients - 183,696
Non-income taxes 5,346,587 5,617,227
Deferred rent 2,760,072 2,942,860
Total $ 27,869,722 $ 32,992,028
All accounts payable and other accrued liabilities have a maturity of no more than
12 months from the balance sheet date, other than the noncurrent portion of deferred rent
of $2.6 million of which has an amortization term of 10 years. Carrying values approximate
fair value at December 31, 2016 and 2015.
21. CLIENT DEPOSITS
FINCA accepts and maintains savings deposits from clients in subsidiary operations. FINCA
has been pursuing a strategy to increase client savings in subsidiary operations eligible to
accept voluntary deposits, offering clients access to banking services while receiving lower-
cost funding in return.
These voluntary deposits represent the majority of FINCA’s savings deposits. Additionally,
certain loan products are structured to require a deposit at the time the loan is made,
representing an additional source of client deposits maintained by FINCA.
2016 2015
Compulsory savings/cash collateral $ 8,148,912 $ 5,913,554
Voluntary savings:
Saving accounts 84,416,693 54,414,511
Term deposit accounts 147,252,736 96,766,899
Other voluntary savings 22,521,816 11,245,715
Total voluntary savings 254,191,245 162,427,125
Total client deposits $ 262,340,157 $ 168,340,679
- 50 -
22. NOTES PAYABLE
FINCA and its subsidiaries have two broad categories of debt: charitable and commercial.
The majority of FINCA loans are sourced from international financial institutions supporting
microfinance, but FINCA has also borrowed from private sources. Interest rates paid by
subsidiaries range from six months London InterBank Offered Rate + 375 bps up to 36.1%
floating and up to 37.5% fixed in local currencies for commercial loans in countries with
high perceived risk or with depreciating currencies. In some situations, FINCA, as the
parent company, may be directly liable or may offer support for loans provided to
subsidiaries without adequate credit standing, which may be in the form of a direct
guarantee, letter of credit, comfort letter, or another form of credit enhancement.
As of the balance sheet date, some subsidiaries have breached covenants contained in
financing agreements underlying these obligations. Management believes that these
breaches are primarily due to recent global economic conditions, which have impacted
microfinance, or in some cases due to local political and economic developments. A breach
of a loan covenant could permit a lender to accelerate payment of the loan, but would not
permit a cross default beyond the particular subsidiary. As of December 31, 2016,
subsidiaries in Armenia, Azerbaijan, Georgia, Russia, Tajikistan, Guatemala, DRC, Malawi,
Tanzania, Zambia, and FMH were in breach of financial covenants regarding loans from
international financial institutions amounting to $141 million. As of December 31, 2016,
FINCA and its subsidiaries had obtained formal waivers for these breaches of covenants
accounting for $8.4 million and prior to the date of issuance of these consolidated financial
statements a further $64.1 million. All loans for which no formal waivers were obtained or
were not obtained before December 31, 2016, are classified as current in the maturity
table below. Although management has obtained formal waivers of some of these breaches
or assurances from lenders that the covenants will be waived, there is no assurance that
these waivers or assurances will be extended indefinitely or that performance can be
brought into full compliance.
Notes payable and overdrafts at December 31, 2016 and 2015, are as follows:
2016 2015
Overdrafts $ 3,401,292 $ -
Notes payable:
Principal amount 448,983,858 577,909,053
Accrued interest 3,151,554 6,905,334
$ 455,536,704 $ 584,814,387
- 51 -
Maturities of principal amounts on notes payable and overdrafts due in future fiscal years
are as follows:
2017 $ 284,939,732
2018 105,871,075
2019 41,734,184
2020 13,979,230
2021 5,860,929
Thereafter -
$ 452,385,150
The book value of notes payable and overdrafts at December 31, 2016 and 2015, is as
follows:
2016 2015
Current:
Overdrafts $ 3,401,292 $ -
Notes payable:
Secured 38,074,794 24,660,523
Unsecured 246,615,201 341,495,857
Collateralized borrowings - 607,260
288,091,287 366,763,640
Non-current:
Notes payable:
Secured 40,242,686 25,894,591
Unsecured 125,340,585 142,438,986
Collateralized borrowings 1,862,146 49,717,170
167,445,417 218,050,747
Total notes payable and overdrafts $ 455,536,704 $ 584,814,387
23. SUBORDINATED DEBT
The subordinated debt balance consists of debt from external financial institutions to FINCA
Georgia ($2.5 million and $2.8 million) and FINCA Nicaragua ($3.1 million and
$2.0 million) as of December 31, 2016 and 2015, respectively.
In 2016, subordinated debt in the amount of $19.6 million from the FINCA Microfinance
Fund matured at which time available funds were insufficient to pay in full the amounts
due on the notes. Principal and interest of $7.1 million due from FINCA Azerbaijan LLC was
unpaid and forgiven by the lenders.
- 52 -
24. DEFERRED REVENUE
FINCA receives awards from U.S. government and other agencies for various purposes.
Awards not yet received are accrued to the extent unreimbursed expenses have been
incurred for the purposes specified by an approved award. FINCA defers award revenue
received under approved awards, to the extent they exceed expenses incurred for the
purposes specified under the awards’ restrictions. Proceeds from monetization of
commodities inventory are also reported as refundable advances until proceeds are used
for program expenses.
The balance of deferred revenue at December 31, 2016 and 2015, is as follows:
2016 2015
United States Department of Agriculture $ - $ 1,958,984

Others 5,593,390 4,079,954
Total $ 5,593,390 $ 6,038,938
25. EMPLOYEE BENEFITS
Defined Contribution Pension Plan—FINCA has implemented an employee retirement

plan (the “Plan”) under Internal Revenue Code Section 403(b). Under the Plan, qualified
employees may defer compensation up to the maximum amount permitted by the Internal
Revenue Code. The elective deferral limit was $18,000 for 2016 and 2015. The catch-up
contribution was $6,000 for 2016 and 2015. FINCA may make contributions to the Plan as
a discretionary employer match. FINCA’s contributions to the Plan during both years ended
December 31, 2016 and 2015, were $0.4 million.
Defined Benefit Agreement—FINCA also maintains a defined senior executive retirement

plan agreement (the “Agreement”) for certain officers and directors, which provides
benefits payable upon retirement from FINCA (no sooner than at age 65). In addition, a
death benefit is payable to a surviving spouse or named beneficiary in the event of the
death of the eligible officer/director. The Agreement is offered at the sole discretion of
FINCA’s board of directors. Currently, several key employees are enrolled in the
Agreement. No changes were made to the Plan in 2016 and 2015.
The net liability of FINCA’s defined benefit plan recognized at December 31, 2016 and
2015, is summarized as follows:
2016 2015
Benefit obligation—beginning of year $ 3,599,046 $ 4,618,476

Service cost 99,538 79,309
Interest cost 135,279 149,041
Actuarial loss (gain) 13,792 (93,838)
Settlement - (445,653)
Net employer benefits paid (139,757) (708,289)
Benefit obligation—end of year $ 3,707,898 $ 3,599,046
- 53 -
The change in plan assets at December 31, 2016 and 2015, is summarized as follows:
2016 2015
Fair value of assets—beginning of year $ - $ -

Employee contributions - -
Employer contributions 139,757 708,288
Settlements - (565,788)
Benefits paid (139,757) (142,500)
Fair value of assets—end of year $ - $ -
The amounts recognized in comprehensive income related to FINCA’s defined benefit plan
at December 31, 2016 and 2015, are summarized as follows:
2016 2015
Service costs:
Current service cost $ 99,538 $ 79,309
Past service cost - -
Settlement gain - (445,653)
Interest cost 135,279 149,041
Defined benefit cost recognized in P/L 234,817 (217,303)
Remeasurements:
Actuarial gains (losses) arising from experience
adjustments (22,958) 30,582
Actuarial gains (losses) arising from financial
adjustments (49,248) 250,769
Other 58,414 (187,515)
Defined benefit cost recognized in other

comprehensive income (13,792) 93,836
Total $ 248,609 $ (311,139)
FINCA does not have any plan assets. As a result, the entire balance of the defined benefit
obligation at December 31, 2016 and 2015, of $3.7 million and $3.6 million, respectively,
is unfunded.
Weighted-average assumptions used to determine benefit obligations at December 31,

2016 and 2015, are as follows:
2016 2015
Discount rate 3.7 % 3.8 %

Salary scale NA N/A
- 54 -
Weighted-average assumptions used to determine net period pension cost for the years
ended December 31, 2016 and 2015, are as follows:
2016 2015
Discount rate 3.8 % 3.3 %

Salary scale NA N/A
Based upon the assumptions used to measure pension obligations, FINCA expects to make
the following benefit payments in aggregate over the next five years:
Years Ending
December 31
2017 $ 689,563
2018 167,069
2019 165,494
2020 743,157
2021 198,535
In aggregate for five fiscal years thereafter 937,606
FINCA’s defined benefit plan is exposed to actuarial risks, such as investment, interest
rate, and life expectancy risks.
Investment Risk—The present value of the defined benefit plan liability is calculated
using the December 31, 2016, Citigroup pension discount curve and the expected benefit
payments from the Plan. This curve is the published yield curve of high-grade corporate
bond rates.
Interest Risk—A decrease in the bond interest rate will increase the Plan liability.
Life Expectancy Risk—The present value of the defined benefit plan liability is calculated
using the published mortality tables for Plan participants during and after employment with
FINCA. An increase in the life expectancy of the Plan participants will increase the Plan’s
liability.
Significant actuarial assumptions for the determination of the defined obligation are
discount rate and the life expectancy of the Plan participants. The sensitivity analysis below
has been determined based on reasonably possible changes of the discount rate
assumption occurring at the end of the reporting period, while holding all other
assumptions constant.
If the discount rate is a 500 bps higher (lower) the defined benefit obligation would
decrease (increase) by $0.2 million.
26. COMMITMENTS AND CONTINGENCIES
In accordance with IFRS, FINCA recognizes a provision where there is a present obligation
from a past event, a transfer of economic benefits is probable and the amount of costs of
the transfer can be estimated reliably. In instances where the criteria are not met, a
contingent liability may be disclosed in the notes to the consolidated financial statements.
Obligations arising in respect of contingent liabilities that have been disclosed, or those
- 55 -
which are not currently recognized or disclosed in the consolidated financial statements,
could have a material effect on FINCA’s financial position. Application of these accounting
principles to legal cases requires FINCA management to make determinations about
various factual and legal matters beyond its control. FINCA makes assessments of the
outstanding legal proceedings at each reporting date in order to determine the need for
provisions and disclosures in its consolidated financial statements. Among the factors
considered in making decisions on provisions are the nature of litigation, claim, or
assessment; the legal process and potential level of damages in the jurisdiction in which
the litigation, claim, or assessment has been brought; the progress of the case (including
the progress after the date of the consolidated financial statements, but before those
consolidated statements are issued); the opinions or views of legal advisers; experience on
similar cases; and any decision of FINCA’s management as to how it will respond to the
litigation, claim, or assessment.
At December 31, 2016, FINCA was obligated under a number of operating leases for
premises used primarily for branch operations and office purposes. In a significant portion
of the business locations where FINCA operates, the operating lease agreements are
negotiated on a month-to-month or year-by-year basis and are in line with general rental
market conditions.
Future minimum lease payments under existing lease contracts are due, in dollars, as
follows:
2016 2015
Less than one year $ 6,444,307 $ 5,958,420

Between one and five years 19,270,300 21,463,948
More than five years 7,912,269 7,817,441
$ 33,626,876 $ 35,239,809
Rent expense was $12.5 million and $13.7 million for the years ended December 31, 2016
and 2015, respectively.
FINCA International, jointly and severally with FMH, provided a guarantee directly on a line
of credit with a total commitment of $4.9 million ($3.3 million outstanding) and
$4.6 million ($4.6 million outstanding) as of December 31, 2016 and 2015, respectively. In
March 2017, this agreement was amended to remove FINCA International as a party and
guarantor. FMH became the sole guarantor on this line of credit.
There are no contingent assets, contingent liabilities, and capital commitments at

December 31, 2016 and 2015.
27. NONCURRENT ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS
In 2016, FINCA sold its interests in two subsidiaries—FINCA S.A. de CV (“FINCA El

Salvador”) was sold in June 2016 and Financiera Finca S.A de C.V SOFOM ENR Mexico
(SOFOM) was sold in November 2016.
FINCA El Salvador and SOFOM represent discontinued operations in accordance with

IFRS 5, Non-Current Assets Held for Sale and Discontinued Operations.
- 56 -
Under IFRS 5, para 38, the assets and liabilities of a disposal group should be presented as
separate line items within current assets and current liabilities on the face of the balance
sheet and should not be offset.
The assets and liabilities of FINCA El Salvador were presented as held for sale as of
December 31, 2015.
Assets of disposal group classified as held for sale:
2016 2015
Cash and cash equivalents $ - $ 892,988

Loans to customers, net - 10,196,694
Total $ - $ 11,089,682
Liabilities of disposal group classified as held for sale, excluding intercompany liabilities of
$5.6 million:
2016 2015
Accounts payable and other liabilities $ - $ 613,552

Notes payable and overdrafts - 2,401,536
Deferred revenue and refundable advances - 14,263
Deferred tax liability - 6,341
Total $ - $ 3,035,692
In accordance with IFRS 5, the assets and liabilities held for sale were written down to
their fair value, less costs to sell, of $2,469,145. This is fair value that is equal to the
selling price negotiated with the buyer, and therefore it is recorded within Level 3 of the
fair value hierarchy.
- 57 -
Results of the discontinued operations in 2016 includes the net income or loss for both
FINCA El Salvador and SOFOM for the period up to disposition in 2016. For 2015, the
results of FINCA El Salvador include the loss recognized on the remeasurement of assets:
2016 2015
Net operating income $ 19,913,700 $ 28,076,856

Expenses (18,629,377) (25,943,251)
Intercompany expenses eliminated on
consolidation 1,629,490 2,685,953
Other income 727,823 1,016,515
Profit before income tax of

discontinued operations 3,641,636 5,836,073
Income tax expense (841,225) (1,198,834)
Profit after income tax of

discontinued operations 2,800,411 4,637,239
Loss recognized on the remeasurement of

assets of disposal group - (1,896,096)
Profit after remeasurement of assets

of disposal group 2,800,411 2,741,143
Loss on sale (3,314,400) -
(Loss) profit from discontinued operations $ (513,989) $ 2,741,143
The gain on sale from assets of the disposal group in the year ended December 31, 2016,
is as follows:
2016
Consideration received $ 29,049,635

Net assets disposed of (20,017,146)
Gain on sale before income tax expense and

reclassification of foreign currency translation reserve 9,032,489
Reclassification of foreign currency translation reserve (11,065,884)

Income tax expense on gain (1,281,005)
Loss on sale $ (3,314,400)
- 58 -
Net cash inflow on sale of assets of the disposal group in the year ended December 31,
2016, is as follows:
2016
Consideration received in cash and cash equivalents $ 16,623,734

Less cash and cash equivalent balances disposed of (1,678,959)
Net cash consideration received $ 14,944,775
Cash flows from the activities of assets of the disposal group for the years ended
December 31, 2016 and 2015, are as follows:
2016 2015
From operating activity $ 4,395,077 $ 1,705,866

From investing activity 1,015,445 (688,965)
From financing activity (9,603,998) (3,476,788)
Total cash flows used by disposal group $ (4,193,476) $ (2,459,887)
- 59 -
28. FINCA ENTITIES
Through its headquarters, foreign representative offices and branches, controlled

subsidiaries and affiliates, FINCA operates in 26 countries. All subsidiaries are controlled by
FINCA directly or indirectly through FMH. The significant microfinance operating
subsidiaries and controlled affiliates of FINCA at the end of the reporting period are listed
below:
Americas
Ecuador Banco para la Asistencia Comunitaria, FINCA S.A. Joint Stock Company
Guatemala Fundación Internacional para la Asistencia Comunitaria de Guatemala Foundation
FINCA Microfinanzas, S.A.
Haiti FINCA HAITI Non-Governmental Organization
FINCA Haiti. S.A.
Honduras Sociedad Financiera FINCA Honduras, S.A. Joint Stock Company
Mexico Tenedora SAPI de C.V
Fundación Integral Comunitaria, A.C. Civil Association
Nicaragua Financiera FINCA Nicaragua, S.A. Joint Stock Company
Fundación Internacional para la Asistencia Comunitaria de Nicaragua Not-for-profit Foundation
Africa
Congo FINCA DR CONGO SARL Limited Liability Joint Stock Company

Malawi FINCA Limited Company Limited by Shares
Nigeria FINCA Microfinance Bank Limited
Tanzania FINCA Tanzania Limited Company Limited by Shares
Uganda Foundation for International Community Assistance Uganda Limited Company Limited by Shares
Zambia Foundation for International Community Assistance-Zambia Limited Company Limited by Shares
Eurasia
Armenia FINCA Universal Credit Organization Closed Joint Stock Company

Azerbaijan FINCA Azerbaijan Limited Liability Company
Georgia JSC FINCA Bank Georgia Closed Joint Stock Company
Kosovo FINCA International, Inc. (Branch)
Kyrgyzstan FINCA Bank Closed Joint Stock Company
Russia FINCA Joint Stock Company
Tajikistan FINCA Micro-Credit Deposit Organization Limited Liability Company
Middle East
Jordan FINCA Jordan Specialized Micro Loans Company

Afghanistan FINCA Afghanistan Joint Stock Company Limited by Shares
Pakistan FINCA Microfinance Bank Ltd.
Nonmicrofinance
Subsidiaries
Netherlands FINCA Network Support Services BV.

Netherlands FINCA Microfinance Cooperatief U.A.
USA FINCA Services USA LLC
USA FINCA Microfinance Global Services LLC
USA FINCA International LLC
USA FINCA Plus LLC
Charitable
Affiliates
United Kingdom FINCA UK

Canada FINCA Canada
- 60 -
In 2016, FMH sold its interests in FINCA S.A. de C.V. in El Salvador and in Financiera Finca
S.A. de C.V. SOFOM E.N.R Mexico (see Note 27). FMH retained ownership or control in
Fundacion Integral Comunitaria A.C. Civil Association and Tenedora SAPI de CV in Mexico.
Noncontrolling members of FMH hold 37.1% and 37.4% of shares and voting rights as of
December 31, 2016 and 2015, respectively. Assets and liabilities attributable to FMH
noncontrolling members are $382.9 million and $298.6 million as of December 31, 2016,
and $401.6 million and $308.9 million as of December 31, 2015, respectively. Net loss is
$9.3 million and $4.3 million for the years 2016 and 2015, respectively. Accumulated net
loss is $4.0 million and accumulated net income is $5.3 million as of December 31 2016
and 2015, respectively.
Non-controlling interest is attributable to non-controlling shareholders of FINCA

Microfinance Bank Ltd. (Pakistan) holds 13.6% of shares and voting rights as of
December 31, 2016 and 2015. Assets attributable to non-controlling interests are
$20.2 million and $11 million as of December 31, 2016 and 2015, respectively. Liabilities
attributable to non-controlling interests are $17.1 million and $8.5 million as of
December 31, 2016 and 2015, respectively. Net income is $0.7 million and $0.3 million for
the years 2016 and 2015, respectively. Accumulated net income is $1.3 million and
$0.6 million as of December 31, 2016 and 2015, respectively.
29. RELATED PARTIES
Balances and transactions between the Company and its subsidiaries, which are related
parties of the Company, have been eliminated on consolidation and are not disclosed in
this note.
Senior Management Compensation—Total compensation paid to the senior

management of the Company for the years ended December 31, 2016 and 2015,
amounted to:
2016 2015
Short-term benefits $ 3,943,577 $ 4,357,179

Postemployment benefits 139,757 135,393
$ 4,083,334 $ 4,492,572
30. SUBSEQUENT EVENTS
Effective January 1, 2017, a wholly owned subsidiary of FMH, FINCA Microfinance Global
Services (FMGS) entered into an MSA with FINCA under which FMGS will provide certain
services to FINCA. These services include finance and accounting, information technology,
legal, and human resources services. The service agreement is for the initial period of one
year and may be renewed at the option of FINCA. The MSA between FMH and FINCA
expired on December 31, 2016.
In March 2017, FINCA Micro-Credit Deposit Organization LLC (FINCA Tajikistan) entered
into a financial debt reprofiling agreement with its lenders to restructure its debt
obligations and FMH has agreed to inject up to an additional $4 million of equity. The debt
restructuring included $4 million in principal repayments, simplified the covenant structure,
and extended the maturities of all scheduled principal payments.
- 61 -
In mid-2016, FINCA Azerbaijan LLC entered into negotiations with its lenders to wind down
the operations of FINCA Azerbaijan in order to maximize the collections on its loan portfolio
and protect the interests of FMH. In April 2017, FINCA Azerbaijan LLC entered into a
wind-down agreement with the majority of its lenders under the terms of which FINCA
Azerbaijan LLC continues to operate to collect amounts outstanding on its loan portfolio in
return for certain forgiveness of debt from the lenders to meet regulatory capital
standards. The wind-down period ends on June 30, 2018, or such other date as the parties
to the agreement may agree.
******
- 62 -

2016 FINCA Int Consolidated IFRS Final

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2016 FINCA Int Consolidated IFRS Final

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FINCA

INDEPENDENT AUDITORS’ REPORT 1–2

CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE

Statements of Financial Position 3

Statements of Profit or Loss 4

Statements of Other Comprehensive Loss 5

Statements of Changes in Equity 6

Statements of Cash Flows 7–8

Notes to Consolidated Financial Statements 9–62

To the Board of Directors and Members of

We have audited the accompanying consolidated financial statements of FINCA

Management’s Responsibility for the Consolidated Financial Statements

Our responsibility is to express an opinion on these consolidated financial statements based

July 17, 2017

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

Cash and cash equivalents $ 140,797,035 $ 137,325,636

TOTAL $ 1,043,547,393 $ 1,093,558,818

LIABILITIES AND EQUITY

Total liabilities 818,521,265 849,008,797

Equity attributable to owners of the parent company 136,267,576 147,913,822

Noncontrolling interest 88,758,552 96,636,199

Total equity 225,026,128 244,550,021

TOTAL $ 1,043,547,393 $ 1,093,558,818

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF PROFIT OR LOSS

Interest income $ 287,783,222 $ 322,766,895

Net interest income (Note 7) 216,778,856 231,156,544

Impairment losses on loans (Note 16) (57,333,825) (35,797,344)

Net interest income after provision for impairment losses

Other operating income (Note 8) 29,099,563 14,811,273

Net operating income 188,544,594 210,170,473

(Loss) gain on financial assets and liabilities at fair value

Personnel expenses (Note 9) (112,204,926) (133,985,874)

Total expenses (209,786,759) (234,034,866)

(Loss) profit before other income (expenses) (27,028,164) 1,469,126

Other income (expenses):

(Loss) profit before income tax (3,517,941) 2,642,568

Income tax (Note 11) (17,562,140) (8,199,484)

Loss for the year from continuing operations $ (21,080,081) $ (5,556,916)

(Loss) profit for the year from discontinued

(Loss) profit for the year attributable to:

Total loss for the year $ (21,594,070) $ (2,815,773)

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE LOSS

Loss for the year $ (21,594,070) $ (2,815,773)

Other comprehensive income (loss):

Total other comprehensive income (loss) 2,231,177 (50,196,715)

Total comprehensive loss for the year $ (19,362,893) $ (53,012,488)

Total comprehensive loss for the year

Total comprehensive (loss) profit attributable

See notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

BALANCE—December 31, 2014 $ 17,706,184 $ 188,448,532 $ (28,299,651) $ 177,855,065 $ 119,559,445 $ 297,414,510

Comprehensive income or loss:

Total comprehensive income or loss - 1,554,489 (31,495,732) (29,941,243) (23,071,246) (53,012,489)

Issue of ordinary shares by subsidiary - - - - 148,000 148,000

Transfer to reserve (868,918) 868,918 - - - -

BALANCE—December 31, 2015 16,837,266 190,871,939 (59,795,383) 147,913,822 96,636,199 244,550,021