BANGKO PINOY RURAL BANK

MICROFINANCE EXPERIENCE

OUTLINE OF PRESENTATION

    Bank Profile Previous Microfinance Experience Present Microfinance Experience Features of BPRB Microfinance Product  Performance of Microfinance Product

BANK PROFILE

 Established in 1974 to serve the financial needs of the rural folks of Philippines and the neighboring areas in Southeast Asia  Has ___ branches/ units established as follows: Philippines - 1974 Thailand - 1997 Malaysia - 1989 Vietnam - 1998 Singapore - 1994 Indonesia - 1998

BANK PROFILE

Financial Condition:

   Assets: Deposits: Loan Portfolio: Regular Microfinance   No. of Depositors: No of Borrowers: Regular Microfinance  Net Income

BANK’S PRODUCTS

  Deposits • Savings • • Time Current Loans • Agricultural • • • Commercial Industrial Other Loans - Salary Loans - Microfinance Loans

BANK’S PRODUCTS

 Other Services • Petnet/Western Union • • Uniteller Payment Center – Water District

BANGKO PINOY’S

PREVIOUS MICROFINANCE” EXPERIENCE  Past “microfinance” products: • Market Vendors’ Loans • Microfinance Group Lending

MARKET VENDORS’ LOAN

    Description Loan Features Lending Procedure Performance

MICROFINANCE GROUP LOAN

    Description Loan Features Lending Procedure Performance

PROBLEMS ENCOUNTERED

  No product manual or guidelines Missed Payments/Failure to pay the loan after maturity   High Past Due Ratio Lack of monitoring/lack of peer pressure

BANGKO PINOY’S

EXPERIENCE

AS A PARTICIPANT BANK OF THE RBAP/MABS PROGRAM

Factors that Convinced the Bank to Resume its Microfinance Activity      A systematic approach/technology to doing microfinance has been made available Market-driven loan product Close monitoring with the installation of MIS Deposit build up mitigate risk Frequent collection = high effective income

ADJUSTMENTS MADE IN DOING THE MICROFINANCE OPERATIONS –MABS WAY

    Human Resources – new organizational structure Marketing – used flyers, posters and streamers “Our clients became our marketing arm.” Financial – allocated funds for microfinance loans and other fixed assets investments like computer hardware and software, motorcycles, filing cabinets, others

Internal Auditor

Previous Organizational Chart

Board of Directors President Vice President Unit Managers Cashier Teller Solicitor Bookkeepers Asst.Bookkeeper

SA/CA - Clerk Loan Officer Loan Clerk

Internal Auditor/Comp. Officer

New Organizational Chart

Board of Directors President Asst. to the Pres.

Cashier Teller Solicitor Vice President Area Managers Unit Managers Bookkeepers Asst.Bookkeeper

SA/CA - Clerk Loan Officer Loan Clerk Microfinance Officer Account Officer

BPRB’s INDIVIDUAL MICROFINANCE PRODUCT

KAPUSO LOAN

TARGET CLIENTS

KAPUSO LOAN

       Intended for microentrepreneurs Loan sizes of P5,000.00 up to P30,000.00 for first time borrowers 2.5% monthly interest amortized equally 3% service fee deducted up front Loan term : 60 days up to 180 days Mode of payment : weekly, semi-monthly & monthly Walk in or Pick up service for loan payments & deposit

KAPUSO LOAN

 Loan Security : – 1 co-maker only – Security Agreement – Above P50,000.00 - REM or Chattel Mortgage or Deed of Assignment of Deposit  Deposit Build up: – Initial deposit of P100 only – Regular deposits to go with each loan payment

SIGNIFICANT THINGS LEARNED FROM THE MABS APPROACH    Thorough character and credit checking Thorough cash flow evaluation Very conservative determination of debt capacity  Simplified & fast processing of loan releases  Zero tolerance to delinquency

SIGNIFICANT THINGS LEARNED FROM THE MABS APPROACH   Market study prior to product design Product designed according to market needs  Loan administration procedures documented in the Product Manual  All borrowers are required to attend Client Orientation

KAPUSO Loan Performance As of January 2004

 No. of Branches - 6  No. of Borrowers - 959  Loan Portfolio Balance - 8.286M

 PAR more than 7 days - 2.68%  PAR more than 30 days - 4.91%

KAPUSO Loan Performance As of January 2004

 Cum. Amt. Of loans disbursed – P35.854M

 Number of AOs - 20  Average # of loans/AO - 48  Average loan portfolio/AO – 414k

Loan Portfolio (Pesos)

9,000,000.00

8,000,000.00

7,000,000.00

6,000,000.00

5,000,000.00

4,000,000.00

3,000,000.00

2,000,000.00

1,000,000.00

1.1

1.6

1.9

2.5

3.7

3.6

3.5

4.5

4.8

4.10

6.2

7.1

0.00

8.3

Jan Feb Mar April May Jun Jul Aug Sept Oct Nov Dec Jan

Active Borrowers

1200 1000 959 822 800 692 600 400 361 410 444 458 529 200 94 0 147 209 257 Ja n Fe b Ma r Ap ril Ma y Ju n Ju l Au g Se pt 589 O ct N ov D ec Ja n

Portfolio At Risk (%)

6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% Ja n F eb M ar A pr M ay Ju n Ju l A ug S ep t O ct N ov D ec Ja n

Thank you!!!