“Financing SMEs and Cooperatives: Fortifying Sustainable Development in the Philippines” MR. JULIO D. CLIMACO, JR. Senior Vice President for Strategic Planning A D F I A P 35 th Annual Meeting 2012 LAND BANK OF THE PHILIPPINES

BACKGROUND ON LANDBANK 100% government-owned universal bank created in 1963 Principal depository bank of the Philippine government 327 branches and 1,000 ATMs nationwide as of March 2012 Largest provider of credit to farmers cooperatives, MSMEs, local government units and rural banks Obtained a CAMELS Rating of “4” in April Highest rating granted by Bangko Sentral to a Philippine bank. Second bank to attain a rating of 4.

BACKGROUND ON LANDBANK Fourth largest in the Philippine banking industry as of 31 December 2011 in terms of: Assets-USD Billion Deposits-USD Billion Loans-USD 7.21 Billion Net Income-USD 208 Million High Return on Equity of 15.4% in 2011 and low NPL ratio of 2.1%.

Local Government Units Rural Banks Small Farmers and Fisherfolk Cooperatives Agrarian Reform Beneficiaries Microenterprises and SMEs Agribusiness Enterprises Agri-Processors LBP’s INTEGRATED COUNTRYSIDE DEVELOPMENT FRAMEWORK LBP

LBP LOANS OUTSTANDING TO MICROENTERPRISES AND SMEs (In USD Millions)

LBP LOANS OUTSTANDING TO SMALL FARMERS AND FISHERFOLK (In USD Millions)

NUMBER OF SMALL FARMERS AND FISHERFOLK BENEFICIARIES OF LBP LOAN RELEASES 2007 to 2011 – 3.12 M

LBP LOANS TO LOCAL GOVERNMENT UNITS (In USD Millions)

LBP FORTIFIES ROLE AS THE BANK FOR LOCAL GOVERNMENT UNITs LBP is the largest provider of development finance to the provinces, cities and municipalities; and 854 LGUs currently have loans with LBP. About 50% of the country’s LGUs are loan clients of the Bank. LBP is also the depository bank of 97% or 1,665 of the country’s 1,714 LGUs. Loans to LGUs have been on a sustained uptrend and increased to USD billion in Of the USD billion LGU loans as of 2011, USD 748 million were loans for agri-infrastructure projects, USD 102 million for schools and hospitals, and USD 207 million for other developmental projects.

THE CONCRETE-FRAMED 2-STOREY MUNICIPAL HALL SOUTH UBIAN, TAWI-TAWI

ROCK CAUSEWAY AND EXTENDED PIER SOUTH UBIAN, TAWI-TAWI PROVINCE

SPEEDBOAT (POWERED BY TWO 250-HP OUTBOARD ENGINES) SOUTH UBIAN, TAWI-TAWI PROVINCE

FOOD SUPPLY CHAIN PROGRAM LANDBANK, in partnership with the Department of Agriculture (DA) and the Department of Finance (DOF), launched the Food Supply Chain Program in October 2010 It aims to increase farmers’ income by way of providing necessary financial and technical support along the value-added chain of a commodity or industry. The program provides the following:  Credit assistance to key players in the food system such as agricultural producers, service providers, consolidators, processors and various market players;  Market linkages between agricultural producers and processors; and  Capacity-building support to strengthen farmers’ organizations and enable them to meet product requirements of anchor firms. As of December 2011, 140 projects (involving 140 anchor firms and 381 coops and SMEs) have been enrolled in the program. LBP has released USD 210 million in loans in These loans have benefitted 78,050 farmers and fisherfolk.

UPDATE ON FOOD SUPPLY CHAIN PROGRAM December 2011 ParticularsTotal Number of Projects140 Number of Anchor Firms140 Number of Coop/FO/NGO Producers381 Number of Farmers Assisted78,050 Loan ReleasesUSD 210 M

RICE PRODUCTIVITY PROGRAM – SUPPORT TO PHILIPPINE GOVERNMENT’S SELF-SUFFICIENCY TARGET 1.A special program where LANDBANK provides credit assistance to small palay farmers. 2.Program supports the government’s efforts to increase rice production and achieve food self-sufficiency by providing the following:  credit to conduits such as farmers’ cooperatives, irrigators’ associations, and countryside financial institutions (CFIs); and  credit enhancements (such as market contracts, crop insurance and guarantees) 3.Total releases as of 31 December 2011 amounted to USD 359 Million benefiting 517,835 farmers.

SIKAT SAKA PROGRAM (FOR RICE PRODUCTION)  In January 2012 LANDBANK forged a Partnership Agreement with Department of Agriculture for the implementation of the Sikat Saka Program, a lending program which will provide small palay farmers direct access to credit.  LANDBANK and the Department of Agriculture (DA) initially earmarked USD 4.7 million each for loans to palay farmers in four major rice producing provinces – Isabela, Nueva Ecija, Iloilo and North Cotabato.  LANDBANK shall provide credit assistance and manpower to complement, manage and monitor the program implementation. The loan proceeds of the farmers will be credited to their special LANDBANK ATM card.  The DA shall take the lead in the program implementation and also provide loan funds, assured market, and irrigation and extension services.