May 12, 2009 Liz Larson, MABS Roundtable, Manila, Philippines MIX and the value of Customized Performance Reporting (CPR)

What is the MIX? To support the growth of the microfinance industry through a world-class public information platform OUR MISSION:

 Limited ability for MFIs and banks to benchmark performance for management diagnostic and business planning  New capital cannot connect with second tier MFIs  Policy makers have limited picture of areas requiring support … because …  Lack of consistent, reliable data in public domain  Private data costly to aggregate on representative scale and coverage for any single actor Lack of transparency stymies industry growth The Problem: Overcoming data dearth

MIX delivers  The authoritative voice on definitions and selection of core indicators for microfinance data analysis  The leader in fundamental MFI data for banks and other institutions  An independent source – no other business interest  The researcher’s choice for MFI performance benchmarks and global, regional analysis including banks with microfinance operations Standards Data Analysis Through Company data – on MFIs, Banks & Investors MFI performance data – individual and in aggregate Training – financial & operational reporting Leadership – performance standards

Products: MicroBanking Bulletin MicroBanking Bulletin is a global leading publication on the sector  Expert author contributions on latest industry topics  Industry leading annual / time series MFI performance benchmarks and analysis

Products: Customized MFI performance reports, CPRs Performance reports for MFIs, covering:  Analysis of trends in performance  Comparison to peer institution benchmarks Diagnostic tools for:  Managers  Board  Stakeholders

Products: MIX Market Public profiles:  1,400 MFIs  103 Investors / Donors  184 Market Facilitators Information:  General information and contacts  Outreach  Financial Performance  Audits / Ratings Tools:  Comparative Analysis  Trend Analysis  Heat Map

Asia Coverage: MIX Market Growth

Products: Regional/Country analysis Annual surveys of microfinance performance in a region or country, including:  Performance analysis  Sector development  Local performance benchmarks  Some latest reports: including Asia 2008 report, Global 100 Benchmarking Report, MCPI report Written, published and disseminated with local partners

Working with Partners MIX Partners (examples): Latin America ProDesarrollo REDCAMIF (C. America) COPEME (Peru) RFR (Ecuador) ASOFIN (Bolivia) Africa Ghamfin (Ghana) AEMFI (Ethiopia) Arab States Sanabel E. Europe / C. Asia RMC (Russia) AMFA (Azerbaijan) Asia PMN (Pakistan) M-Cril (India) RBAP (Philippines) MCPI (Philippines) MICRA (East Asia)

How can you use this information?  Understand sector trends  Set the context for rural banks  Compare your rural bank

Asia Trends: Growth Cambodia and Philippines lead portfolio growth in East Asia, with borrowers growing by 32% and 36%.

Asia Trends: Funding Patterns CountryEquityLiabilities Higher Growth in Debt Afghanistan20%84% Bangladesh21%48% Cambodia18%130% Nepal11%31% Pakistan5%36% Vietnam66%82% Higher Growth in EquityIndia216%91% Equal growth in Debt / Equity Indonesia25%27% Philippines77%72% Sri Lanka20%28% As leverage increases in Asian microfinance, countries with savings based funding (incl. Philippines) keep stable funding structure.

Asia Trends: Returns Asia returns are stable, with slight increase in returns on equity from higher leverage. Returns on equity in the Philippines are increasing especially in 2007.

Asia Trends: Efficiency Asian efficiency remains stable, with biggest gains in developing Afghan sector. Indian subcontinent leads through group lending but Philippines is improving.

How can you use this information?  Understand sector trends  Set the context for rural banks  Compare your rural bank

Rural Banks: Size Philippine rural banks are much larger than regional peers with the greatest number of depositors and borrowers.

Rural Banks: Deposit funding Rural banks have same leverage as peers, with Philippine Rural Banks having the highest deposit to loan ratio.

How can you use this information?  Understand sector trends  Set the context for rural banks  Compare your rural bank

Strong returns … “MIX Super Bank” serves 2x more borrowers than peer rural banks, and earns higher returns. What drives returns?

… from high revenues … “MIX Super Bank” has much higher (+33%) revenues to cover costs and still maintain strong returns. What drives revenues and costs?

… from high yield and allocation … “MIX Super Bank” has higher yield, and maximizes its yield through high asset allocation to portfolio. What about costs?

… but high costs … “MIX Super Bank” has higher costs due to higher operating expenses. What drives its higher operating costs?

… due to salary structure. “MIX Super Bank” maintains same productivity as peers, but high salary structure raises costs. So, in summary …

Summary MIX Super Bank PhilippinesPhilippines Rural Bank Indonesia Rural Bank Return on Assets1% -1% Financial Revenue/Assets31% 22%24% Total Expense/ Assets29%31%22%23% Portfolio Yield35%43%30%29% Portfolio to Assets83%66%67%69% Financial Expense/Assets5% 10% Provision for Loan Impairment/ Assets 2% 1%3% Operating Expense / Assets22%23%12%9% Average Salary/ GNI per Capita427%239%261%195% Borrowers per Staff Member Despite high salary structure, “MIX Super Bank” achieves high returns through strong yield and asset allocation.

Benefits to you  Realistic context on the market  Benchmarks for peer performance  Quick identification of strengths, weaknesses, and drivers of performance  Comparable information recognized globally by 1000s of microfinance providers, 100s of investors, and regulators and networks.  CPRs are FREE to participating banks!!!

How to participate  Provide current data to MABS or MCPI  Audited financial statements  One page questionnaire (outreach, product, portfolio, background of organization)  Deadline: August 2009 –  All benchmarked institutions receive  Custom Performance Report  Trend Report (with 2-3 years data)  Recognition in MicroBanking Bulletin (MBB)  Inclusion in analytical reports  Profile on MIX Market site for global visibility

MICROFINANCE INFORMATION EXCHANGE, INC. The leading provider of business information and data services for the microfinance industry. THANK YOU!!! Web: Headquarters: 1901 Pennsylvania Ave., NW, Suite 307 Washington, D.C USA Other Locations Lima, Peru ● Dakar, Senegal ● Gurgoan, India ● Jakarta, Indonesia