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: 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

Previous Organizational Chart Board of Directors Internal Auditor President Vice President Unit Managers Loan Officer Cashier Bookkeepers Loan Clerk Asst.Bookkeeper Teller SA/CA - Clerk Solicitor

New Organizational Chart Board of Directors Internal Auditor/Comp. Officer President Asst. to the Pres. Vice President Area Managers Unit Managers Cashier Bookkeepers Loan Officer Microfinance Officer Asst.Bookkeeper Teller Loan Clerk Account Officer Solicitor SA/CA - Clerk

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 : Deposit Build up: 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

Thank you!!!