Loan Portfolio Analysis: Tools for Effective Supervision Rural Bankers Association of the Philippines- Microenterprise Access to Banking Services (RBAP-MABS)

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Presentation transcript:

Loan Portfolio Analysis: Tools for Effective Supervision Rural Bankers Association of the Philippines- Microenterprise Access to Banking Services (RBAP-MABS) Supervisors Training Course

LOAN PORTFOLIO ANALYSIS

Definition of terms Loans outstanding – refers to the balance of all loan releases that remain outstanding Loans disbursed – refers to the total loans released Arrears – refers to the installments past due and not paid

Definition of terms Portfolio At Risk – refers to the total outstanding balance (principal only) of those accounts with installments past due for one day or more Loan Loss – refers to principal amount written off from the portfolio

Key portfolio ratios: Arrears rate = amounts over 1 day past due X 100 outstanding portfolio Portfolio at risk rate = Outstanding principal balance of loans over 1 day past due X 100 outstanding portfolio Loan loss rate = amount written off from the portfolio X 100 average outstanding portfolio for the period

Portfolio analysis is an easy and powerful tool in controlling delinquency It is key to identifying and preventing PAR It is key to planning the work of supervisors and BMs with every AO Loan Portfolio Analysis

CHECK FOR TRENDS!!! You will be more effective and efficient if you know the strengths and weaknesses of your account officers.

PAR ANALYSIS AO 1AO 2 Apr % Which AO has the best performance?

PAR 1 Trends Marlon AO Joelan AO Dec %7.00% Jan %5.00% Feb %4.50% Mar %3.00% Apr % Who is the better performer of the two AOs?

PAR by AGE AOs Joelan2% Marlon2% Aris2% Conrad2% Donald2% The Account Officers have the same PAR, but the Aging of PAR shows a different picture.

Loan Loss Rate AOs Joelan2% Marlon0% Aris2% Conrad2% Donald2% If the PAR of AO 2 is written off, it will appear that he is the best performer.

PAR by AGE AOsPAR Joelan6% Marlon2% Aris3% Conrad7% Donald4% In this example, who is the best performer?

PAR by AGE AOsPAR Joelan6% Marlon2% Aris3%2%1% Conrad7%3%4% Donald4%1%4% The Aging of PAR now shows a different picture.

PORTFOLIO AT RISK SUMMARY

THANK YOU The Supervisors’ Training Course was designed by Arelis Gomez for MABS Philippines June 2005