Assessment of Participating Banks Microfinance Performance based on MABS – EAGLE Standards

Eulogio Martin O. Masilungan Monitoring & Research Coordinator MABS 2009 RBAP-MABS National Roundtable Conference May 12-13, 2009 Hyatt Hotel and Casino Manila

“What gets measured gets done.” “What can’t be measured can’t be managed.”

• The EAGLE assessment evaluates the performance of microfinance portfolio • A management tool for monitoring and evaluating factors affecting a rural bank’s microfinance operations • Has 5 performance areas with 13 indicators

Efficiency Asset Quality Growth Liability Structure Earnings

EFFICIENCY (30%) • Cost Efficiency • Loan Officer Productivity (group and individual loan) • Cost per Active Borrower (group and individual loan)

ASSET QUALITY (30%) • PAR Over 7 Days • PAR Over 30 Days • Loan Loss Provision • Loan Loss Rate

GROWTH IN PORTFOLIO (10%) • Growth in Active Borrowers • Growth in Loan Portfolio LIABILITY STRUCTURE (10%) • Deposit to Loan Ratio EARNINGS (20%)

AA: Overall weighted score of 4.25 and above - Excellent microenterprise finance performance A: Overall weighted score between 4.24 and 3.5 – Very good microenterprise finance performance B: Overall weighted score between 2.5 and 3.49 – Average microenterprise finance performance NG: Overall weighted score less than 2.49 – Below average performance

So, how did banks score for the period January to December 2008?

• 51 banks were evaluated • 5 scored AA; 3 are qualified for the EAGLE Award • 20 scored A • 18 scored B • 8 No grade

Measuring EFFICIENCY

Measuring ASSET QUALITY

Measuring GROWTH

Measuring LIABILITY STRUCTURE

Measuring EARNINGS

BEST PRACTICES

Best Practices • Allot a day a week for promotional activities such as barang ay visits, distribution of flyers and community events • Ask AOs to work on Saturdays if there are PAR problems and low intake of new clients • Ask AOs to prepare weekly prospects list • Niche marketing – TODA members

AREAS FOR IMPROVEMENT

Areas for Improvement • Non-functioning MIS resulted in non monitoring of PAR status • Loan Supervisors are not given authority to address delinquency issues (no delegation of authority) • nflexible products (fixes loan amount, I terms, etc.) • Poor customer service (long waiting lines, not enough chairs, unfriendly staff)

Areas for Improvement • No incentives for MF borrowers who maintain high savings balance (e.g., lower interest rate, better payment terms, etc.)

Continue ! Doing Well by Doing Good ! and ! See You All at the ! MABS EAGLE Awards ! tonight!!

Assessment of Participating Banks Microfinance Performance based on MABS – EAGLE Standards

by MABSIV on May 26, 2009

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Assessment of Participating Banks Microfinance Performance based on MABS – EAGLE Standards — Presentation Transcript