Power of coop pesos

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Power of coop pesos

  1. 1. Power of P. E. S. O. S.
  2. 2. The Power of P E S O S BOOKKEEPER’S TRAINING August 26, 2013
  3. 3. W hat is P E S. O. S. ? . .
  4. 4. P - PORTFOLIO QUALITY E - EFFICIENCY S - STABILITY O - OPERATIONS S - STRUCTURE OF ASSETS These are indicators for the financial performance of savings and credit cooperatives and other types of cooperatives with savings and credit services.
  5. 5. PESOS RATIOS GOALS: • P ortfolio Quality • E fficiency • S tability • O perations • S tructure of Assets A toolkit for good Cooperative Governance. A risk assessment tool.
  6. 6. PESOS BASED A framework for risk based reviews and assessment of the credit cooperative’s risk management practices. A toolkit for good Cooperative Governance. A risk assessment tool.
  7. 7. PURPOSES:  Supervisory & Regulatory Tool  Management Tool
  8. 8. As Supervisory and Regulatory Tool For supervisory and/or regulatory body designated To ensure safety and stability of credit cooperative through necessary operational and financial discipline that would surely protect the money of the members.
  9. 9. As Management Tool For BoD, GM and key implementers To ensure that the cooperative is operating efficiently and effectively and satisfying the needs/wants of the members and community in general and keeping the cooperative viable at all times.
  10. 10. PESOS
  11. 11. PORTFOLIO QUALITY - 25% 1. PORTFOLIO AT RISK (PAR) Measures the risk of default in the portfolio. Formula: Balance of Loans with 1 day missed payments Total Loans Outstanding Standard: 5% or less 15 %.
  12. 12. PORTFOLIO QUALITY 2. Allowance for Probable losses on loans Measures the adequacy of the allowance for probable losses on loans a) Formula 1: Amount of allowance for loans over 12 Months Past Due_____ Total Loans Outstanding over Standard: 100% 12 months past due 5%
  13. 13. PORTFOLIO QUALITY 2. Allowance for Probable losses on loans Measures the adequacy of the allowance for probable losses on loans b) Formula 2: Amount of allowance for loans 1 to 12 Months Past Due_____ Total Loans Outstanding 1 to Standard: 35% 12 months past due 5%
  14. 14. EFFICIENCY - 20% 1. Asset Yield Measures the ability of coop’s assets to generate income. Formula: Undivided Net Surplus Ave. Total Assets Standard: At least Inflation Rate
  15. 15. EFFICIENCY 2. Operational Self-Sufficiency Measures the ability of coop to sustain its operation. Formula: Interest Income from Loans + Service Fees+Filing Fees+Fines Financing Costs+Admin Costs Standard: more than 100%
  16. 16. EFFICIENCY 3. Rate of Return on Members’ Share Measures the earning power of members. Formula: Interest on Share Capital Average Share Capital Standard: Higher than Inflation Rate 4%
  17. 17. EFFICIENCY 4. Loan Portfolio Profitability Measures how profitable the loan portfolio is. Formula: Int. Inc. from Loans + SF+ FF+ Fines Average Total Loans Outstanding Standard: More than 20%
  18. 18. EFFICIENCY 5. Cost per Peso Loan Measures the efficiency in managing the loan portfolio. Formula: Financing Cost + (Admin Cost – Member Benefit Expense ) Average Total Loans Outstanding Standard: P0.10 per P1.00 loan
  19. 19. EFFICIENCY 6. Administrative Efficiency Measures the cost of managing the coop’s assets. Formula: Administrative Costs Average Total Assets Standard: 3% to 10% 2%
  20. 20. STABILITY ………30% 1. Solvency Measures the degree of protection that the coop has for members’ savings and shares in the event of liquidation of the coop’s assets and liabilities. Formula: (Assets+Allow)-([Total Liab-Deposits] +Past Due Loans+LR+LUL) Deposits + Share Capital Standard: At least 110% 10%
  21. 21. STABILITY 2. Liquidity Measures the coop’s ability to serve its members’ withdrawals and deposits on time. Formula: Liquid Assets-ST Payables Total Deposits Standard: Not less than 15% 10%
  22. 22. STABILITY 3. Net Institutional Capital Measures the level of institutional capital after subtracting the losses Formula: (Reserves+Allow for PLL) – (Past Due Loans+LUL+P Assets) Total Assets Standard: At least 10% 10%
  23. 23. OPERATIONS 1. Performance of Membership Growth ….10% Determines the performance of change in membership vis-à-vis target. Formula: Actual Increase in the # of Members Target Increase in the # of Members 5% Standard: Target set in the Developmental Plan
  24. 24. OPERATIONS 2. Trend in External Borrowings Determines the percentage of change in external borrowings. Formula: Ending Ext. Borrowings – Beg. External Borrowings Beg. External Borrowings Standard: Decreasing towards zero. 5%
  25. 25. STRUCTURES OF ASSETS – 15% 1. Asset Quality Measures the percentage of total assets that are not producing income. Formula: Non-Earning Assets Total Assets 5% Standard: Not more than 5%
  26. 26. STRUCTURES OF ASSETS 2. Asset Structure - 1 Measures the percentage of total assets financed by deposits Formula: Total Deposits Total Assets Standard: 55% - 65% 5%
  27. 27. STRUCTURES OF ASSETS 2. Asset Structure - 2 Formula: Total Loans Receivables Total Assets Standard: 70% - 80% 2%
  28. 28. STRUCTURES OF ASSETS 2. Asset Structure - 3 Formula: Total Share Capital Total Assets Standard: 35% - 45% 3%
  29. 29. PESOS RATINGS SUMMARY P - PORTFOLIO QUALITY …… 3….25 E – EFFICIENCY ………………. 6….20 S - STABILITY…………………. 3….30 O - OPERATIONS…………….. 2….10 S - STRUCTURE OF ASSETS..4… 15 TOTAL……………………….18..100 X …………... 80%
  30. 30. PESOS RATINGS SUMMARY P PORFOLIO QUALITY (25% ) 1 Portfolio at Risk (PAR) 2 Allowance for Probable Losses on Loans more than 12 months past due 3 Allowance for Probable Losses on Loans 1 to 12 months past due E EFFICIENCY (20% ) 4 Asset Yield 5 Operational Self-Sufficiency 6 Rate f Return on Members' Share 7 Loan Portfolio Profitability 8 Cost per Peso Loan 9 Administrative Efficiency S STABILITY (30% ) 10 Solvency 11 Liquidity 12 Net Institutional Capital O OPERATIONS (10% ) 13 Performance in Membership Growth 14 Trend in External Borrowings S STRUCTURE OF ASSETS (15% ) 15 Asset Quality 16 Asset Structure: Total Deposits/Total Assets 17 Asset Structure: Total Loans/Total Assets 18 Asset Structure: Total Share Capital/Total Assets TOTAL PESOS 15 5 5 25 4 4 4 4 2 2 20 10 10 10 30 5 5 10 5 5 2 3 15 100
  31. 31. What is the “POWER OF PESOS”???
  32. 32. The Power of PESOS It will help the management identify ratios which require attention and focus Identify necessary intervention
  33. 33. The Power of PESOS Benefits: •Board and management focus •Incremental changes in innovation •Quality, productivity and performance measurement •Developing and applying new approaches •Allocation of scarce resources •Cooperative Governance and (Self) Regulataion
  34. 34. The Power of PESOS Indicator Intervention/Module Portfolio Quality •Delinquency Control •Credit Management Efficiency •Capital Management •Asset/Liability Management Stability •Liquidity Management •Investment Management Operations •Membership Growth •Trend in External Borrowings Structure of Assets •Asset Quality •Asset Structure
  35. 35. The Power of PESOS SOME ACTION PLANS OF COOPS WHO REGULARLY MONITOR PESOS RATIOS  Monthly aging of loans receivables  Increased provision for allowance for probable losses on loans  Housekeeping  In close watch with income and operating expenses against budgeted income and expenses  Increased % of allocation to reserve fund  Started funding the statutory reserves 
  36. 36. Thank you!!!

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