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Session 2 : Measuring Performance through the EAGLE Score Card

Session 2 : Measuring Performance through the EAGLE Score Card. Jennifer S. Sabianan MABS. 2012 RBAP-MABS National Roundtable Conference June 7-8, 2012 Hyatt Hotel Manila. Managing for Success. “What gets measured gets done.” “What can’t be measured can’t be managed.”.

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Session 2 : Measuring Performance through the EAGLE Score Card

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  1. Session 2:Measuring Performance through the EAGLE Score Card Jennifer S. Sabianan MABS 2012 RBAP-MABS National Roundtable Conference June 7-8, 2012 Hyatt Hotel Manila

  2. Managing for Success “What gets measured gets done.” “What can’t be measured can’t be managed.”

  3. MABS-EAGLE Assessment • Evaluates the performance of microfinance portfolio in 5 areas, with 11 indicators • A management tool to monitor and evaluate factors affecting microfinance operations

  4. Indicators & Weights EFFICIENCY (30%) ASSET QUALITY (30%) GROWTH (10%) LIABILITY STRUCTURE (10%) EARNINGS (20%)

  5. EAGLE Grades Excellent (AA): 4.25- 5 Very Good (A): 3.5 -4.24 Good (B): 2.5 - 3.49 No Grade (NG): 2.49 or less

  6. Results for 2011 (Base: 34 Banks)

  7. Annual Assessment January – December 2011 • 34banks evaluated • 2AA; 1EAGLE Award • 7 A • 19 B • 6 No grade

  8. Cost efficiency Loan officer productivity - Individual loan product - Group loan product RESULTS FOR EFFICIENCY

  9. Cost Efficiency

  10. Loan Officer Productivity Range: 33 – 214 Median: 86

  11. Loan Officer Productivity Range: 115 – 305 Median: 260

  12. Portfolio at Risk (PAR) 7 & 30 Loan Loss Reserve (% Provisioning) Loan Loss Rate (% Write Off) RESULTS FORASSET QUALITY

  13. % PAR >7 days Range: 0.28% - 52% Median: 9.3%

  14. % PAR >30 days Range: 0.21% - 47% Median: 8%

  15. Loan Loss Reserve (%)

  16. Loan Loss Rate (%)

  17. Year on Year Growth --Number of Borrowers --Portfolio Amount RESULTS FORGROWTH

  18. %Growth - Number of Borrowers 16 of 34 banks, or 47% had negative growth!

  19. % Growth - Gross Loan Portfolio Median: (0.59%) 19 of 34 banks, or 56% had negative growth!

  20. DEPOSIT TO LOAN RATIO (%) RESULTS FORLIABILITY STRUCTURE

  21. Deposit to Loan Ratio

  22. NET INCOME OVER AVG PORTFOLIO RESULTS FOR EARNINGS

  23. Earnings (%)

  24. In Summary….Pay attention to the following: • Cost efficiency • Determine expenses that can be reduced • Book only MF-related operational expenses • Increase portfolio by diversifying product • Accuracy of expense data reflected in MPM report • Loan officer productivity – low production means high cost of operations • Book adequate loan loss provision following BSP Circ. 409

  25. In Summary….Pay attention to the following: • Write off, clean out long overdue & uncollectible accounts • Arrest client drop outs – monitor drop outs and document reasons for leaving your bank WHEN WAS THE LAST TIME YOU HAD A MICROFINANCE OPERATIONS REVIEW IN YOUR BANK?

  26. Check if your bank manifests any of the adverse findings FINDINGS FROM OPERATIONS REVIEW

  27. Observations on usual areas needing improvement • Lack of monitoring of PAR status due to non- functioning MIS. • Loan Supervisors do not have authority to address delinquency issues (no delegation of authority). • Inflexible products (fixed loan amount, terms, etc.) leave clients no options • Poor customer service (long waiting lines, not enough chairs, unfriendly staff) • No incentives for borrowers who maintain high savings balance (e.g., lower interest rate, better payment terms, etc.)

  28. DO WELL BY DOING GOOD!

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