Microenterprise Access to Banking Services (MABS)

Microenterprise Access to Banking Services (MABS) Program

OPERATIONS REVIEW

CONDUCTED FOR

Reviewers

Date operations review report was prepared (DD/MM/YYYY)

Table of Contents

I.INTRODUCTION

Highlights of Overall Financial Condition

Strategic Directions of the Bank......

Discuss the bank’s strategic thrusts and major activities for the next 3 to 5 years. Explain how the bank shall support its major strategies and how microfinance fits into it.

Background of Bank’s Microfinance Operation......

II.OBJECTIVES OF THE OPERATIONS REVIEW......

III.METHODOLOGY......

IV.FINDINGS AND RECOMMENDATIONS......

A.Overall Microfinance Performance: Selected Indicators

B.Performance of Microfinance Loan Product under review

C.Product Design: Policies & Features

D.Loan Process/Procedures

E.Management and Staff

F.Client Feedback: FGD, Client Visits, and Exit Surveys

V.CONCLUSIONS AND RECOMMENDATIONS......

VI.ANNEXES......

Annex 1 - OpRev Form 1: Document Audit Template

Annex 2 - OpRev Form 2: Attendance Sheet for Clients Attending the FGD......

Annex 3 - OpRev Form 3: FGD with Clients......

Annex 4 - OpREv Form 4: Attendance Sheet for AOs & Supervisors attending the FGD...

Annex 5 - OpRev Form 5: FGD with Supervisors & AOs......

List of Tables

Table 1: Selected Financial Indicators......

Table 2: Selected Microfinance Indicators, Selected Years (Amounts in Pesos)

Table 3: Selected Product Performance Indicators, as of _____

Table 4: Loan Terms and Conditions, Findings and Recommendations

Table 5: Loan Procedures, Findings and Recommendations

Table 6: Management & Staff Concerns, Findings and Recommendations

Table 7: Summary of Focus Group Discussion Results

List of Figures

Figure 1: Chart on Loan Portfolio and Deposit Liabilities Growth (range)

Figure 2: Chart on Comparative Loan Portfolio (Bankwide against Microfinance)

Figure 3: Chart on Microfinance Portfolio Share & Net Income

Figure 4: Chart on Distribution of Microfinance Loan Borrowers (use only if bank has two or more microfinance products)

Name of Bank

Name of loan product reviewed

OPERATIONS REVIEW

Date of operations review

I.INTRODUCTION

Brief history of the bank, including, but not limited to, the date of organization, name of owners/incorporators, office address, number of branches, number of employees, products offered.

Highlights of Overall Financial Condition

This portion provides a summary of the bank’s financial condition and highlights areas that require the attention of management. A short discussion on items of interest is also provided.

Table 1: Selected Financial Indicators

As of ______ / As of ______ / Growth Rate
BANKWIDE DATA:
Total Assets
Total Loan Portfolio
Total Deposit Liabilities
Total Bills Payable
Total Liabilities
Total Capital Account
Capital Stock
Surplus
Total Financial Cost
Total Operating Expense
Net Income
Average Loan Portfolio
Selected Bankwide Ratios:
Earning Assets Ratio¹ (%)
Return on Assets (%)
Return on Equity (%)
Deposit to Loans Ratio
Bills Payable to Loans Ratio
Net Income to Ave. Loan Portfolio
Cost to Average Portfolio:
Financial Cost
Operating Cost
Total

¹ Ratio of Earning Assets= (Due from Banks, Loan Portfolio, IBODI)/Total Assets

Figure 1: Chart on Loan Portfolio and Deposit Liabilities Growth

Show a chart on loan portfolio growth for a certain period, say, 2006-2009.

Strategic Directions of the Bank

Discuss the bank’s strategic thrusts and major activities for the next 3 to 5 years. Explain how the bank shall support its major strategies and how microfinance fits into it.

Background of Bank’s Microfinance Operation

Provide a brief background of the microfinance operation of the bank, including when and how the bank started, training and resource providers, the credit methodology/ies adopted, the target market, the scope of microfinance operations, the organization of the microfinance unit and its supervision.

Discuss the importance that bank management gives to microfinance in the context of bank-wide operations, and the direction management wants their microfinance operations to take.

II.OBJECTIVES OF THE OPERATIONS REVIEW

Introduce the team members who conducted the operations review and the dates of review. In bullet form, enumerate the objectives of the review.

Sample operations review objectives:

Discuss with top management the bank’s expansion plan and its strategies;
Conduct an evaluation of the bank’s microenterprise loans, microfinance for agriculture, microfinance for housing, mobile phone banking, and/or microinsurance programs;
Evaluate the strengths and areas of improvement of the product, its delivery system, loan documentation, and MIS;
Provide recommendations on issues and challenges the bank currently encounters in its microfinance operations as well as give options to address them;
Determine areas for improvement on how the corporate support departments can help support microfinance in the bank; and,
Provide recommendations for improving the bank’s credit management and remedial management functions for microfinance.

III.METHODOLOGY

Enumerate the methods used in conducting the operations review. See sample below:

The operations review of (name of product) involved the following activities:

Focus Group Discussions with microfinance loan clients in x number of branches
Focus Group Discussion with x number of account officers
Review of Microfinance Operations Financial Statements
Review of Compliance with Policies, through a review of client folders selected at random from a specified number of branches
Review of Management Information System
Individual interviews with some senior and middle management officers
Exit meeting with senior and middle level management of the bank for a discussion of findings and recommendations

IV.FINDINGS AND RECOMMENDATIONS

A.Overall Microfinance Performance: Selected Indicators

Show and discuss selected performance indicators, accompanied by charts and graphs. These indicators include the following:

Total number of microfinance clients & outstanding portfolio (trend)
Total outstanding portfolio at the time of the review
Quality of Microfinance Portfolio

Table 2: Selected Microfinance Indicators, Date (Amounts in Pesos)

As of ______/ Share to Bankwide / As of
______/ % Share / Growth Rate
MICROFINANCE DATA:
Total MF Loan Portfolio
Total MF Deposit Liabilities
Total MF Bills Payable
Average Loan Portfolio
MF Income Data:
Total Operating Income
Total Operating Expense
Total Financial Cost
Net Operating Income
No. of Borrowers
Selected MF Ratios:
MF Contribution to Bank-wide GROSS INCOME, amount and %
MF contribution to Bank-wide NET INCOME, amount and %
Deposit to Loan Ratio (end of year)
Bills Payable to Loans Ratio (end of Year)
Gross MF Income to Avg. Loan Portfolio
Net MF Income to Avg. Loan Portfolio
Average Cost/Borrower, Php
Cost to Average Portfolio:
Financial Cost
Operating Cost
Total

Figure 2: Chart on Comparative Loan Portfolio (Microfinance against Bank-wide)

Show a chart comparing the loan portfolio of the microfinance operation against bank-wide loan portfolio as of the date of review.

Figure 3: Chart on Net Income Share to Bank-wide Net Income

Present a chart showing the net income contribution of microfinance to bank-wide income.

Figure 4: Chart on Distribution of Microfinance Loan Borrowers

Use this only if the bank has two or more microfinance products. This chart shows the number of borrowers of every microfinance product and determines which product has the biggest as well as the lowest client outreach.

B.Performance of Microfinance Loan Product under review

This part provides an explanation and analysis of the data contained in Table 3 below. Analyze AO productivity and portfolio quality.

Table 3: Selected Product Performance Indicators, as of _____

C.Product Design: Policies & Features

This part provides a brief explanation and analysis of the data contained in Table 4 below.

Table 4: Loan Terms and Conditions, Findings and Recommendations

AREAS OF CONCERN / FINDINGS / RECOMMENDATIONS
Loan Size
Loan Terms
Mode of Payment
Interest Rate
Service Charge
Loan Guarantee
Documentary Req.
Savings
Insurance

D.Loan Process/Procedures

This part provides a brief explanation and analysis of the data contained in Table 5 below.

Table 5: Loan Procedures, Findings and Recommendations

AREAS OF CONCERN / FINDINGS / RECOMMENDATION
Origination/Marketing
Loan Documentation
Loan Analysis
a) CIBI/Character analysis
b) Cash Flow analysis
Loan Decision
Loan Disbursement
Loan Monitoring
Loan Collection

E.Management and Staff

This part provides a brief explanation and analysis of the data contained in Table 6 below.

Table 6: Management & Staff Concerns, Findings and Recommendations

AREAS OF CONCERN / FINDINGS / RECOMMENDATIONS
1. Microfinance Supervisors and Account Officers
2. Staff Productivity Targets
3. Branch Support
4. Top Management
5. Human Resources Management
6. Finance Administration
7. Internal Audit
8. Information Technology
9. Credit Management/ Remedial Management
10. Others

F.Client Feedback: FGD, Client Visits, and Exit Surveys

Document the approaches used in gathering feedback from client, places where the feedback gathering activities were conducted, the number of clients involved in the activities, and the number or names of staff who participated in the feedback gathering activities.

In Table 7 below, summarize the results of all Focus Group Discussions conducted during the operations review.

Table 7: Summary of Focus Group Discussion Results

Loan Terms and Conditions / What clients like about the product / What clients do not like about the product / Reviewer recommendations for improvement

Mention here as a note that Annex ___ presents the detailed results of focus group discussion with the different client groups.

Table 8: Summary of Results of Exit Interviews

AREAS OF CONCERN / FINDINGS
Amount of last/current loan
Savings Balances
Number of loan cycles
Type of Business
Payment on last loan – current or delinquent?
Type of Client
Gender
Reason for leaving bank
Plans to return to the bank?
If client plans to return to the bank, timeframe to re-avail of the microfiannce loan
If client does not intend to return to the bank, what changes in the bank’s policy would encourage them to return?
Satisfaction rating (bank’s services)

V.CONCLUSIONS AND RECOMMENDATIONS

This conclusion part briefly sum up the reviewer team’s overall view. Recommendations should be stated in more specific and doable terms.

VI.ANNEXES

When detailed annexes are useful to the bank, they can be attached. Pro-forma Annex tables are shown in the following pages.

Annex 1 - OpRev Form 1: Document Audit Template

Name of Bank, ______Branch

Date:

Loan Product:

Name of Borrower:
Age:
Address:
Name of Spouse:
Name of AO:
Loan Details:
Loan Cycle:
First Loan Amount:
Current Loan Amount:
Loan Term:
Mode of Repayment:
Nature of Business:
Agri Activity: / 1. Loan Recommendation Sheet
2. Application/Repeat Loan Form
3. Promissory Note
4. Disclosure Statement
5. Co-Maker’s Statement
6. Co-Maker’s Profile
7. CI/BI Form
8. Cash Flow Analysis
9. Authority to Debit
10.Client Status Report
11.Others
12. Applied vs. Approved
STATUS: Current
REPAYMENT RATE: 100%
Name of Borrower:
Age:
Address:
Name of Spouse:
Name of AO:
Loan Details:
Loan Cycle:
First Loan Amount:
Current Loan Amount:
Loan Term:
Mode of Repayment:
Nature of Business:
Agri Activity: / 1. Loan Recommendation sheet
2. Application/Repeat Loan Form
3. Promissory Note
4. Disclosure Statement
5. Co-Maker’s Statement
6. Co-Maker’s Profile
7. CI/BI
8. Cash Flow Analysis
9. Authority to Debit
10.Client Status Report
11.Others
12. Applied vs. Approved
STATUS: Current
REPAYMENT RATE: 100%

Annex 2 - OpRev Form 2: Attendance Sheet for Clients Attending the FGD

NAME OF BANK

FOCUS GROUP DISCUSSION WITH MICROFINANCE CLIENTS

Venue: ______Date/Time: ______

Name of Client / Address / Amount of First Loan / Amount of Current Loan / Loan Cycle / Business Activities

Annex 3 - OpRev Form 3: FGD with Clients

NAME OF BANK

FOCUS GROUP DISCUSSION WITH MICROFINANCE CLIENTS

Venue: ______/Date: ______

Product Feature / Like Best / Like Least / Client Recommendation
Loan size
Loan term
Interest rate
Service charge
Mode of payment
Loan guarantee
Documentary req.
Savings
Bank Services
AO rating (1 lowest, 5 highest)

Annex 4 - OpREv Form 4: Attendance Sheet for AOs & Supervisors attending the FGD

NAME OF BANK

FOCUS GROUP DISCUSSION WITH SUPERVISORS & ACCOUNT OFFICERS

Venue: ______Date/Time: ______

NAME / DESIGNATION / AREAS OF OPERATION / EMPLOYED SINCE / FIRST ASSIGNMENT IN THE BANK

Annex 5 - OpRev Form 5: FGD with Supervisors & AOs

NAME OF BANK

FOCUS GROUP DISCUSSION WITH SUPERVISORS AND AOs

Venue: ______/Date: ______

No. of participants:

What do you like most about your job?

What do you like least about your job?

What are the major challenges and problems you encountered as an AO? As a Supervisor?

What are your recommendations to address the challenges?

What do you like most about the product?

What do you like least about the product?

What are your recommendations to improve the product?