2. What is the global financial crisis?
• The global financial crisis is an ongoing issue
which put a number of countries into a
recession and the major stock indices into a
downward spiral.
• The crisis came to the forefront of the
business world and media in September 2008
with the failure and merging of a number of
American financial companies with the sub‐
prime mortgage crisis.
4. According to Kate McKee, CGAP official and former head of
Microenterprise development at USAID:
“It’s in -mes of crisis that we see what
microfinance is really made of. During past
emergencies, microfinance has held fast. And
even as the current global banking mess has
gone from bad to worse, recent headlines have
global and industry leaders asser-ng that
microfinance can and should be able to
withstand it.”
5. How does Can-lan Bank view the
financial crisis?
• It is a Challenge and growing concern as
unemployment could increase, and deposits and
loans might decline
• But also, it’s an opportunity to strengthen the bank
and become be1er at what we do through:
– Staying true to our mission and vision
– Be1er strategic planning and expanding in mul-ple ways
– Innova-on
– Be1er a1en-on to our human resources
– Be1er customer care
6. Can-lan Bank’s Market Profile
• Caraga Region is one of the poorest regions;
many families are engaged in micro and small
enterprises as a major income source
• An agricultural and fishery‐based economy
• Export‐oriented mining industry has become
important in recent years
• Overseas Filipinos, 17K, send money regularly to
their families thus helping fuel the economy
7. Possible Effects to Local Economy and
Microentrepreneurs
• We an-cipated there may be reduced family
income and a reduc-on in remi1ances and that:
– Income from microenterprise will cover much of the
family’s needs
– More sales on credit due to reduced liquidity of
households
– Possible reduc-on in sales
– Higher spending to meet basic needs may affect
client’s capacity to meet obliga-ons and save
• In reality, remi1ances are up this quarter and there
are no reports of OFWs coming home in our region.
8. Possible Challenges & Responses of
CBI:
CHALLENGES RESPONSES
Delinquencies may Tighter monitoring
rise if risks are not and control of
properly managed delinquencies
Reduced deposit Promote and encourage
balance due to heavier greater savings
withdrawals and fewer mobiliza-on to help
new accounts clients weather the
crisis
9. Effects on the MF Market Environment
• Demand for loans may increase but the bank
will have to be more careful during the
screening process.
• Increased compe--on by other microfinance
players may lead to over‐indebitedness.
Therefore, we need to guard against clients
with mul-ple loans, especially at this -me
(credit bureau may help).
11. • ank wide portfolio declined due to
B • fter Sept. 2008, deposits managed
A
fewer qualified applicants, tightened to increase. The episodes of decline
loan policies for clean loans, P10 M were due to the shutdown of mining
loans were written off in Dec.’08. companies.
• ut loan volume has been rising since.
B • eposit levels have stayed much
D
higher than they were prior to the
onset of the global financial crisis.
12. After cleaning up our loan portfolio in December, the number of
loan accounts bank wide managed to rise in the first quarter of
2009.
13. MICROFINANCE PORTFOLIO
• he decline in MF loans is not directly related to the global financial crisis;
T
rather it is due to internal challenges that we’ve started to address.
• he bank tightened loan screening for both new and repeat clients to
T
improve portfolio quality.
• ortfolio growth comes mostly from repeat borrowers and, to a lesser
P
extent, from new borrowers.
14. • he dips in deposits are due to withdrawals to pay for loans and the
T
need for additional cash due to inclement weather and/or seasonal
farm production needs. Notwithstanding, micro deposits are up since a
low in August 2008 .
15. The Bank’s Ini-a-ves:
• To update the strategic and opera-onal plans
guided by the bank’s mission and vision
• Expansion – ver-cal & horizontal – based on
market research and MABS Approach
• To align the budget to improve staff capability
and adopt available technologies to improve
cost‐efficiency and bank expansion
• Pro‐ac-ve stance across loan products to be1er
manage delinquency
18. Delinquency Management
• Proac-ve approach in microfinance has
been adopted for regular loans
• Contractual savings product is integrated
in all loan products as added service to
borrowers, as a source of low cost fund,
and to help manage credit risk
19. In Conclusion
• The global financial crisis has had li1le
nega-ve impact on the bank’s opera-ons
• The crisis offers an opportunity to improve our
fundamentals, what we do and how we do
them so that we are prepared for any crisis,
domes-c or global!
