housing microfinanc: addressing home improvements and housing needs

2010 RBAP-MABS National Roundtable ConferenceHyatt Hotel and Casino, ManilaJune 2-3, 2010

Housing Microfinance, Addressing Home Improvements

and Housing NeedsTeresa Ganzon

Bangko Kabayan

GABAY Housing LoanGABAY Housing LoanBangko Kabayan’s Housing MicrofinanceBangko Kabayan’s Housing Microfinance

1. Additional working capital

2. Education

3. Medical purposes

4. House repair & renovation

5. Addt’l capital for farming activities

6. Car

Why Why HMF?HMF?

2005 MF Survey

✔✔✔

Feasibility of product because of higher demand for home improvement

Additional loan product for Microfinance Clients (market penetration)

Increase in no. of accounts for Account Officers

Client retention (because GABAY is an incentive loan for existing clients)

Why Why HMF?HMF?

Sample Flyer

ClientsClients(As of March 2010)(As of March 2010)

Number of accounts:Number of accounts: 267267

Total Releases:Total Releases: P 5,496,000.00P 5,496,000.00

Loan Portfolio:Loan Portfolio: P P 3,899,074.363,899,074.36

Ave. Loan Term:Ave. Loan Term: 10 months10 months

Ave. Loan Amount:Ave. Loan Amount: P 20,500.00P 20,500.00

Kitchen Improvement 31 11.6%Wall Finishing and Painting 45 16.8%Ceiling and Roof Improvement 23 8.6%Bathroom Improvement 16 6%Improvement of doors and windows 20 7.5%Floor finishing and Improvement 14 5.2%Water and Electric Supply 17 6.3%Additional Capital for House Construction 13 4.9%Home Improvement/Renovation (addt’l rooms) 61 22.9%Fence Improvement 9 3.4%Apartment 2 0.75%Other related projects (poultry, piggery, store) 16 6%TotalTotal 267267 100%100%

Type of ProjectsType of Projects

Developmental Developmental StageStage

STEP 1: Market Research was STEP 1: Market Research was conducted through the conducted through the support of MABSsupport of MABS

a) with two (2) days indoor a) with two (2) days indoor and actual field trainingand actual field training

b) preparation of draft product b) preparation of draft product manualmanual

c) FGD with BM’s, AO’s, c) FGD with BM’s, AO’s, Supervisors and selected Supervisors and selected respondents from the branchrespondents from the branch

Developmental StageDevelopmental StageSTEP 2: Training of Supervisors and Account Officers of Pilot STEP 2: Training of Supervisors and Account Officers of Pilot BranchesBranches

a) ina) in--house training with AOs and Supervisorshouse training with AOs and Supervisors

b) documentation and discussion of policiesb) documentation and discussion of policies

STEP 3: Manual Preparation and ApprovalSTEP 3: Manual Preparation and Approval

STEP 4 : Inclusion of Housing Microfinance in Loans Program STEP 4 : Inclusion of Housing Microfinance in Loans Program and General Ledgerand General Ledger

Introductory Introductory StageStage

•• Pilot test in two (2) branches Pilot test in two (2) branches

•• Zero availment on the first three (3) months of pilot testingZero availment on the first three (3) months of pilot testing

oo July is not a good month to start construction and repair July is not a good month to start construction and repair of housesof houses

oo AO hesitant to offer new product (new documentation AO hesitant to offer new product (new documentation requirement procedure for group lending)requirement procedure for group lending)

Introductory StageIntroductory Stage•• One time orientation without follow through in One time orientation without follow through in

process and procedure is ineffective for new process and procedure is ineffective for new products.products.

•• We pilotWe pilot--tested HMF during the peak season for loan tested HMF during the peak season for loan renewal of existing clients.renewal of existing clients.

•• Bangko Kabayan was not able to rollBangko Kabayan was not able to roll--out HMF on the out HMF on the 1st semester of 2009 and was delayed by six (6) 1st semester of 2009 and was delayed by six (6) months.months.

Introductory StageIntroductory StageProduct rollProduct roll--out was delayed because…out was delayed because…

..preparation & approval of Process and Procedure ..preparation & approval of Process and Procedure Manual took a lot of timeManual took a lot of time

..our MF department focused more on strengthening ..our MF department focused more on strengthening existing loan products to achieve growth for 2009existing loan products to achieve growth for 2009

..there was quite a number of scheduled renewals ..there was quite a number of scheduled renewals from existing clientsfrom existing clients

•• After the MABS roundtable on HMF, our Supervisors realized that HMF After the MABS roundtable on HMF, our Supervisors realized that HMF loans did not need to have large amounts and that simple house loans did not need to have large amounts and that simple house renovations could be accommodated.renovations could be accommodated.

•• Bangko Kabayan’s GABAY Housing Loan has shown remarkable growth Bangko Kabayan’s GABAY Housing Loan has shown remarkable growth since its pilot test (Sept. ’09)since its pilot test (Sept. ’09)

•• As of April 2010, it has total releases of P5.5 M, a portfolio of P3.9 M with As of April 2010, it has total releases of P5.5 M, a portfolio of P3.9 M with 232 accounts and 0.43% PAR.232 accounts and 0.43% PAR.

Moving Moving ForwardForward

BK HMF Loan Status BK HMF Loan Status PerformancePerformance

Continuous marketing of GABAY Housing Loan to all Continuous marketing of GABAY Housing Loan to all eligible MF clientseligible MF clients

RollRoll--out to regular depositorsout to regular depositors

Maintain zero percent (0%) PAR through proper account Maintain zero percent (0%) PAR through proper account managementmanagement

Continuous product innovationContinuous product innovation

Future PlansFuture Plans

Impact of HMF Impact of HMF

1.1. Bank and ManagementBank and Management Additional product to offer for the clientsAdditional product to offer for the clients

Good opportunity and competitive Good opportunity and competitive advantageadvantage

Additional loan portfolioAdditional loan portfolio

Impact of HMF Impact of HMF

2.2. Account OfficerAccount Officer Additional portfolio that may be Additional portfolio that may be

considered for incentiveconsidered for incentive

Helps the account officer acquire new Helps the account officer acquire new clients by offering good opportunities clients by offering good opportunities not only on their business but also in not only on their business but also in their status of livingtheir status of living

Impact of HMF Impact of HMF

3.3. Microfinance ClientsMicrofinance Clients Availment of additional (incentive) loan Availment of additional (incentive) loan

with a lower interest rate and a longer with a lower interest rate and a longer termterm

Diversion of funds for their business can Diversion of funds for their business can be avoidedbe avoided

Improve their status of livingImprove their status of living

Marigel LuzMarigel LuzLoan Amount: P 15,000.00Loan Amount: P 15,000.00

Project: Improvement of Kitchen and Bath RoomProject: Improvement of Kitchen and Bath Room

BEFORE AFTER

Marigel LuzMarigel LuzLoan Amount: P 15,000.00Loan Amount: P 15,000.00

Project: Improvement of Kitchen and Bath RoomProject: Improvement of Kitchen and Bath Room

BEFORE AFTER

BEFORE AFTER

Evangeline BanilaEvangeline BanilaLoan Amount: P 9,000.00Loan Amount: P 9,000.00

Project: Wall PaintingProject: Wall Painting

BEFORE AFTER

Nenita MagtibayNenita MagtibayLoan Amount: P 20,000.00Loan Amount: P 20,000.00

Project: Partitions of 2 Bed Rooms and Wall FinishingProject: Partitions of 2 Bed Rooms and Wall Finishing

Riza CapindingRiza CapindingLoan Amount: P 9,000.00Loan Amount: P 9,000.00

Project: Repair of Ceiling and Wall PaintingProject: Repair of Ceiling and Wall Painting

BEFORE AFTER

Mila RosalesMila RosalesLoan Amount: P 13,000.00Loan Amount: P 13,000.00

Project: Improvement of terrace precast and flooringProject: Improvement of terrace precast and flooring

BEFORE AFTER

Protacia LorzanoProtacia LorzanoLoan Amount: P 50,000.00Loan Amount: P 50,000.00

Project: Kitchen Improvement (flooring, walls, sink, Project: Kitchen Improvement (flooring, walls, sink, cabinet)cabinet)

BEFORE AFTER

Jasmin LatJasmin LatLoan Amount: P 50,000.00Loan Amount: P 50,000.00

Project: Construction of SariProject: Construction of Sari--sari storesari store

BEFORE AFTER

Edna HonradeEdna HonradeLoan Amount: P 40,000.00Loan Amount: P 40,000.00

Project: Construction of Ground Floor and additional roomProject: Construction of Ground Floor and additional room

BEFORE AFTER

Dulce MeranoDulce MeranoLoan Amount: P 15,000.00Loan Amount: P 15,000.00

Project: Fence Improvement and Water TankProject: Fence Improvement and Water Tank

BEFORE AFTER