MIDDLE MANAGEMENT TRAINING MIDDLE MANAGEMENT TRAINING COURSECOURSE

Session 1Session 1Effective Supervision:Effective Supervision:

Reading and Analyzing the Reading and Analyzing the MIS ReportsMIS Reports

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Session ObjectivesAt the end of the session, participants are expected to:

Have a fresh understanding and appreciation of microfinance reports

Be able to read and analyze the important microfinance reports

Understand the relationship of data across reports

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Introduction

Appropriate, accurate and timely reports and indicators greatly contribute to the participating banks’ success in microfinance and in making microfinance a part of the regular banking operation.

It is important for middle management to know how to read and understand the reports in order to make the right and timely decision.

It is important to know the relationship of data across reports to be able to spot errors and detect fraud.

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MABS Monitoring ReportsMABS Monitoring Reports Listing of Loans Collection Due Report Delinquency Report Portfolio at Risk Report

Indicates loan portfolio data and quality

Indicates revenue, growth and performance.

Analyze quality based on client, business and characteristics..

Interest Collected by MF Unit Performance Report by AO Microfinance Monthly Report Client Status Report

PAR by Aging and Business Activity PAR by Loans Disbursed and Business

Activity Loan Profile by Gender

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Listing of Loans (Monthly)

List of all active accounts; accounts with outstanding balance – current or overdue

Shows static information such as; borrower’s name and account number, loan cycle, release and maturity date, amount borrowed, outstanding loan balance, amortization due, and hold out deposits

It also shows amount overdue and portfolio at risk (PAR) amount

Users: MF Unit supervisor and staff, branch manager

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Delinquency Report1 (Daily)

List of delinquent accounts; missed amortization repayment for 1 day or more

Shows static information such as; borrower’s name and account number, release and maturity date, PAR amount, total amount due

It also shows the number of amortization payments missed and how many days the borrower is overdue

This report shows the hold out balance and the exposed amount.

Users: MF Unit supervisor and staff, branch manager

1Delinquency report is an exception report

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Portfolio at Risk Report (Daily, Weekly, Mo.)

This is a summary report showing the number of borrowers, loan amount overdue, outstanding balance or PAR amount by age.

Also shows the percentages e.g. % clients, % in arrears, and PAR %

Users: MF Unit supervisor and staff, branch manager, top

management

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Total Interest Collected from MFU (Monthly)

This is a summary report showing the monthly growth of the loan portfolio (outstanding balance: beginning & ending).

Shows the interest, fees & other charges, and the total revenue collected within the period; usually monthly

Shows the yield % for the period

Users: MF Unit supervisor and staff, branch manager, top

management

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Performance Report by Account Officers (Weekly, Monthly)

This is a summary report that determines the performance of each account officer (AO)

Shows the # of borrowers handled by an AO, loan balance, # of accounts that are overdue, par amount and percentage

It also shows the # of new and repeat loans released during the period and the total revenue generated by the AO

Users: MF Unit supervisor and staff, branch manager, top

management

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Client’s Status Report (As needed)

This report shows the credit history of the borrower Shows the # of loans the borrower has availed Shows the repayment performance of the borrower:

percentage payments made on time Shows the detailed repayment performance of the

borrowers current loan

Users: MF Unit supervisor and staff, branch manager,

credit committee

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READING THE REPORTS

Check the accuracy of the figures and amounts in the reports

Cross check figures and amounts of items between and among related reports

Analyze the reports

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ANALYZING THE REPORTS

Random check if the sub-total by account officer adds up Check if all AO sub-totals add up with the over-all total Check for duplicate accounts or accounts that show up

more than once. This could indicate that the account of the borrower, if fully paid, was not properly closed in the system.

Validate whether the loan cycle or cumulative loan matches with the Client’s Status Report

Verify whether the loan balance is correct at the time the report was generated

Validate whether there is “lump-sum” payment schedule

Listing of Loans

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ANALYZING THE REPORTS

Check whether horizontal and vertical totals and percentages are accurate

Validate if the figures in this report, e.g. # of borrowers, loan overdue amount, outstanding balance, and PAR are consistent with the Listing of Loans report.

Using the Delinquency Report, check if the accounts with overdue amortization add up with the summary totals per age.

Analyze the extent of the delinquency After determining the extent, identify which accounts are

involved

Portfolio at Risk Report

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ANALYZING THE REPORTS

Random check if the sub-total by account officer adds up Check if all AO sub-totals add up with the over-all total Check horizontal totals and computations e.g. exposed

amount, etc… The Portfolio at Risk amount on this report should be

equal to the Portfolio at Risk amount on the Listing of Loans and Portfolio At Risk Report

Randomly validate the # of amortization missed and days overdue with the individual Client’s Status Report

Using the information gathered from the PAR Report, manually age the account over 90 days

Delinquency Report

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ANALYZING THE REPORTS

Check if totals add up Check horizontal computations e.g. total revenue, and

yield%, etc… Validate whether figures in this report tally with the

related reports e.g. listing of loans and performance report by AO OLP1 ending should be equal to Total Loan Balance of

the Listing of Loans & Total Loan Account Balance of the Performance Report by AO

Total Revenue should be equal to Total Revenue of the Performance Report by AO

Total Interest Collected from MFU

1OLP – Outstanding Loan Portfolio

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ANALYZING THE REPORTS

Check if totals add up Check horizontal computations if all figures add up e.g. #

loans disbursed = # new loans disbursed + # repeat loans disbursed, etc…

Validate whether figures in this report tally with the related reports e.g. listing of loans and total interest collected by MFU Loan Account Balance should be equal to the OLP1

ending of the Total Interest Collected & Total Loan Account balance of Listing of Loans

Total Revenue should be equal to Total Revenue of the Total Interest Collected from MFU

Performance Report by AO

1OLP – Outstanding Loan Portfolio

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ANALYZING THE REPORTS

Validate … # of Borrowers tally with # of accounts of the Listing of

Loans # of loans w/ overdue amount tally with the number of

accounts listed on the Delinquency Report Portfolio at Risk amount tally with Total PAR amount of

the Listing of Loans PAR % tally with the Outstanding Balance % Sub-Total of

the PAR report Validate the # loan disbursed per AO by counting all

accounts released within the specified range e.g. 06/01/2004 to 06/28/2004. This can be done by manually counting the accounts released within the period in the Listing of Loans.

Performance Report by AO

1OLP – Outstanding Loan Portfolio

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Client Status Report

Validate release and maturity dates of current loan against the Listing of Loans

Useful when evaluating an application for a repeat loan, or when determining course of action for a delinquent borrower

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Comparison Across Reports

REPORT TITLE # Accounts O/Balance Amount O/Due

PAR PAR%

Listing of Loans

Delinquency Report

PAR Report

Interest Collected

MABS Monthly

Performance Report

PAR by Aging

PAR by Loans Disbursed

Loan Profile by Gender

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SUMMARY

In this session we learned the following:

How to read the important MF reports How to detect erroneous reports How to analyze and make use of these

reports in making timely decisions.

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LINKS

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Exposed Amount

Refers to the difference between the outstanding loan balance and the savings balance.

This amount bears the risk of not being collected.

The exposed amount represents the amount the clients still owes to the bank after her/his savings have been applied to the loan amount due

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Formula for YIELD %

Total Revenue

(OLP1 beginning + OLP End)/2YIELD % =

1 Outstanding Loan Portfolio

Total Revenue = Interest Income + Fees and Other Charges

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“Duplicate” accounts

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Loan Cycle Validation

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How to Verify the Accuracy of Loan Balance

Identify the repayment frequency to determine the principal amortization

Determine the number of “should be” payments since the first payment

Multiply the principal amortization to the number of “should be” payments and deduct the product from the loan amount disbursed

The difference should be equal to the listed loan balance

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Determining the Lump Sum Payments

Identify the repayment frequency of the account Determine the correct amortization by dividing

the loan disbursed amount with repayment frequency or installment

Compare the result with the Amount of Amortization found in the report.

Another way of knowing if the payment schedule is lump sum: when the amortization amount listed is either zero or equal to the loan amount granted or disbursed

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PAR Report versus Listing of Loans

PAR Report Listing of LoansTotal: Number of Borrowers Total: Number of Accounts

Total: Loan Amount Overdue Total: Amount Overdue

Total: Outstanding Balance Total: Loan Balance

Sub-Total: Outstanding Balance

Total: Portfolio at Risk

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PAR Report versus Listing of LoansPAR Report Analysis    

       

  Outstanding Outstanding Delinquency

  Balance Balance % Analysis

Current 5,700,328.34 89.51%  

1 - 7 days 128,997.24 2.03% 19.31%

8 - 14 days 131,678.68 2.07% 19.71%

15 - 30 days 114,920.96 1.80% 17.20%

31 - 60 days 108,665.95 1.71% 16.27%

  484,262.83   72.50%

       

61 - 90 days 66,302.14 1.04% 9.93%

Over 90 days 117,403.93 1.84% 17.58%

  183,706.07   27.50%

       

Sub-Total 667,968.90 10.49%  

Total 6,368,297.24 100.00%