3 PORTFOLIO AND OUTREACH

This section defines a number of items frequently reported by MFIs and other financial institutions. Some terms are also used to calculate financial ratios. Please note that some items in this section require that the data entered reflects only the values and amounts incurred during the current accounting period (e.g. month or quarter), and does not represent a total from the beginning of the financial year up to date. Those items are marked “during period”. All other items are labeled “end of period”.

Portfolio Activity

A01 Value of loans disbursed (during period):

The value of all loans disbursed during the period, regardless of whether they are subsequently performing, non-performing or written off. This value should not be confused with gross loan portfolio, which is by definition, less than the value of loans disbursed.

A02 Number of loans disbursed (during period):

The number of loans disbursedduring the period. For MFIs using a grouplending methodology, the number of loansshould refer to the actual number of loansreceived by groups, not the individuals ofthose groups.

A03 Number of clients taking first loan (individuals and members of groups) (during period):

The number of newborrowers who took a loan for the first timeduring the period. This number should bebased on the individual borrowers (individualclients and members of groups) rather thanthe number of groups.

A04 Number of loans fully repaid (during period):

The number of outstanding loansthat have been fully paid off during the period.

A05 Value of loan payments received (during period):

The value of all loan paymentsreceived during the period.

A06 Number of clients receiving loans as individuals, excluding group loans (end of period):

The number of individuals receivinga loan who are not part of a groupguaranteeing each other's loans. Commonlyreferred to as “individual loans”. Often theseloans are secured with some type of formalcollateral (but not always).

A07 Number of outstanding loans (end of period):

This refers to the number of loanswhich have an amount outstanding. Loanswhich have been paid in full are not considered in this number. This number may be greater than the number of active loan clients as individual clients may have more than one loan outstanding (if allowed by the MFI).

A08 Value of outstanding loans (end of period):

The total amount of loans outstanding in Shillings as of the end of the period (all loans not yet repaid or written off). This figure is equal to the Gross loan portfolio (B04) on the Balance Sheet.

Outreach

A09 Total number of active borrowers (individuals and members of groups) (end of period):

The number of individuals who currently have an outstanding loan with the MFI. This number is based on the individual borrowers (individual clients and members of groups) rather than the number of groups.

A10a Number of borrowers with income below poverty line (individuals and members of groups) (end of period):

The “poverty monthly income level” is set by default to 150,000 USh and can be adjusted by each institution individually in the PMT setup. Borrowers below this limit are considered to be “poor”. While this approach is certainly disputable, it provides an indication of the typeof client reached by the institution (proxy for poverty outreach). This number should be based on the individual borrowers (individual clients and members of groups) rather than the number of groups.

A10b Number of outstanding loans below poverty line (end of period):

The “Povertyloan size limit” is set by default to 200,000USh and can be adjusted by each institutionindividually in the PMT setup. An individualtaking a loan below this level is considered tobe “poor”. While this approach is certainlydisputable, it provides an indication of the typeof client reached by the institution (proxy forpoverty outreach). Note: For some MFIs,clients must begin with a loan amount lowerthan 200,000 USh, so this should be takeninto consideration and should be viewedalongside the number of clients takingsubsequent loans.

A10c Value of outstanding loans to clients below poverty line (end of period):

Note: For some MFIs, clients must begin with a loan amount lower than 200,000 USh, so this should be taken into consideration and should be viewed alongside the number of clients taking subsequent loans.

A11a Number of borrowers in the agriculture sector (individuals and members of groups) (end of period):

The number ofborrowers that have outstanding agriculturalloans. An agricultural loan product is a loanthat is given for the generation of income andsupporting of expenses related to an

agricultural enterprise. Agricultural enterprises include value chain actors in e.g. crops, forestry, fisheries, apiary, animal and poultry. This number should be based on the individual borrowers (individual clients and members of groups) rather than the number of groups.

A11b Number of outstanding loans in the agriculture sector (end of period):

Thenumber of loans disbursed that are intendedfor use in the agriculture economic sub-sector.

An agricultural loan product is a loan that is given for the generation of income and supporting of expenses related to an agricultural enterprise. Agricultural enterprises include value chain actors in e.g. crops, forestry, fisheries, apiary, animal and poultry.

A11c Value of outstanding loans in the agriculture sector (end of period):

Thevalue of loans disbursed that are intended foruse in the agriculture economic sub-sector.

A12a Number of female borrowers (individuals and members of groups) (end of period):

The number of female borrowers that have outstanding loans with the institution. This number should be based on the individual borrowers (individual clients and members of groups) rather than the number of groups.

A12b Number of outstanding loans to female borrowers (end of period):

The number ofoutstanding loans that are taken by femaleclients.

A12c Value of outstanding loans to female borrowers (end of period):

The value ofoutstanding loans that are taken by femaleclients

A13a Number of borrowers in rural branches (individuals and members of groups) (end of period):

The number of borrowers with outstanding loans that are managed in rural branches. This number should be based on the individual borrowers (individual clients and members of groups) rather than the number of groups. By common definition, rural areas comprise human settlements with small populations and the rural space is dominated by farms, forests, water, mountains and/or desert. Typically, rural people have agriculture as their main occupation; they are farmers, nomads, pastoralists, or fishermen. They deal with animal production, transformation and marketing of land and forest products and services. Rural communities are diverse culturally, socially and economically but by large, gainful employment options are limited and many rural groups are self-employed and lack access to adequate basic social services.

A13b Number of outstanding loans in rural branches (end of period):

The number ofoutstanding loans that are managed in ruralbranches. By common definition, rural areascomprise human settlements with smallpopulations and the rural space is dominated by farms, forests, water, mountains and/or desert. Typically, rural people have agriculture as their main occupation; they are farmers, nomads, pastoralists, or fishermen. They deal with animal production, transformation and marketing of land and forest products and services. Rural communities are diverse culturally, socially and economically but by large, gainful employment options are limited and many rural groups are self-employed and lack access to adequate basic social services.

A13c Value of outstanding loans in rural branches (end of period):

The value ofoutstanding loans that are managed in ruralbranches. By common definition, rural areascomprise human settlements with smallpopulations and the rural space is dominated by farms, forests, water, mountains and/or desert. Typically, rural people have agriculture as their main occupation; they are farmers, nomads, pastoralists, or fishermen. They deal with animal production, transformation and marketing of land and forest products and services. Rural communities are diverse culturally, socially and economically but by large, gainful employment options are limited and many rural groups are self-employed and lack access to adequate basic social services.

Savings

A14 Number of savings accounts (end of period):

The total number of savingsaccounts maintained by the MFI for its clients.

A15 Total number of savers (individuals and members of groups) (end of period):

Thetotal number of individuals who currently havefunds on deposit with the MFI (either compulsory and/or voluntary). This number applies to deposits that are held by the MFI and deposits held in other institutions by the MFI’s clients for the purpose of accessing credit from the MFI. Even though it is possible that a single deposit account may represent a group of savers (multiple depositors / borrowers), the number should be based on individuals rather than the number of groups.

A16a Number of clients with compulsory savings (individuals and members of groups) (end of period):

The number ofclients who are required to maintain obligatorysavings as a condition of an existing or futureloan. This represents the number ofdepositors that have deposits that are recorded on the MFI’s Balance Sheet and should not include depositors who maintain deposits with other financial institutions that are not booked in the MFI’s name. Even though it is possible that a single deposit account may represent a group of savers (multiple depositors / borrowers), the number be based on individuals rather than the number of groups.

A16b Value of compulsory savings (end of period):

The value of savings that an MFI’sclients hold with the MFI as a condition of anexisting or future loan. These are deposits thatare recorded on the MFI’s Balance Sheet and should not include deposits maintained withother financial institutions that are not bookedin the MFI’s name. Hence, this amount shouldbe equal to the Balance Sheet item B16.

A17a Number of clients with voluntary savings (individuals and members of groups) (end of period):

This is the number of clients who voluntarily maintain savings with an MFI but are not required to do so as a condition of an existing or future loan. This represents the number of depositors that have deposits that are recorded on the MFI’s Balance Sheet and should not include depositors who maintain deposits with other financial institutions that are not booked in the MFI’s name. Even though it is possible that a single deposit account may represent a group of savers (multiple depositors / borrowers), the number should be based on individuals rather than the number of groups.

A17b Value of voluntary savings (end of period):

The value of savings that an MFI’s clients maintain voluntarily and are not required as a condition of an existing or future loan. These are deposits that are recorded on the MFI’s Balance Sheet and should not include deposits maintained with other financial institutions that are not booked in the MFI’s name. Hence, this amount should be equal to the Balance Sheet item B17.

A18a Number of female savers (individuals and members of groups) (end of period):

Thenumber of females who currently have fundson deposit with the MFI (either compulsory and/or voluntary). Even though it is possible that a single deposit account may represent a group of female savers (multiple depositors / borrowers), the number should be based on individuals rather than the number of groups.

A18b Value of savings by female clients (end of period):

The value of savings that the MFI’sfemale clients hold with the MFI (compulsoryas well as voluntary).

A19a Number of savers in rural branches (individuals and members of groups) (end of period):

The number of individuals who currently have funds on deposit with the MFI (either compulsory and/or voluntary). Even though it is possible that a single deposit account may represent a group of savers (multiple depositors / borrowers), the number should be based on individuals rather than the number of groups.

A19b Value of savings in rural branches (end of period):

The value of savings that the MFI’sclients hold in rural branches (compulsory aswell as voluntary).

Portfolio Quality

A20 Value of arrears (principal plus interest) (end of period):

The value of expectedrepayments (both principal and interest) whichwas not repaid at the end of the period.

A21 Number of loans in arrears > 1 day (end of period):

The number of loans that have oneor more payment which has become due buthas not been received at least one day afterthe expected repayment date.

A22 Value of outstanding loan balance with arrears > 1 day (end of period):

This iscommonly referred to as Portfolio at Risk(PAR 1) and is the outstanding balance of all loans with an amount in arrears. This measures the amount of default risk in the portfolio. In distinction to Arrears (A20), Portfolio at risk includes the total outstanding balance of the loan and not just the amount that has become due and not been repaid. Generally PAR only includes principal outstanding and not interest unless the MFI capitalizes (records on the Balance Sheet) interest payments as they become due and are not received. So this item records the total principal amount outstanding of all loans that have at least one payment that has become due but has not been received at least one day after the expected repayment date.

A23 Number of loans in arrears > 30 days (end of period):

The number of loans that haveone or more payment which has become due but has not been received at least 31 days after the expected repayment date.

A24 Value of outstanding loan balance with arrears > 30 days (end of period):

This iscommonly referred to as Portfolio at Risk (PAR 30) and is the outstanding balance of all loans with an amount in arrears. This measures the amount of default risk in the portfolio. In distinction to arrears (A20), Portfolio at Risk includes the total outstanding balance of the loan and not just the amount that has become due and not been repaid. Generally PAR only includes principal outstanding and not interest unless the MFI capitalizes (records on the Balance Sheet) interest payments as they become due and are not received. So this item records the total principal amount outstanding of all loans that have at least one payment that has become due but has not been received at least 31 days after the expected repayment date.

A25 Value of outstanding loan balance with arrears by age of arrears (end of period):

The Portfolio at risk categorized by age of arrears. These categories conform to industry standard ageing categories.

Write-Offs

A26 Amount written off during period:

The value of loans that have been recognized for accounting purposes as uncollectible and written off during the period (sometimes called a charge-off). A write-off is an accounting procedure that removes the outstanding balance of the loan from the Gross loan portfolio and from the Loan loss reserve. Thus the write-off does not affect the balance of the Net loan portfolio, Total assets, or Equity, unless the Loan loss reserve was insufficient to cover the amount written off. In this case an additional amount of Loan loss reserve is recorded as a Provision for loan losses expense on the Income Statement thereby increasing the Loan loss reserve on the Balance Sheet (and reducing the amount of Net income on the Income Statement to be transferred to the Balance Sheet as Retained earnings). This results in an equal reduction to both sides of the Balance Sheet. Most MFIs have policies requiring a write-off of all loans past due more than a certain number of days (if no policy exists, there should be one established – generally by the Board – and followed). It should be noted that a write-off does not have any bearing on the MFI’s efforts to collect the delinquent loan or the client’s obligation to pay. It is not uncommon that MFIs recover loans after they have been written-off. In this case, the payment received is recorded as income on the Income Statement and does not affect the Gross or net loans outstanding on the Balance Sheet.

A27 Number of loans written off during period:

The number of loans which have been written off during the period.

Dividends and Exchange Gains / (Losses)

A28 Amount of dividends paid (during period):

The value of the dividends paid during the period.

A29 Foreign exchange gains / (losses) (end of period):

Gains or losses caused by exchangerate fluctuations for funds held in foreignexchanges.

Data for Solvency Calculation (SACCOs only)

A30 Number of members (end of period):

The number of SACCO members.

A31 Balance of loans delinquent greater than 12 months (end of period):

The outstandingbalance of all loans with an amount in arrearsgreater than 12 months.

A32 Balance of loans delinquent from 1 to 12 months (end of period):

The outstandingbalance of all loans with an amount in arrearsfrom 1 to 12 months.

A33 Problem assets (losses that will be liquidated) (end of period):

This value is for“junk assets” or assets of dubious value thatthe SACCO maintains on its balance sheets.

This includes:

Doubtful Assets: situations where the SACCO has taken uncollectible loans out of their loan portfolio and placed them on the balance sheets as an account receivable. Other assets of this nature include investments in second-tier organizations or other financial institutions that have gone bankrupt or are in financial difficulty.
Accounting Discrepancy – Assets: when there is an error in assets in the balance sheet
source document that is being entered. Rather than adjusting an existing account at random, the adjustment can be entered in this field so that when the discrepancy is located at the SACCO the adjustments can be made quickly.Other Problem Assets: assets of dubious value, such as a fixed asset that should have been depreciated more quickly or assets for which the cost has been overstated.

A34 Total value of member shares (end of period):

The value of member shares as ofthe end of the period.

Human Resources

A35 Total number of staff in the head office (end of period):

The number of individualswho are employed by the MFI in the headoffice.

A36 Total number of staff in branches (end of period):

The number of individuals employedby the MFI in the branch network.

A37 Total number of loan officers (end of period):

The number of staff whose mainactivity is direct management of a portion ofthe loan portfolio. A loan officer is the staffmember of record who is directly responsiblefor arranging and monitoring client loans. Theterm “loan officer” or “credit officer” refers tofield personnel or line officers that interact withthe client, but not to administrative staff oranalysts who process loans without directclient contact. Loan officers include contractemployees who may not be part of permanentstaff, but are contracted on a regular basis inthe capacity of loan officer. The number ofloan officers is reported on a full-time equivalent(FTE) basis. In cases where a staff member manages some loans, but also has other duties (for instance, a supervisor), this indicator should include a fraction < 1 that represents the amount of time spent doing loan officer duties. For instance, an MFI that has 5 loan officers and one supervisor that manages some loans may report 5.5 as the number of loan officers.

A38 Number of branches (end of period):

Number of branches of the institution. This does not include the head office; so if an institution has no branches, the amount would be zero.

Miscellaneous

A39a Nominal lending rate (end of period) (% per month):

This should be the nominal interestrate at which loans are ordinarily given out toclients. It should either be the interest rate ofthe most commonly used loan product or anaverage of several loan products’ interestrates – whichever is more representative ofthe MFI’s business.

A39b Effective lending rate (end of period) (% per month):

This should be the effectiveinterest rate at which loans are ordinarilygiven out to clients. It should either be theinterest rate of the most commonly used loanproduct or an average of several loanproducts’ interest rates – whichever is morerepresentative of the MFI’s business.

The effective lending rate is likely to differ from the nominal lending rate usually advertised by the MFI, due to the addition of other fees charged. The computation of the effective rate can vary depending on the type of fees included, e.g. loan application fees, loan processing fees, loan insurance fees, monthly service charges, etc., which are to be added to the entire amount paid by the client. Hence, the effective lending rate will always be higher than the nominal lending rate and displays the true “cost” of borrowing. If an MFI does not yet compute its effective lending rate, it should seek advice on how to do so and disclose it to its clients as a form of customer care and sound practice.

A39c Interest on savings (end of period) (%):

This is the savings rate commonly paid on ordinary, voluntary savings. In case the MFI offers several savings products, the average interest rate should be reported. However, this should not include the interest rate of e.g. time deposits.

A40 Effective repayment rate (end of period) (%):

This measures how well loans are beingrepaid by the institution’s clients. This isfrequently looked at as one of the figuresindicating the general health of an institution’sstate of business. A simple approach would be to calculate total payments received divided by total amount due. However, this would rather be the “on-time repayment rate”. A formula to compute the effective repayment rate would be: Total amount due at the beginning of the period less total payments in arrears at the end of the period divided by total amount due at the beginning of the period. Any payment a day or more late is considered in arrears and thus affects this indicator.