PCFC loan portfolio hits P2.4-B

DAVAO CITY – The Peoples Credit and Finance Corp. (PCFC), the country’s main conduit for microfinance lending, has registered a total loan portfolio of P2.35 billion in end September this year, or 17 percent higher than the P2 billion recorded for the whole of 2002. The loan portfolio has been growing by over 25 percent in the past four years.

The tremendous growth rate has prompted the PCFC hierarchy to target a P3.17-billion loan portfolio for next year.

The PCFC is a government-owned and controlled corporation (GOCC) mandated by law to service conduits or microfinance institutions (MFIs), which in turn would directly lend to microentrepreneurs. It is under the guidance of the Land Bank of the Philippines (LBP).

In fact, it is servicing over a million households nationwide this year or roughly eight months ahead of schedule. Its original target was set at one million households by June next year.

PCFC president and chief executive officer Iluminada L.E. Cabigas said that they are targeting a minimum 250,000 new micro-entrepreneurs among the poorest of the poor next year. The estimated potential micro-borrowers are over 4.2 million.

From a mere 66,709 micro-borrowers by end 1997, it grew to 217,239 two years later. In end 2001, it reached 482,243 then ballooned by 65 percent to 791,099 households.

The main MFIs tapping the services of PCFC are non-banking institutions such as non-government organizations (NGOs), cooperatives and lending investors while the banking institutions are rural banks, cooperative banks, and thrift banks.

The NGOs has always been the traditional leader among the MFIs, but rural banks increased its involvement in the recent years. It is second best MFI as of last record date accounting for 319,581 households behind the NGOs client base of 429,123.

Microlending is becoming so profitable that it now accounts for an average 25 percent of the microfinance-oriented rural bank’s loan portfolio.

Non-banking MFIs accounted for a total 536,781 micro-borrowers while the remaining 463,231 microentrepreneurs were serviced by banking MFIs.

What makes it extremely atrtractive however is the high repayment level which could be the envy of thrift and commercial banks.

Cabigas boosted that since its inception, microlending never recorded a repayment level lower than 98 percent. In fact, the highest level was recorded last September reaching 99.80 percent.

"The poor are bankable. They are honest and profitable," the PCFC chief executive said, adding that the GOCC has an almost negligible three percent past due ratio.

Of the total loan portfolio, the island of Luzon still accounts for the biggest chunk of 55 percent followed by Visayas (24 percent) and Mindanao (21 percent).

In terms of penetration, PCFC has covered all the 79 provinces and 115 cities nationwide. However, it still has to reach the remaining 228 barangays of the total 1,495 nationwide. Cabigas said that they are still searching for credible and reliable MFIs in the Southern Luzon and Bicol regions.