Competition is generally viewed as positive because this usually drives prices down which makes the customers win. The Philippine microfinance industry is considered to be near its mature stage. Competition is crowding out smaller players and is also considered as a barrier to entry.
The estimated reach of the Philippine microfinance industry is approximately five million. With a poverty incidence of 25%, that gives approximately 5 million households that are below the poverty line. This matched the current estimate for microfinance reach which targets poor households which is an indication of market saturation.
|MFI||Gross Loan Portfolio|
(In Million USD)
|# of Borrowers||Reporting Period|
Business generation follows overall market trends and may affect profitability and capitalization during times of intense competition. Competition is fierce in the Philippine microfinance industry. In any given barangay, there are about five to 19 microfinance institutions competing in the same market.
Commercial banks are also gaining interest in the industry. Their strategy is to acquire existing microfinance institutions. Banco de Oro Unibank, the largest commercial bank in the Philippines acquired One Network Bank which has the largest branch network among rural banks. East West Bank also acquired Green Bank of Caraga. Rizal Commercial Banking Corporation has Rizal Microfinance Bank.
Closure of rural banks that operate microfinance units also pose a risk to the industry. In 2010, there were more than 700 microfinance institutions, as of June 2016 almost 200 rural banks were closed down. Financial institutions offering microfinance services may suffer a bad reputation due to these closures.
The table compares growth rates of the largest microfinance institutions worldwide gathered from Mix Market, an online platform that compiles data on institutions in the financial inclusion sector.
The microfinance institutions chosen for the comparison are institutions either with more than 1 million clients, or the largest MFI player in the country. The countries chosen for the comparison are developing countries that have similar conditions to the Philippines and have microfinance operations.
|Five Years Growth Rate Comparison|
|Country||Microfinance Institution||2011||2015||Growth Rate|
|Bharat Financial (SKS)||4,256,719||4,636,669||8%|
|Colombia||Banco Caja Social||625,546||787,378||21%|
|Banco Mundo Mujer||0||549,616||100%|
|Compartamos – GTM||14,451||75,979||81%|
|Dominican Republic||Banco ADOPEM||145,995||217,992||33%|
|Average Growth Rate||29%|
The number of active borrowers is used as an indicator of growth as outreach measures how many clients have been assisted with financial services. Furthermore, the number of borrowers is an effective tool to determine the MFI’s reach in line with it’s vision of financial inclusion.
As seen from the data below, the MFI with the highest growth rate is Banco Mundo Mujer from Colombia. The MFI with the lowest growth rate is Genesis Empresarial, with a negative growth rate. The average growth rate for all MFIs is 29%, making the giant microfinance institutions in the Philippines above average in performance.
Since the 1980s, MFIs have proliferated all over the country. The industry has expanded from providing loans to rural poor to include urban poor clients.
Moreover, MFIs have begun opening branches and increasing their operations to include hard-to-reach areas. This caused microfinance to be a widespread practice in the country. In 2011, the penetration rate of the microfinance industry in the Philippines is 45%.
In 2015, it is estimated that the penetration rate could be as much as 80% due to the aggressive expansion of the top 10 microfinance institutions. The penetration rate is computed by dividing the current number of microfinance clients by the number of potential clients.
Potential clients are those who live in the area and have their own microenterprises. This is usually counted by getting the number of households in the area and subtracting those who are in the middle-income bracket and higher.
Only the number of households is counted because prudent MFI practices dictate that there should only be one member from each household to reduce the risk of over-indebtedness of the family.
Sources of information and practical tips on money management
Mga bagay na dapat mong malaman sa insurance
Mga iba pang babasahin tungkol sa insurance:
- Iba’t-ibang klase ng insurance
- Must-have insurance for people in their 30s
- Ang pinakamatatag na insurance company sa Pilipinas (Part 1)
- Ang pinakamatatag na insurance company sa Pilipinas (Part 2)
- Anong insurance dapat mayroon ang mga bata?
- Gusto kong paghandaan ang future ng anak ko, tama bang investment-linked insurance ang kinuha ko?
- Paano gumagana ang ibinabayad na premium sa insurance para mabigyan tayo ng proteksyon sa panahon ng emergency
- Kung akala mo insurance ang education plan, basahin mo ito
- Insurance para sa mahirap
- Bakit mahal ang VUL o investment-linked insurance
Mga bagay na dapat mong iwasan sa insurance
Ito ang listahan ng mga articles na isinulat ko at videos na nagawa ko tungkol sa VUL para makakuha tayo ng mas sulit at mas epektibong insurance coverage.
- Bakit mahal ang VUL?
- Bakit mas maganda ang BTID kaysa VUL?
- Epektibong paggawa ng BTID upang masulit ang pinaghirapang pera sa insurance at investment
- Paanong mas maliit ang fund value sa VUL kaysa sa BTID?
- Ok ba talaga ang VUL kasi protected ka nito beyond 65 years old compared to term?
- Ok ba talaga ang VUL para sa estate taxes?
- Why Not VUL?
- Anong gagawin ko kung may VUL na ako? Paano ko ito ititigil?
- Pagkakaiba ng savings sa VUL
- Mga terms and conditions na kailangang hanapin kung bibili ng VUL
- Paano pumili ng mabuting insurance agent
Different kinds of investments
Preparing for retirement
How are articles on retirement
- 10 Commandments of retirement
- Mga kinakatakutan ng retirees at paano ito paghahandaan
- Magkano ang matatanggap mong SSS pension upon retirement
Watch videos on money management
Get in touch with Sir Vince
Join online groups of Sir Vince
Join Sir Vince blog newsletter