Market Survey Results and Implications for Product Design

1. Market Survey Results and Implications for Product Design TRAINING WORKSHOP FOR BANKS INTERESTED IN OFFERING HOUSING MICROFINANCE

2. Background • Total Number of Respondents: 100 • Period of Survey: 2010 March 15 - April 15 • Location of Survey: Municipalities of X and Y • 12 barangays • Table on Distribution of Respondents

3. Is there demand for housing loan?

4. Demand for HMF • POINTS TO CONSIDER • Given the data gathered, is there a demand for HMF? • 88.10% of the respondents are interested to get a loan for housing purposes • POINTS TO CONSIDER • Is the demand manifested in past and planned home improvements? Table on Past and Planned Home Improvements, in Percent

5. Demand for HMF • POINTS TO CONSIDER • Where did the majority of funds for past improvements come from? Sources of Majority of Funds for Past Home Improvements

6. Demand for HMF • POINTS TO CONSIDER • Is there a demand from existing borrowers? • Of the 38 respondents who received a loan from the RB in the last 2 years, 33.33% used a part of these for housing purposes. • % of loan amount used for the purpose cited: minimum of 2% maximum of 100% and median of 60%

7. What are the loan purposes to be financed by housing MF?

8. Loan Purpose • POINTS TO CONSIDER • What are their past and planned house improvements? Table on Types of Past and Planned Home Improvements (multiple answers)

9. Loan Purpose • POINTS TO CONSIDER • Given their house situationer, what are the probable improvements? • Housing Situationer: • Majority of houses age more than 15 years (47.47%) • Respondents and their families lived in their house for more than 15 years too (55.56%) • 71.72% have two or more bedrooms in their house • 67.68% owns both toilet/bath and kitchen while 19.19% owns either a toilet/bath or a kitchen • Houses made from stable materials • Roof: corrugated iron 79.8% • Floor: concrete 56.57% • Walls: Concrete 47.47% • Piped water inside the house 56.57% • Electricity from formal power line connection 89.90%

10. What will be the loan amount & term?

11. Loan Amount and Term • POINTS TO CONSIDER • What will be the range of loan amount and term? • How should bank configure terms relative to size of loan and amortization? Table on Preferred Loan Amount Term and Amortization Table on Cost of Improvements in the Past Year

12. Loan Amount and Term • POINTS TO CONSIDER • Basing on how much each of this improvement will cost, what will be the loan amount range? Table on Types of Past and Planned Home Improvements (multiple answers)

13. What are the eligibility criteria?

14. Target Market • POINTS TO CONSIDER • Who are the target market of the bank’s HMF? Existing clients? Borrowers and/or Depositors? Microfinance and/or Regular Loan borrowers? • What are the risks involved in offering the product to each market? Table on Distribution of Respondents

15. PersonalProfile • POINTS TO CONSIDER • What age range will be eligible to apply for a loan? • Should the bank offer the product to both male and female? • Will the bank consider the applicant’s civil status? • Age ranges from 21 to 70, median of 45 • Predominantly female (86%) • Majority married (89%) • POINTS TO CONSIDER • What will be the residency requirement, if any? • Majority of houses age more than 15 years (47.47%) • Respondents and their families lived in their house for more than 15 years too (55.56%) • Own the house 88%, • with title 48%, • Hired builder 78% • owned lot 68%

16. Income Source • POINTS TO CONSIDER • Should the bank offer the product to entrepreneurs or salaried employees? • Most businesses are engaged in trade (81%) • For those employed, most private (42%) • Table on Regular Sources of Household Income

17. Business Profile • POINTS TO CONSIDER • Exclude or include those without permit in eligible borrowers? Why? • What are the risks here? • 42% businesses are registered • Chart on Growth of Business Profits over the Past 12 Months

18. What collateral/security will be required?

19. Collateral/Security • POINTS TO CONSIDER • What types of collateral will the bank require? • At what loan amount should the bank require which collateral? Table on Types of Available Loan Collateral (multiple answer)

20. What is the product’s seasonality ?

21. Seasonality • POINTS TO CONSIDER • What month does the bank expect higher demand? • Table on Preferred Months to Make House Improvements • They are most likely to make these improvements on March, July and December; while 4% remains undecided

22. Should HMF have a savings component? Is there a need for a separate savings product for housing purposes?

23. Savings – Contractual or Separate Product • POINTS TO CONSIDER • Should bank integrate contractual savings in the loan product design? What will be the policy on withdrawal? • Can the RB see an opportunity in this deposit market? • Should the RB design a goal-related (housing) savings product? What basic features could be included? • With those who have planned improvements, only 10% have savings • While 19% have been saving building materials

24. Who are your competitors?

25. Loans and Savings Experience • POINTS TO CONSIDER • Given the data above, what are the opportunities of the RB in the deposit market? • Do depositors prefer the RB over other financial institution? Why? • What is the RB’s competitive edge over other financial institutions? Table on Savings Deposits with Banks

26. Loans and Savings Experience • POINTS TO CONSIDER • What are the products and terms/conditions offered by other creditors? • How should the bank target those afraid/shy to borrow from a bank? • What marketing activities/campaigns should bank undertake to increase awareness of bank and its loan products? Table on Usual Source of Credit, besides the RB