KMBI 2019 Integrated Annual and Sustainability Report

(A Microfinance NGO)

2019 I N T E G R AT E D A N N U A L & SUSTAINABILITY REPORT

Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO)

1

OUR VISION

OUR MISSION

To see people in communities live in abundance with strengthened faith in God and in right relationship with their fellowmen and the rest of creation.

KMBI is a Christ-centered organization existing to advocate and work for the integral transformation of the lives of low-income people and their communities, by providing responsive sustainable microfinance and non-financial services.

CORE VALUES Christian Faith People’s Well Being Good Governance Continuous Improvement Teamwork

YOUR FEEDBACK IS IMPORTANT! If you have questions or concerns related to the publication of this report, you may reach out to us at:

ABOUT

Corporate Affairs Office Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO) 12 San Francisco St., Karuhatan, Valenzuela City (02) 8291-14-84 to 86 loc 109 http://www.kmbi.org.ph

THIS REPORT The 2019 Integrated Annual and Sustainability Report is the third integrated report of KMBI. The report is prepared in accordance with the Global Reporting Initiative (GRI) Standards: Core option, and demonstrates KMBI’s commitment to keeping its stakeholders, including employees, Program Members, partners and other community members abreast of the organization’s efforts towards sustainability. 102-54

ABOUT THE COVER

Hundreds of women microentrepreneurs convene for the Center Leaders’ Conference (CLC) in Davao. This is one of the several legs of CLC being conducted nationwide.

102-53

TABLE OF

OF CONTENTS 04 06 12 14 16 18 20 22 30 32 36 39

JOINT MESSAGE OF THE CHAIRMAN AND PRESIDENT OUR GOVERNANCE OUR CLIENTS OUR PARTNERS PRODUCTS AND SERVICES 2019 AT A GLANCE PAGHANDOM SA DAMLAG OUR STAKEHOLDERS MATERIAL TOPICS WHERE WE SERVE GRI INDEX CHECKLIST 2019 AUDITED FS

JOINT MESSAGE

OF THE CHAIRMAN AND PRESIDENT

It gives us immense pleasure to share with you some momentous activities in 2019. We would like to our colleagues on the Board for their valuable guidance and contribution in steering the organization to higher levels of achievement in 2019. We would also like to thank our management team for its collaboration and hard work in building on our strong operations.

2019 has been a remarkable year in many respects. Our credit operations continued to expand. We opened five (5) new branches, eleven (11) satellite units, two (2) Agri Loan Program units, and upgraded nine (9) satellite units to branches. At the end of 2019, KMBI operates in seventy-nine (79) branches and twenty-two (22) satellite units.

Financial Results At the end of the year, KMBI had a cash ending balance of Php 95 Million.

Revenues for 2019 reached Php 764.94 Million with an 11% increase from 2018. Our fund balance is now at Php 592.83 Million, up by 13.26% from the Php 523.40 Million level at the end of 2018.

Board Governance and Leadership Since our AGM last year, we reviewed and consequently made some changes to the composition of the membership of the Board committees, particularly the installation of the Finance Committee. One of our Trustees, Ms. Mila M. Bunker, assisted KMBI on a consultancy engagement, in developing risk management competencies.

Advocacy and Transformation We participated in the mass action and prayer gathering conducted by APPEND and MCPI on November 27, 2019 at the Senate of the Philippines.

We brought some of our clients from the nearby branches to the Senate as a

4

KMBI 2019 Integrated Annual and Sustainability Report

102-14, 102-15

show of force so that the position of the microfinance industry to retain the tax incentive of MF NGOs would be heard.

23% of our organizational activities were dedicated to our Program Members through our non-financial services such as distribution of transformational materials, conduct of Center Leaders’ Conference, Branch Initiated Activities, Cleanliness Drive, Scholarship Program, Wellness Caravan and other related activities.

Sixty-nine (69) branches conducted Center Leaders’ Conference with a total of 10,300 Center President attendees. 199 clients from TSKI and 27 clients from UPLIFT also attended our Center Leaders’ Conference. A total of 483 couples sealed their vows in our mass weddings. 1,555 Program Members attended our Wellness Caravan. In 2019, we released 159 scholarships grants to deserving children of our Program Members. Since its inception in 2015, Dalawang Iskolar per PUH Program reached 993 scholarship grants.

A total of 27 Outstanding KMBI Program Members joined our 2019 Program Members’ Appreciation Activities. They visited one of the centers in our Antipolo Branch and were also taken for a tour around Casa Santa Museum.

Program Members also participated in the Entrep Day Program, themed “Empowering MicroEntrePinoy for a better tomorrow.” The event was facilitated by the Entrpreneurial Development Division of KMBI in partnership with the Department of Trade and Industry (DTI), Social Security System (SSS), Pag-IBIG, PhilHealth, Bureau of Internal Revenue (BIR), Technical Education and Skills and Development Authority (TESDA), and ChinaBank. The activity aimed to open KMBI Program Members to wider market opportunities by showcasing their products.

Networking and Partnerships Membership subscriptions and network lineaging with like-minded institutions have remained consistent in 2019. Through the initiatives of the Entrepreneurial Development Division of the Transformational Development and Training Group (TDTG) and KMBI Development Foundation Inc. (KDFI), we partnered with the Department of Trade and Industry (DTI) and Technical Education and Skills Development Authority (TESDA), to conduct skills training. Programs like these aim to help Program Members acquire basic entrepreneurial skills that they may employ to generate profit and increase their business productivity.

What lies ahead?

We have started to work on the digitalization of our systems and processes as technological innovations in the Microfinance industry around the country has continued unabated. DUNAMIS, our in-house information system, has already been rolled-out to all branches and satellite units.

KMBI’s project with International Labour Organization (ILO) is still on-going.

The said project aims to develop an integrated risk management solutions for our clients. They have just completed the market research and awareness campaign milestones. Based from the results of the market research, the preferred financial solutions among the clients are the following: health insurance offering in- patients benefits, life insurance, funeral and calamity insurance. Credit was highlighted as the preferred tool to cope with risk events.

With all we want to accomplish this coming year, your membership, participation, and time will certainly help us to achieve our goals in 2020.

Let us continue the servant spirit we have in the General Membership and throughout KMBI.

We also opened our organization to foreign visitors who would like to benchmark with the best practices and current processes of KMBI. As requested by MCPI and APRACA, foreign visitors—mostly bankers and microfinance practitioners— visited our office and branches in 2019.

We have always sought to be diligent in our services to our Program Members, but our strategies for the next few years will intensify this focus as we set another five- year business plan, determinedly and wholeheartedly.

Masaya dito sa KMBI!

DAVID D. GUTIERREZ CHAIRMAN

EDUARDO C. JIMENEZ PRESIDENT

Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO)

5

<30 y/o: 0

30-50 y/o: 1

>50 y/o: 8

OUR GOVERNANCE

102-18, 405-1a

The Board is responsible for providing governance, oversight of the Strategic Directions, and approval of applicable policies and enhancements in the systems and processes of the organization. It also promotes the interests of the stakeholders through the products and services being offered by KMBI. The Board has also delegated to the Management the authority to manage the day-to-day operations of the organization.

The Board of Trustees and Management firmly believe that full commitment to the standards of corporate governance is fundamental to ensure that we are able to protect the interests of all shareholders, integrity is intact and sustainability of the organization’s operational and financial performance is achieved.

The KMBI Board of Trustees. From left to right: Mr. Lemuel David A. Salmo, Trustee; Bishop Jose D. Dalino, Trustee; Mr. Eduardo C. Jimenez, President, Ms. Mila Bunker, Trustee; Dr. Virginia P. Juan, Corporate Secretary; Mr. David D. Gutierrez, Chairman; Dr. Rodolfo P. Estigoy, Trustee; and Mr. Edgardo F. Garcia, Corporate Treasurer.

BOARD COMMITTEES Trustees serve on Committees that are assembled to assist the Management in the decision-making on new frameworks, policies and procedures. The Board regularly meets every quarter to review the Strategic Plans, and the President updates the Board on Operational and Financial performance of the organization.

The Corporate Governance and Membership Committee recommends and nominates new individuals and professionals, who are experts in their chosen fields, to join the General Membership. The Committee pre-screen and shortlist possible candidates nominated to become a member of the General Membership, and if elected, can become member of the Board of Trustees.

The Training, SPM and Transformation Committee recommends frameworks, policies, policy-related guidelines and budget related to, but not limited, to the following: Institutionalization of Social Performance Management; Holistic Transformation; Competency-based Training Program; Research and Development; Client Services Program; Establishment of Training Institute; and Social Protection.

6

KMBI 2019 Integrated Annual and Sustainability Report

The Human Resources and Retirement Committee assists the Board in installing effective and solid human resources and robust retirement plan with the capacity to accomplish KMBI’s Human Resources’ goals: to become an outstanding employer in the Microfinance NGO industry, and to have a pool of human resources that are deeply loyal to the vision and mission of KMBI and whose service is above self-interests. The committee recommended to the Board the approval of an investment for the retirement fund of the staff.

The Audit, Risk Management and Compliance Committee is elected and organized by the Board of Trustees to assist in fulfilling its oversight responsibilities regarding the effectiveness of internal controls and systems, integrity of the financial statements, and assessment of operational and reputational risks.

The Tax and Legal Management Committee is organized to oversee and review the actions on the tax and legal cases of the organization.

Board of Trustees

Training, SPM and Transformation Committee

Mr. David D. Gutierrez

HR and Retirement Committee

Audit, Risk Management, Compliance Committee

Chairman

Mr. Eduardo C. Jimenez Mr. Edgardo F. Garcia

Member

Member

Vice-Chairman

Vice-Chairman

Dr. Virginia P. Juan

Member

Member

Ms. Mila M. Bunker

Chairman

Member

Vice-Chairman

Member

Chairman

Atty. Romel R. Bagares

Mr. Sergio G. Edeza Dr. Rodolfo P. Estigoy

Member

Corporate Governance, Membership Committee

Tax and Legal Management Committee

Member

Chairman

Vice-Chairman

Member

Vice-Chairman

Member

Member

Chairman

Member

Vice-Chairman

Member

Chairman

Member

Mr. David A. Salmo

Property Development Committee^^

Member Member

Atty. Rainier Q. Chu^

Member

Bishop Jose D. Dalino^

Member

Member

Mr. Kak Sin Koo^

Member

Member

Mr. Sebastian Quiniones^

Member

Member

^ Corporate Members ^^ Ad hoc committee Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO)

7

THE MANAGEMENT <30 y/o: 2

30-50 y/o: 47

102-18, 405-1a

>50 y/o: 0

EXECUTIVE MANAGEMENT GROUP

PRINCES O. DACCA Manager Corporate Affairs Office

8

KMBI 2019 Integrated Annual and Sustainability Report

SANCHO A. MONTAOS II Manager Internal Audit

MAYLANIE D. APAWAN Manager Legal Services Office

MANAGEMENT SERVICES GROUP

MADELYN P. FRIJILLANO Deputy Executive Director

HECTOR H. CELAJES, JR. Director General Services

JEFFERSON T. NG Manager Procurement & Distribution

MIRASOL C. VILLAFANE Acting Manager Finance

MARVIN E. BARRIETA Director Finance and Accounting

ILYN T. LANDERO Acting Manager Accounting

ROBERT B. SAMORTIN JR. Acting Director Information Technology

EUNICE GALE C. TACASTACAS Manager Logistics & Facility Mgt.

JOFEL P. GANDEZA Manager Technical Services

JOEL P. CRUZ Officer-In-Charge Technical Services

Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO)

9

TRANSFORMATIONAL DEVELOPMENT AND TRAINING GROUP

HAZEL CHRISTINE R. BAYACA Deputy Executive Director

RICO B. ANTION Acting Manager Entrepreneurial Services

10

ANSELMO EDWIN B. ARUELO Director Training and Education

LEA G. DOMINGO Manager Staffing & Employee Relations

KMBI 2019 Integrated Annual and Sustainability Report

MARIA CECILIA V. WEE Officer-In-Charge Programs & Services

PAOLO MARTIN M. CAM Acting Manager Research & Development

SHARON O. DIONCO Director Human Capital

DAWN JANDIE I. ULANGCA Officer-In-Charge Spiritual Development

TIMOTHY JOHN A. PASICOLAN Program Director KDFI

CREDIT OPERATIONS GROUP

RACHELLE M. BASIYA Deputy Executive Director

LANIE C. MONTANO Regional Director North Luzon

CASHMERE T. CAYABAN Regional Director South Luzon

SHEILA DIANNE P. OSTREA Regional Director Visayas

AMELITA T. ANDILAB Regional Director Mindanao

EARL JOHN F. BENITO Acting Area Manager North East Luzon

IAN GEORGE G. BAYONA Acting Area Manager North West Luzon

JOSE ARCHIE R. CRUZ Area Manager Pampanga

ALVIN V. OFEMIA Area Manager Central Luzon

DANDY K. ANDRES Area Manager Bulacan

VICTOR A. PALCE Area Manager NCR North

SUSANA H. CARIÑO Acting Area Manager CALABARZON 1

JEANELYN T. BENGUA Acting Area Manager CALABARZON 2

JENNIFER U. LARRACAS Acting Area Manager Rizal

PHILIP B. BAUTISTA Area Manager Bicol

ELIZABETH B. ALCON Area Manager Negros

REYNALDO A. CAYAO Area Manager Cebu

HERRON F. ANTONIO Acting Area Manager Panay

CRISMAR T. ESCALON Area Manager Northern Mindanao

ROSUNNY E. DELA LUNA Area Manager ZamPen

MARIBETH N. PABAYOS Acting Area Manager Caraga

HAZEL D. LAURENTE Area Manager Davao

GRACE M. ASEDILLO Area Manager SOCKSARGEN

JANET J. SUBALDO Acting Area Manager North Cotabato

Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO)

11

203-2

GOLD IN SCRAPS Melinda Leonido is a KMBI member from Payatas, Quezon City who runs a business of recycling and reselling Cleaning Polyethylene (PE).

The income from her business is more than sufficient for the needs of her family. She often gets the impression “may pera sa basura.” Melinda makes sure to complete her weekly payment to KMBI. Her fellow Program Members would describe her as a resilient woman who has faced a lot of hardships.

She lost family members in a short interval of time years ago. One of her kids died of dengue and internal hemorrhage. One of her grandchildren had a major operation due to appendicitis and she shared those cramming yet motivating times to go through the endeavors of life.

She said that her faith never failed her. There were people and institutions like KMBI who helped her go through life again and be able to bounce back for her family.

Her husband, who is also a garbage collector, helps her and even supports her membership with KMBI. The Microinsurance program of KMBI motivated her to invest for the future to give her and her family a peace of mind amidst uncertain events. She also makes sure to save for the future through the organization’s Capital Build Up. Learning from past experiences is an eye-opener for her to be a better person each day and hope for success even in the most impossible situations.

Melinda shares that perseverance and hard work are not enough. One should also be resilient in facing difficult situations in life because as the mother in the household, she should be a stronghold and light for her family.

At the end of the day, resiliency and the desire to achieve success may be a far yet achievable thing to do. Melinda is surely an inspiration to mothers like her who have gone through the most challenging times.

12

KMBI 2019 Integrated Annual and Sustainability Report

203-2

STREET-SMART, MONEYWISE Arlene Bago, a Program Member of KMBI for 7 years, has an inspiring story to share. She started exploring different businesses until she finally found her fortune with a fishball cart business with only a PhP1,500 capital.

She started with one cart until it expanded into 3 and finally had the opportunity to build her own boarding house where she earns almost PHP 5,000 for each unit. This passive income is on top of her net proceeds from her fishball, kwek kwek (quail egg) and isaw (barbecued pig or chicken intestines) business located in nearby marketplace within her locality.

Street foods are among the oldest and fastest-growing microbusinesses in the Philippines. It is embedded in the Filipino culture and everyday lives, and popular among those in a hurry, in the middle of heavy workloads and tight deadlines.

The Microinsurance benefit of KMBI motivated Arlyn to continue and pursue her membership with KMBI. She said that her Capital Build-Up also encouraged her to save more and be wise with her spending habits.

Aside for earning for her own, she was also able to help three other neighbors and relatives who work for her.

She shared that her business blessed not only her family but also the people around her.

The best part about being successful is when you are also able to help the people around you especially being able to provide for your family. Knowing that your present and future needs are being met gives her a peaceful mind.

She invests not only as a business-minded individual but also as a mother to her 5 children who are currently studying.

Progress in business requires consistency and being wise with finances. The story of Arlyn Bago is not new, as it is echoed by her fellow microentrepreneurs aspiring for a life out of poverty.

Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO)

13

PARTNERS & AFFILIATIONS NGOs and other Networks

• Ahon sa Hirap, Inc. (ASHI) • Alalay sa Kaunlaran, Inc. (ASKI) • Asia-Pacific Rural and Agricultural Credit Association (APRACA) • APRACA - CENTRAB • APPEND Inc. • ASA Philippines Foundation • Asian School of Development and CrossCultural Studies • Asian Theological Seminary • Banko Sentral ng Pilipinas, Pia Bernadette Roman • Banking with the Poor • Bicol Microfinance Council, Inc. • Canvas.ph • Center for Agriculture and Rural Development Mutually Reinforcing Institutions (CARD MRI) • Center for Community Transformation (CCT) • Community Economic Ventures, Inc. (CEVI) • ECLOF Philippines • Katuwang Resource Center, Inc. (KRCI) • Management Association of the Philippines (MAP) • MBSsolve Insurance Agency, Inc. • Microfinance Council of the Philippines, Inc. (MCPI) • Microfinance Information Data Sharing Inc. (MiDAS) • Microfinance NGO Regulatory Council • Mindanao Microfinance Council 14

KMBI 2019 Integrated Annual and Sustainability Report

102-13

• Negros Women For Tomorrow Foundation, Inc. (NWTF) • Nickosia • Opportunity-Kauswagan Bank, Inc. (OK Bank) • People’s Alternative Livelihood Microfinance Foundation of Sorsogon, Inc. (PALMFSI) • Pinoy Ako Insurance Services (PAIS) • Philippine Society for Training and Development • Rangtay sa Pagrang-ay, Inc. (RSPI) • Resources for the Blind • REACH, Inc. • Taytay sa Kauswagan, Inc. (TSKI) • Talete King Panyulung Kapampangan, Inc. Foundation

• • • • • • • •

Program Partners and Service Providers

Local Government and Government Agencies

• • • • • • • • • • • • •

Ang Hortaleza Foundation Bayan Academy BPI Sinag Collins International Trading Corporation First Life Financial Company, Incorporated For His Glory Multipurpose Cooperative Habitat for Humanity Intellicare (HMO Provider) International Labor Organization (ILO) KPMG Manulife Philippine Bible Society Park Inn by Radisson North Edsa

Rayel and Butuyan Law Offices Sequoia Hotel Seda Vertis North SNS Security Services Standard Insurance SUN Cellular Sunking. Greenlight Planet Water.org

Banks • • • • •

• • • • • • • • • • • •

Bank of Commerce Philippine Business Bank Philippine National Bank – Allied Producers Bank Security Bank Corporation / Savings

Mayor’s Office, Quezon City Mayor’s Office, Valenzuela Mayor’s Office, Caloocan Mayor’s Office, Manila Office of the Punong Barangay, Karuhatan Office of the Punong Barangay, South Triangle Bureau of Internal Revenue Securities and Exchange Commission TESDA Philhealth SSS Pag-ibig

AWARDS & RECOGNITIONS

• Outstanding Member of MCPI for 2019 by the Microfinance Council of the Philippines (MCPI) • Recognition for the pivotal role as founding member of MCPI

Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO)

15

OUR SERVICES

102-2

Microfinance is giving financial access to the unbanked. It is what we do at KMBI and more. Our business is ensuring that social and transformational services are widely available to those who are otherwise excluded from its benefits. We advocate inclusive growth and empowerment of the microenterprise sector by sharing opportunities to improve the quality of living of the entrepreneurial poor. We do this by addressing beyond their financial needs and looking into their holistic wellbeing.

FINANCIAL SERVICES

GROUP LOAN PROGRAM (GLP) The Group Loan Program is the flagship service of the organization.

It is a tool to empower women microentrepreneurs through additional capital to help in the development of their microenterprises.

16

INDIVIDUAL MICROENTERPRISE PROGRAM (IMEP) The Individual Microenterprise Program extends credit provision to graduated Program Members who need additional capital beyond the terms offered by the Group Loan Program.

AGRICULTURAL MICROFINANCE PROGRAM (AMF) The Agricultural Microfinance Program seeks to assist and provide loans to farmers and individuals in the farming sector and enable them to further cultivate the agricultural sector in the country.

MICROINSURANCE

CAPITAL BUILD-UP (CBU)

Microinsurance is an add-on service of KMBI intended to protect the Program Members in cases of accident or death.

This benefit comes along with the Group Loan Program and Capital Build-up.

Capital Build-Up is offered to Program Members to help them build up their financial resources and reduce their vulnerability to crisis and dependence on outside credit sources. The CBU is also intended to serve as additional capital when the client resigns from the program.

NON-FINANCIAL SERVICES • ENTREPRENEURIAL DEVELOPMENT SERVICES (EDS) - The EDS aims to reinforce the knowledge and enterprising skills of women microentrepreneurs through capacity-building programs and network building to establish their access to wider markets.

• MASS WEDDING - KMBI values the sanctity of marriage and the role of families as integral building blocks of society. Mass Wedding is one of the non-financial services of the organization offered to unmarried cohabiting couples to legalize their union.

• WELLNESS CARAVAN - KMBI does not only enhance the overall social, economic, and spiritual state of the Program Members, but also values their health and wellbeing. This is done in partnership with like-minded entities to bring health-related programs to the communities of clients.

• DALAWANG ISKOLAR KADA PUH - Education is highly regarded as a pivotal means of lifting families from poverty. The scholarship is given to deserving children of Program Members who have limited access to higher education due to lack of financial resources.

• ADOPT-A-DAYCARE PROGRAM - KMBI continues to innovate methods to push for quality education among children, part of which is donating school materials and sponsoring the needs of Daycare Centers.

• DISASTER PREPAREDNESS AND RESPONSE MANAGEMENT (DPRM) - The DPRM is designed to mitigate the impact of natural disasters on the financial state of Program Members.

• CENTER LEADERS’ CONFERENCE - KMBI enhances the leadership capacities of Center Leaders in handling and empowering their groups.

Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO)

17

2019 AT A G L A N C E Client outreach

170,652

O P E R AT I O N A L P E R FO R M A N C E

102-6, 102-7, 102-8, 201-1, 201-3, 203-2

Loan Portfolio

Average Loan Size

172,537

1.16B

1.04B

149,080

840.27M

2017

9.765K

2018

10.26K

2019 2017

2018

2019

2017

Portfolio-at-Risk

2018

10.88K

2019

No. of Branches

No. of Centers 8,235

54 2.42%

3.07%

5.66%

2017

2018

2019

2017

No. of Staff

2017 2018

2018

2019

5,603

2017

Lives Insured

1,071

297,789

1,237

2019 18

65

79

KMBI 2019 Integrated Annual and Sustainability Report

275,908

6,578

2018

2019

Loans Disbursed

276,917

3.27B

3.59B

2.65B

1,447

2017

2018

2019

2017

2018

2019

FINANCIAL P ERFO RM A N C E

O P E R AT I O N A L I N D I CATOR S

2017

2018

2019

Increase (Decrease) 2018-2019

Percentage change 2018-2019

Total Assets

1.32B

1.34B

1.49B

150M

11.19%

Total Liabilities

856.12M

813.05M

928.09M

115.04M

14.15%

Fund Balance

467.12M

523.40M

560.48M

37.08M

7.08%

Net (loss) / income

69.73M

72.60M

43.54M

(29.06M)

(40.02%)

A S S E T/ L I A B I L I T Y R ATI O S

2017

2018

2019

Increase (Decrease) 2018-2019

Percentage change 2018-2019

Current Ratio

1.21

1.50

1.53

0.03

2%

Debt to Equity Ratio

1.83

1.55

1.66

0.11

7.09%

CBU to Outstanding Loan Ratio

52%

52%

51%

(1%)

(1.9%)

LR to total Assets

63.50%

78%

78%

-

-

Financial Self-sufficiency

111.95%

99.37%

98.93%

(0.44%)

(0.44%)

Operational Self-sufficiency

113.96%

108.18%

105.77%

(2.41%)

(2.23%)

Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO)

19

7

STRATEGIC DIRECTIONS

Paghandom sa Damlag encapsulates the perspective of sustainability promoted in the GRI standards with an additional focus on spiritual development alongside economic, environmental and social conditions as components of the broader context of sustainability.

Thus, it has been used as a basis for identifying material topics in this integrated annual and sustainability report.

1 2

3 20

Paghandom sa Damlag: Vision 2020 is KMBI’s five-year business plan. It is the organization’s road map, running from 2016 up until the year 2020, and is comprised of the Seven Strategic Directions which serve as the basis for specific plans, programs, and interventions.

It is a product of one of the most exhaustive and participative planning activities over the years. In 2015, the Board of Trustees and the Expanded Management Committee have gathered to assess the performance of the organization vis-a-vis the needs and demands of KMBI’s stakeholders, primarily its clients – and through a meeting of minds and hearts arrived at the five-year business plan.

DEVELOP FAITH-BASED

OUTLOOK & VALUES OF PEOPLE

ENSURE

SUSTAINABILITY OF KMBI

STRENGTHEN BOARD GOVERNANCE

& LEADERSHIP

KMBI 2019 Integrated Annual and Sustainability Report

• Development of Integral Transformation Framework • Development of Transformation Metrics/ Tracking Tool • Standardization/Production of Transformational Tool (Road Signs 3) • Spiritual Development Support Program • Social Protection Program

• Implementation of MF System for GLP, ILP, AMF • KMBI Brand Building Activities (tree planting, cleanliness drive) • Conduct of yearly operational planning • Full implementation of KMBI’s programs and services

• Board and Management Education/ Capacity Building /BOT Field Exposure • Development of Governance Manual

71.76% 82.93% 75%

4 5

DELIVER CONSISTENT

& EFFECTIVE TRANSFORMATION ACTIVITIES

FOSTER AN

ATMOSPHERE OF TRUST

BUILT ON INTEGRITY

• Implementation of Organizations’ Transformational Program for Clients • Strengthening in full implementation of standard meeting agenda and program to all centers • Non-financial services: Wellness Caravan, Scholarships, Mass Wedding, Adopt a Daycare • Other activities: ENTREP Magazine, Story Caravan, General Assembly, Center Leaders’ Conference, Transformational Development Forum

• Statutory and company-initiated benefits (Relocation packages, service awardees, allowances, K-Fit program, etc.)

• Compliance to DOLE-related Work Policies • Policy development regarding proper treatment of employees • Development of Implementing Rules and Regulation (IRR) on Admin Case Investigation Process

6 ENHANCE

• Conduct of periodic performance evaluation • KMBI Advance Education Program • Implementation of employee reward and recognition system

7 BUILD CLOSE &

• • • • •

PERSONAL VALUING

HEALTHY RELATIONSHIPS

Common Liturgies Community outreach Mass Weddings Annual Center Leaders Conference Implementation of work-life balance (K-Fit program) • Celebration of KMBI anniversaries

86.54% 62.22% 51.72% 91.18%

Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO)

21

STAKEHOLDER ENGAGEMENT

102-40, 102-43

Stakeholders give value to our transformational work as much as we pay back to the communities that we serve. These stakeholders include industry partners, suppliers and networks, clients, staff, local communities, and regulators.

MOVING AHEAD OF THE CURVE Digitalization is key to the future that is financial inclusion. Technological advancements have made it possible for businesses to undergo digital transformation. When talking about “responsive sustainable microfinance and non-financial services” in our mission, it comes with it the adoption of digital technology as KMBI aims to become a more agile and future-ready institution.

The Dynamic Unified Network and Management Information System (DUNAMIS)

The organization’s efforts this year have directed a clear and major step towards digitalizing its systems. KMBI has been working on its in-house digital platform, the Dynamic Unified Network and Management Information System or DUNAMIS. Launched in 2017, DUNAMIS integrates the organization’s processes and systems through cloud-based networking that will facilitate data storage, access, and sharing between and among groups.

This year, DUNAMIS has been fully rolled out to all branches and satellite units. The HR Information System (HRIS) has also seen significant improvements on usability. With this, KMBI now hosts its own employee portal that will allow staff to track their timekeeping record. Client and employee information are also stored in KMBI’s online database and kept secured in accordance with the Data Privacy Act. The transition to digitalized systems and processes reflects KMBI’s commitment to adopting emerging global trends to advance microfinance operations as well as deliver non-financial services more responsively.

22

KMBI 2019 Integrated Annual and Sustainability Report

EMPLOYEES

401-1, 404-3, 405-2

The workforce is the primary delivery channel of an organization’s services. KMBI is interested in both the professional and personal growth of its employees, providing them with relevant training programs, semestral performance appraisals, health and wellness programs, and competitive incentive schemes. KMBI values workforce harmony by allotting time for employees to congregate and bond together in the form of weekly accountability groups and devotions.

Staff empowerment continues to be the main core for 2019. Various employee-centered programs and activities were mounted this year. Filling the first quarter of the year were the regional General Assemblies, Retreat, and APPEND Commissioning, held in three separate tranches in Luzon, Visayas, and Mindanao. The General Assemblies were attended by KMBI Officers and up, in which KMBI’s plans and activities for 2019 were discussed in detail. The assemblies also became a venue for staff to receive policy reinforcements as well as introduction of new programs and system enhancements due for rollout. This activity also allowed staff to air operational concerns and gave them opportunity to talk directly to the Board of Trustees, with a purpose of instilling transparent communication and sharing of valuable insights.

Branch Managers’ Conference 2019

747

The KMBI Regional Retreat was also part of the assemblies, attended by all staff per region.

The activity focused on inner emotional healing. The APPEND Commissioning served as the culmination of these activities, expressing support for the advocacies of APPEND in pushing financial inclusion in the country by bringing its network of microfinance NGOs as collaborators.

In July, all KMBI Branch Managers convened for their 2019 conference, held in Lucban, Quezon.

This yearly conference serves as a platform for sharing best practices, learning operational strategies, and recognizing top-performing branches.

Total number of new hires for 2019

1:1

Distribution ratio of male-female salary

Male - Female Distribution Rank & File

45%

55%

Supervisory

44%

56%

Junior Management

44%

56%

Senior Management

43% 57%

AGE DISTRIBUTION

830

<30

612

30-50

5

>50

Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO)

23

Training and capacity building are paramount to increasing employee productivity and competency.

KMBI ensures that all staff are undergoing continuous improvement as aligned with one of the organization’s core values. This year, a total of 948 staff have undergone KMBI’s internal training programs, while 270 have boarded on external training and international training.

From entry to growth 404-1, 404-2 The ONE KMBI Program (OKP) is KMBI’s own onboarding program that gives new employees a better understanding of the operational processes and structure of the organization. This year, 414 new hires underwent this short course and were oriented to their roles in KMBI as agents of transformational programs. Graduates of this program are expected to better understand the main business of KMBI and how they can individually contribute to extending financial and non-financial services to the Program Members and their communities.

KMBI also runs a training program intended to increase the capacity of supervisors, called the Introductory Course to Management (ICM). This year’s ICM introduced key management responsibilities to 153 newly promoted supervisors and helped with their transition to supervisory roles. With this program, supervisors are equipped to better handle situations that would require a higher level of administrative decision-making and people management skills.

Graduates of the Basic Management Training

Ave. hours of training

per gender and employee category

For employees in the Credit Operations Group, a program for supervisors and managers is provided in the context of branch operations. Program Unit Heads undergo the Basic Supervisory Training or BST, while Branch Managers train under the Branch Management Training or BMT. These programs aim to strengthen the capacity of branch officers in handling procedures and issues in the operations. 32 Branch Managers and 139 Program Unit Heads have been trained in 2019 through these programs.

1,218

Total number of staff trained

24

KMBI 2019 Integrated Annual and Sustainability Report

15.4 hours

Average hours of training per employee

Rank and File Supervisory Junior Management Senior Management

45% 51% 42% 38%

55% 49% 58% 62%

LOCAL COMMUNITIES

413-1

Staying true to one of its Strategic Directions, KMBI affirms consistency in the effective and truthful delivery of its services to those who need it most. Driven by the need to extend its services beyond its Program Members and their families, the organization continues to innovate programs that cater not only to its clients, but also to the people around them. KMBI aims to build community leaders now and in the future by equipping them with adequate resources to help them move out of poverty.

The organization remains strongly committed to easing the plight of Program Members suffering financial setbacks. This commitment led to an increase in the Hospital Income Benefit under the Microinsurance program, now giving hospitalized Program Members a daily allowance of PhP 250 for a maximum of 5 days, a significant increase from the previous PhP 100.

10,300

159

403

1,555

Women Leaders

Scholarship Grants

Couples

Participants

empowered through Center Leaders’ Conferences

released under Dalawang Iskolar kada PUH Program

wed through KMBI’s Mass Wedding Program

briefed on health and wellness through Wellness Caravan

Kabalikatpara parasa saMaunlad Maunladna naBuhay, Buhay,Inc. Inc.(A (AMicrofinance MicrofinanceNGO) NGO) Kabalikat

25 25

BEYOND FINANCIAL HELP KMBI does not see Program Members merely as clients whose relationship with the organization ends upon loan repayment. The organization values its Program Members as capable assets who have the most potential to bring about change in the society: all they need is an opportunity for them to do so. KMBI responds to this need by partnering with like-minded institutions to deliver comprehensive client training and capacity building programs.

This year, KMBI partnered with the Department of Trade and Industry (DTI) and Technical Education and Skills Development Authority (TESDA), to hold a skills training on Meat Processing and seminar on Product Costing, Pricing, Packaging and Labelling in Isabela last October, with 64 Program Members taking part in the training. The following month, a workshop on Good Manufacturing Processes, Meat Processing and Packaging & Labeling was held in Roxas, in partnership with DTI and Capiz Toll Packaging Center.

KMBI also seeks ways to empower seasoned Program Members by giving them the opportunity to impart their skills and mentor aspiring microentrepreneurs. In November, KMBI tapped award-winning microentrepreneur, Ms. Lydia Malot, to facilitate a workshop on Nata De Coco processing in Davao, attended by 42 Program Members. In the same month, KMBI Program Member, Ms. Mariselle Martinez, led the training on Mushroom Cultivation for Program Members in Tanay.

These activities are part of the “Program Member to Program Member (PM2PM) Mentoring” under the KMBI Success Circle Program. With this program, aspiring microentrepreneurs are given a head start in following the footsteps of growth-oriented Program Members.

KMBI also launched the ENTREP Day Program in Valenzuela and Cauayan, in partnership with the Department of Trade and Industry (DTI), Social Security System (SSS), Pag-IBIG, PhilHealth, Bureau of Internal Revenue (BIR), Technical Education and Skills and Development Authority (TESDA), and ChinaBank. This program helps Program Members subscribe to various statutory services. This event also served as a marketing platform for clients to exhibit their products.

In 2019, KMBI once again brought 30 outstanding Program Members to Manila for a series of skills training and capacity-building activities, as part of the organization’s yearly Program Member Appreciation Activities. Just like the previous years, Program Members underwent intensive skills training and business workshops. They were also taken for a tour at the KMBI Head Office and around Metro Manila to appreciate the bustling capital.

The appreciation activities are meant to recognize the loyalty of KMBI Program Members and their contribution to their communities.

Relief operations in Manila where hundreds of houses were razed by fire last March, displacing several families. KMBI held a feeding program and distributed GI sheets, sacks of white sand and grocery packs.

KMBI DEVELOPMENT FOUNDATION, INC.

KDFI: THE COMMUNITY BUILDING ARM OF KMBI KMBI stretches out its arms to extend help beyond financial services to communities. Through its community building arm, the KMBI Development Foundation, Inc. (KDFI), KMBI now has a more clear-cut approach to several other aspects of development, such as the environment.

This year, KDFI partnered with several institutions to preserve natural habitats and lands that require protection and restoration. These organizations include Forest Foundation Philippines and Climate Change Commission. KDFI was also accredited as a Civil Society Organization by the municipality of Dona Remedios Trinidad in Bulacan, where the institution previously conducted reforestation efforts in 2018. 304-2 Part of the community development efforts of KDFI is a gift-giving program for pupils of Camachin Elementary School. Children beneficiaries received school supplies to help with their schooling needs.

Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO)

27

KMBI celebrates partnership through the biennial conduct of Partners’ Appreciation Night.

INDUSTRY PARTNERS Industry partners are not just those with whom KMBI secures mutually beneficial transactions. KMBI partners with institutions that have in mind the best interests of the poor.

The organization invests time and resources to look for the right institutions with aligning mission and values. KMBI keeps close lines with its partners by celebrating connectedness and fostering long-term healthy relationships which are integral to sustainability. 102-43 When it comes to the supply chain, KMBI ensures that suppliers share similar values with the organization, and that they have a deep understanding of its business. The organization follows a thorough process in selecting suppliers as part of its commitment to maintain fair and healthy competition in dealing with vendors, taking into careful consideration various aspects such as environmental impacts and labor conditions, among others. 102-42 KMBI pays high regard to its networks, as they play a significant role in getting microfinance institutions—who could otherwise be competitors in the industry—to work together and achieve the common goal of eradicating poverty. This is done through taking a proactive approach to efforts initiated by the networks and responding to their needs.

In January, the Asian School Of Development And CrossCultural Studies (ASDECS) Incorporated collaborated with KMBI to mount the Learning Conference 2019 in Quezon City. The activity was a training consortium of faith-based organizations, development NGOs, higher educational institutions, and practitioners in the Philippines and Asia. The event tackled the Community Manuscript Bible study and the best approach 28

KMBI 2019 Integrated Annual and Sustainability Report

to doing social enterprise. The conference aims to help build capacities on practical transformational development ministries in the Philippines and in Asia.

Sharing best practices KMBI continues to be an exemplary microfinance institution as it welcomed 81 international microfinance practitioners this year for a learning exchange program. The Microfinance Council of the Philippines (MCPI) selected KMBI to be a venue institution for foreign visitors to learn best practices and processes in microfinance operations. These delegates were composed of practitioners from Centre for Self-Help and Development (CSD), Rural Microfinance Development Center (RMDC), and AsiaPacific Rural and Agricultural Credit Association (APRACA).

In June, foreign delegates from Lausanne Global Movement chose KMBI as a venue for an exchange visit, taking interest in the organization’s approach to Integral Transformation and its relevance to microfinance operations.

Delegates had the opportunity to interact firsthand with KMBI Program Members and learn KMBI’s approach to microfinance and transformation in the form of weekly center meeting.

In November, KMBI mounted its 3rd Transformational Development (TD) Forum, tackling the responsibilities of men and women in both the organizational and societal setting.

The discussion placed emphasis on gender roles and empowerment in light of Biblical context and current realities. The TD Forum is a convention of practitioners of related industries and like-minded institutions to provide an avenue for discussion on how transformational principles can be applied in the practical context of operations.

GOVERNMENT AND REGULATORS KMBI pays respect to industry regulations. They are set in place to oversee and maintain the balance of the microfinance industry in view of upholding the highest degree of ethical, moral, and corporate standards. The organization continues to be responsive to the needs of the governing entities by keeping abreast of movements within the industry and securing compliance with local regulations.

In compliance with the Republic Act 11058, KMBI sent delegates for a training on basic occupational safety and health. These were appointed as safety officers who were responsible for conducting an orientation on occupational safety and health for Head Office and Branch staff. The orientation tackled how to detect, prevent, and respond to hazards in their work environment, and promote a safe and healthful workplace for all employees.

In line with the Republic act 10173 or the Data Privacy Act, KMBI held a training on data privacy breach protocol in Iloilo City in March, attended by Branch Managers and Area Managers from all areas of operations.

This year, KMBI also partnered with the Social Security System, PhilHealth and Pag-IBIG to facilitate the registration of clients to government programs. An opportunity was opened to Program Members to avail of the social services of these government institutions.

Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO)

Head Office participants of Occupational Safety and Health (OSH) Training at the KMBI Panay Office, Quezon City.

29

MATERIAL TOPICS Material Topic: Human Rights and Labor Why this is material

Material Aspects

GRI Indicator

Description

Aspect Boundary

Remarks

Our core values mirror our love for fellowmen.

Employment

401-2

No. of employees hired in 2019

Internal

See page 23

With no respect to age, gender, religion, or culture, we strive to promote inclusion,

Labor Management/ Relations

402-1

Advisory on operational changes

Internal

Announced during 2019

Diversity and Equal

405-1

solidarity, and equal growth among our employees.

General Assembly

Opportunity

No. of employees by gender and employee

Internal

See page 23

category 405-2

Ratio of salary distribution by gender

Internal

See page 23

Non-discrimination

406-1

Incidents of employee discrimination

Internal

No incidents reported

Child Labor

408-1

Cases of child labor

Internal

No incidents reported

Forced or Compulsory Labor

409-1

Incidents of forced or involuntary servitude

Internal

No incidents reported

Rights of Indigenous Peoples

411-1

Violation of indigenous peoples’ rights

Internal

No violations reported

Why this is material

Material Aspects

GRI Indicator

Description

Aspect Boundary

Remarks

The organization’s approach to development is holistic, thus engagement and impact to the communities where it operates are vital in the achievement of its objectives

Local Communities

413-1

Operations with local community engagement, impact assessments, and development programs

Internal and external

See page 25

413-2

Operations with significant actual and potential negative impacts on local communities

Internal and external

See page 25

Material Topic: Local Communities

Material Topic: Product Responsibility Why this is material

Material Aspects

GRI Indicator

Description

Aspect Boundary

Remarks

We place high regard to our Program Members by making sure that our products and services are presented with utmost honesty and integrity and delivered exactly in the way they are intended.

Consumer Health and Safety

416-2

Non-compliance with safety impacts of services

Internal and External

No incidents of non-

Marketing Communications

417-2

compliance reported

404-3

30

KMBI 2019 Integrated Annual and Sustainability Report

Non-compliance on service information and labeling

Internal and External

Non-compliance concerning marketing and communications

Internal and External

No incidents of noncompliance reported No incidents of noncompliance reported

Material Topic: Product Responsibility Why this is material

Material Aspects

GRI Indicator

Description

Aspect Boundary

Remarks

We continuously exhibit responsiveness to emerging trends in the microfinance industry. We constantly update our policies and processes in order to keep our compliance with regulators. This is also our way of safeguarding our stakeholders from exposure to unforeseen risks.

Data Privacy

418-1

Complaints on Data Privacy Breaches

Internal and External

No complaints received

Anti-competitive behavior

206-1

Legal actions for anti-competitive behavior

External

No reports of anti-competitive behavior

Why this is material

Material Aspects

GRI Indicator

Description

Aspect Boundary

Remarks

Human Capital is one of our most important

Training and Education

404-1

Conduct of employee assessment or performance

Internal

Semestral, 100% of staff

Material Topic: Training and Education

assets; continuous improvement through training

evaluation

and education is both a need and a responsibility of the organization.

evaluated

404-2

Programs for upgrading employee skills and transition assistance programs

Internal

See page 23

404-3

Average hours of training per yer per employee

Internal

See page 23

Material Topic: Economic Why this is material

Material Aspects

GRI Indicator

Description

Aspect Boundary

Remarks

A good financial performance is a manifestation of our ability to effectively render non-financial services, such as values formation and capacity building, to our Program Members.

Economic Performance

201-1

Direct economic value generated and distributed

Internal

See page 18

201-3

Defined benefit plan obligations and other retirement plans

Internal

See page 7

201-4

Financial assistance received from government

Internal and External

No financial assistance received

Material Topic: Indirect Impact Why this is material

Material Aspects

GRI Indicator

Description

Aspect Boundary

Remarks

As an MF NGO, the organization is interested in a broader perspective of economic development, aspiring to help promote national and international agenda especially those related to poverty alleviation and financial inclusion.

Indirect Economic Impacts

203-2

Significant indirect economic impacts

Internal and External

See page 12-13

Material Topic: Environment Why this is material

Material Aspects

GRI Indicator

Description

Aspect Boundary

Remarks

Our approach to holistic transformation encompasses environment as one of our integral dimensions. We develop initiatives that will not only benefit the environment, but also generate sustainable living for people living in adjacent areas.

Biodiversity

304-3

Habitats Protected and Restored

Internal and external

See page 7

Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO)

31

WHERE WE SERVE KMBI Head Office

12 San Francisco St., Karuhatan, Valenzuela City Tel No: (02) 8291-1485

Extension Offices

Panay: 130 Panay Avenue, Brgy. South Triangle, Diliman, Quezon City Tel No: (02) 8291-1484 to 86 / (02) 8373-1297

102-3, 102-4

Pampanga

Angeles: Malonzo and Cortez Bldg., Magalang Road, Brgy.

Salapungan, Angeles City, Pampanga Tel No: (045) 456-0449 Olongapo: G/F Rementilla Bldg., 1630 Rizal Avenue, East Tapinac, Olongapo City, Zambales Tel No: (047) 611-0477

Bayambang Unit: 2/F Lagoy’s Building, Zone 7, Poblacion, Bayambang, Pangasinan

North West Luzon

Laoag: Avenue West, Barangay 8, Gen. Luna cor Panganiban St., Laoag City, Ilocos Norte Tel No: (077) 670-7965

Davao Regional Office: 2/F Bernardo Bldg. Bonifacio St., Brgy. Poblacion, Davao City Tel No: (082) 225-4172

Iba Unit : 2/F Unit B Supremebike Building, Magsaysay Highway, Iba, Zambales

San Carlos: 2/F Jelines Building, Barangay Palaris, San Carlos City, Pangasinan Tel No: (075) 634-1785

North East Luzon

San Fernando: Unit 1-A 3/F Brgy. Dolores City, SFC, Pampanga Tel No: (045) 409 - 3513

La Union: 3/F CJ Arch Corporation Building, Quezon Avenue, San Fernando City, La Union

Balanga Unit: 2/F Tuazon Building, Capitol Drive, San Jose, Balanga City, Bataan

Rosales: RGT Building Brgy. Tomana East Rosales, Pangasinan

Cauayan: 3/F Room 303, CLU Bldg., National Highway, Cauayan City, Isabela Tel No: (078) 652-3910 Santiago: 3/F Psalm 23 Bldg., #74 National Road, Victory Norte, Santiago City, Isabela Tel No: (078) 305-1072 Tuguegarao: Tuddao Bldg., Campos St. College Ave., Corner Caritan Centro, Tuguegarao City Tel No: (078) 375-2156 Solano: 2/F Unit Q KMCI East Bldg., National Highway, Roxas, Solano, Nueva Vizcaya Tel No: (078) 375-2156 32

KMBI 2019 Integrated Annual and Sustainability Report

Central Luzon

Mabalacat: 2/F China Bank Savings Building, Mac Arthur Highway, Dau, Mabalacat, Pampanga Tel No: (045) 892-1296 Paniqui: Out of Town Annex Building, 538 A. Magallanes St., Poblacion Sur, Paniqui, Tarlac Tarlac: 2/F unit 5B & 6B JTM Bldg., M. H. Del Pilar St. corner Zafiro St., Brgy. San Nicolas, Tarlac City

Dagupan: 2/F Producers Building Room 1&2 Poblacion, Dagupan City, Pangasinan

Bulacan

Balagtas: 2/F Mc Arthur Building, Wawa, Balagtas, Bulacan Tel No: (044) 697-1650 Baliwag: 3/F Writ Building, 1733 Ano Street, corner Roberto Chico Street, Baliwag, Bulacan Tel No: (044) 761-1958

San Jose: 3/F Umerez Building, Tungko, San Jose Del Monte City, Bulacan Tel No: (044) 760-0459

Upper Cavite: 2/F RCS Building, Old Carmona Rd., Brgy. Sampaloc 1, Palapala, Dasmarinas, Cavite Tel No: (046) 419-0235

Gapan: DPC Commercial Building, Unit 102 corner Del corro and E. Jacinto, San Vicente, Gapan City, Nueva Ecija

Mendez Unit: 3/F JLC Bldg. #126 Mendez Crossing West, Tagaytay City, Cavite Tel No: (046) 412-1808

San Miguel: 2/F Dona Amelia Building, Unit 5, Maharlika Highway, Camias, San Miguel, Bulacan

NCR

Novaliches: 3/F Room 306-309, Our Lady of Mercy Building, #970 Quirino Highway corner Ramirez Street, Novaliches, Quezon City Tel No: (02) 8244-9894 Quezon City 1: Blk 26 Lot 41, Gabriela Silang Street, New Capitol Druive Estates, Commonwealth Avenue, Batasan Hills, Quezon City Tel No: (02) 952-4210 West Avenue: 3/F Unit F Cabral Building, No. 68 West Avenue, West Triangle, Quezon City Tel No: (02) 8240-2598 Valenzuela: #12 San Francisco St., Karuhatan, Valenzuela City Tel No: (02) 8356-5799

Calabarzon 1

Manila: 5/F UGIC Tower, 682 & 684 Tomas Mapua Street, Sta. Cruz, Manila Tel No: (02) 8252-6072

Binan: 2/F Unit 3, RK2 Building, National Highway, San Vicente, Binan City, Laguna Tel No: (046) 831-8093 Bacoor: O.M.V Building, Bahayang Pagasa Subd., Molino V, Bacoor, Cavite Tel No: (046) 435-2484

Calabarzon 2

Calamba: 2/F Auyonick Bldg., Brgy. Parian, Calamba City, Laguna Tel No: (049) 531-0116 Lipa: 2/F MA and H Bldg., #18 CM Recto, Brgy. 9, Lipa City, Batangas Tel No: (043) 788-2214 San Pablo: 2/F Nino Jesus Bldg, Unit 2C & 2D, Purok 1, Maharlika Hi-way, San Francisco St., San Pablo, Laguna Tel No: (049) 523-8839 Batangas: 2/F Blay Dela Roca Building, Unit 3 Calicanto, Batangas City

Rizal

Angono: 3/F Aurora Building, Quezon Avenue, San Isidro, Angono, Rizal Tel No: (02) 806-5137 Pasig Unit : 2/F One De Castro Building, Sta Lucia, Pasig City Binangonan: 2/F Rainbowshine Bldg., Quarry Road, Binangonan, Rizal Antipolo: 2/F Room 1 354 E&E Building M. L. Quezon Street, San Roque, Antipolo City, Rizal Tel No: (02)247-7046 San Mateo: 125 Gen. Luna, Ampid, San Mateo, Rizal Tel No: (02) 721-9712 Tanay: 19 J.M. Catolos Street, Katbayani, Tanay, Rizal Tel No: (02) 8997-3072

Bicol

Daet: 2nd Floor, LACSON Building, Governor Panotes Avenue, Barangay 8, Daet, Camarines Norte Tel No: 885-0559 Goa: 2/F Bentoy Square Building, San Jose St., Goa, Camarines Sur Tel No: (054) 881-1928 Iriga: L T Building, Lot 2-A, Gonzales St., San Francisco, Iriga City Tel No: (052) 881-7089

Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO)

33

Naga: 2/F Frieto Bldg., Panganiban Drive, Naga City, Camarines Sur Tel No: (054)881-1511 Ligao Unit: 3/F Cate Building, Mabini St., Brgy. Bagumbayan, Ligao City, Albay Tel No: (052) 826-0262 Tabaco Unit: G/F Caño Bldg., A. A Beces St., San Juan, Tabaco City, Albay

Negros

Bacolod: 3/F VSB Building, 6th and 7th Street, Lacson Avenue, Bacolod City, Negros Occidental Tel No: (034) 431-2440 Kabankalan: 2/F Jomabo Building, Guanzon St., Brgy. 3, Kabankalan City, Negros Occidental Tel No: (034) 431-1499 Victorias: Jomabo Bldg., Cor. Magsaysay St., Osmeña Ave., Brgy. 5, Victorias City Tel No: (034) 717-7057 Cadiz Unit: 2/F Avon Building, Juan Luna St., Poblacion 4, Cadiz City, Negros Occidental Tel No: (034) 720-7404 Dumaguete: 3/F Rolcien Bldg., Dr. A Aldecoa Drive, Daro, Dumaguete City, Negros Oriental Tel No: (035) 522-9437

34

KMBI 2019 Integrated Annual and Sustainability Report

Panay

Roxas: 2/F Hernandez Building, Roxas Avenue, Roxas City, Capiz Tel No: (036) 651-0016 Passi: 2/F Deza Building, Brgy. Man-it, Passi City, Iloilo Tel No: (036) 536-1007 Kalibo: 2/F #14 Gutladera Building, Quezon Avelue, Estancia, Kalibo, Aklan Tel No: (036) 500-7192 Caticlan: 4/F HM Building, Room 5 & 6 Caticlan, Malay, Aklan Oton: 3/F Silla Building, Mabini Street, Poblacion, Oton, Iloilo Tel No: (033) 327-8577

Cebu

Carcar Unit: Dr. J.P Rizal St., Poblacion 1, Carcar, Cebu City Danao: 3/F VAM Bldg., Pio del Pilar St., Poblacion, Danao City

Northern Mindanao

Cagayan De Oro 1 ADM Building, 2/F Door 1, ADM Bldg. Max, Suniel St. corner V. Neri St., Carmen, Cagayan De Oro Cagayan De Oro 2 2/F Hill Point Business Center, National Highway Puerto, Cagayan De Oro, Misamis Oriental Malaybalay 2/F MRMA Bldg, Fortich St., Brgy 7, Malaybalay, Bukidnon Valencia 2/F Central Quality Appliances Building, T.N, Pepito Poblacion, Valencia, City, Bukidnon

Bogo Unit: N1 SIM Bldg., P. Rodriguez St., Brgy. La Purisima, Bogo City, Cebu Tel No: (032) 5232-7376

Caraga

Cebu North: 4/F Martinez Bldg., Jones Ave., Cebu City Tel No: (032) 232-4139

Gingoog: 2/F J&E Building, National Highway, Gingoog City, Misamis Oriental Tel No: (085) 816-0582

Mandaue: 3/F Cotiaoking Building, along Cebu North Road, Basak, Mandaue, Cebu City Tel No: (032) 239-8281 Talisay: 2/F Unit C201 South Agora Building, P. Deiparine St., Talisay City Cebu Tel No: (032) 383-2063

Butuan: 3/F Cesia Bldg., Montilla Blvd., Dagohoy, Butuan City Tel No: (085) 816-0582

San Francisco: 3/F Bernardo Paqueo Jr. Bldg., Brgy. 4, San Francisco, Agusan Del Sur Tel No: (085) 839-3348 Cantilan Unit: Joseph Cotares Residence, Purok 2 Oritiz Street, Magosilom, Cantilan, Surigao del Sur

Surigao 2/F Bullo Building, Unit 2, Km 1, National Road, Washington, Surigao City Tel No: (085) 827-1569 Tandag: WM Bldg., La Suerte, Brgy. Dagocdoc, Tandag City Barobo: 2/F Zita Building, Purok 1, Poblacion, Barobo, Surigao del Sur Mangagoy: G/F CAP Building, R.B Castillo District, Mangagoy, Surigao Del Sur Bayugan: 2/F HED Bldg., Door 5 & 6 Purok 6 Crossing, Maygatasan, Bayugan City, Agusan Del Sur

SOCCSKSARGEN

Gen. Santos 1: 2/F GP Johnston Bldg., Magsaysay Ave. Brgy.

Dadiangas South, General Santos City Tel No: (083) 552-0686 Gen. Santos 2: 2/F Benjamin Napala Building, Magsaysay Avenue, General Santos City Tel No: (082) 552-1704 Koronadal: Door #1, 3/F UGA Bldg., Gensan Drive, Koronadal City, South Cotabato Tel No: (083) 520-2279 Surallah: Corner Apitong, Narra St., Zone 4, Barangay Libertad, Surallah, South Cotabato Tel No: (083) 878-5014

Tacurong: 2/F Le Gre Bldg., National Highway, Tacurong City Tel No: (064) 477-0099 Kiamba: Purok Bougainvilla, Poblacion, Kiamba, Sarangani Province

Davao

Mati: Door 5, 2nd Floor Ville Bldg., Madang St., Brgy. Centro, Mati City Lupon: Diego S. Francisco Bldg., Market Avenue, Poblacion, Lupon, Davao Oriental Metro Davao 1: 2/F VAB Building, Mac Arthur Highway, Ulas, Davao City Tel No: (082) 293-3629

Kidapawan: 3/F Roma Bldg., Quezon Blvd., Brgy. Sudapin, Kidapawan City Tel No: (064) 572-0941 Kabacan: 2/F Melai’s Building, Mantawel St., Kabacan, Cotabato City Tel No: (064) 572-6365 Midsayap: 2nd Floor LLL Tarongoy Bldg., Door 2 Poblacion 6, Midsayap, North Cotabato Tel No: (064) 521-1822 Malita Unit: Glorofredo Balane Residence ,Tugas St., Poblacion, Malita, Davao Occidental

Metro Davao 2: 2/F MITRA Bldg., #160 San Pedro St., Davao City Tel No: (082) 224-4172 Samal Unit: 2/F One Bldg. Miranda, Pichon, Samal City, Davao Del Norte Tagum: 2/F Door 12-A, Suarez Plaza, corner Sobrecary & Mabini Streets, Tagum City, Davao Del Norte Tel No: (084) 216-0201

Northern Cotabato

Digos: 2/F JMC Bldg., Rizal Avenue, Zone 2, Digos, Davao Del Sur Tel No: (082) 272-0008

Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO)

35

GRI INDEX CHECKLIST GRI Standard

Disclosure

Page number

Omission

General Disclosures GRI 102: General Disclosures 2017

102-1 Name of the Organization 102-2 Activities, brands, products, and services 102-3 Location of headquarters 102-4 Location of operations 102-5 Ownership and legal form 102-6 Markets served

Cover page 16-17 32 32-35 KMBI is a non-stock, non-profit MF-NGO 32-35

102-7 Scale of the organization

18

102-8 Information on employees and other workers

18

102-9 Supply chain

28

102-10 Significant changes to the organization and its supply chain

No significant changes

102-11 Precautionary Principle or approach

No applicable context that requires precautionary principle or approach

102-12 External initiatives

KMBI subscribes to USSPM, CPP, Data Privacy Act, TLA, RA 10693, OSH

102-13 Membership of associations

14

102-14 Statement from senior decision-maker

4

102-15 Key impacts, risks, and opportunities 102-16 Values, principles, standards, and norms of behavior 102-18 Governance Structure 102-40 List of Stakeholder Groups

4-5 2 6-11 22

102-41 Collective bargaining agreements

No collective bargaining agreements reported

102-42 Identifying and selecting stakeholders

28

102-43 Approach to stakeholder engagement

28

102-44 Key topics and concerns raised

Currently not included in this report; development of process is underway

102-45 Entities included in the consolidated financial statements

36

No entity included

102-46 Defining report content and topic Boundaries

30-31

102-47 List of material topics

30-31

102-48 Restatements of information

Page 16-17

102-49 Changes in reporting

No significant changes in reporting

102-50 Reporting period

January to December 2019

102-51 Date of most recent report

July 2019

KMBI 2019 Integrated Annual and Sustainability Report

GRI 102: General Disclosures 2017

102-52 Reporting cycle

Annual

102-53 Contact points for questions regarding the report

3

102-54 Claims of reporting in accordance with the GRI Standards

3

102-55 GRI content index

36

102-56 External assurance

No external assurance

Material Topics Economic GRI 103: Management Approach 2017

103-1 Explanation of the material topic and its Boundaries 103-2 The management approach and its components

31

GRI 201: Economic Performance

201-1 Direct economic value generated and distributed

18-19

201-3 Defined benefit plan obligations and other retirement plans

31

7

201-4 Financial assistance received from government GRI 202: Market Presence

202-1 Ratios of standard entry level wage by gender compared to local minimum wage

GRI 203: Indirect Economic Impacts

203-2 Significant indirect economic impacts

No financial assistance received from government 23 12-13, 24-25

Regulatory Compliance GRI 103: Management Approach 2017

103-1 Explanation of the material topic and its Boundaries 103-2 The management approach and its components

30-31

GRI 206: Anticompetitive Behavior

206-1 Legal actions for anti-competitive behavior, anti-trust, and monopoly practices

30-31

GRI 307: Environmental Compliance

307-1 Non-compliance with environmental laws and regulations

No incidents of non-compliance reported

GRI 416: Customer Health & Safety

416-2 Incidents of non-compliance concerning the health and safety impacts of products and services

No incidents of non-compliance reported

GRI 417: Marketing & Labeling

417-2 Incidents of non-compliance concerning product and service information and labeling

No incidents of non-compliance reported

417-3 Incidents of non-compliance concerning marketing communications

No incidents of non-compliance reported

28, 30-31

Environment GRI 103: Management Approach 2017

103-1 Explanation of the material topic and its Boundaries 103-2 The management approach and its components

30-31 27, 30-31

Human Rights and Labor GRI 103: Management Approach 2017

103-1 Explanation of the material topic and its Boundaries

30-31

103-2 The management approach and its components

30-31

GRI 401: Employment

401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees

Rice subsidy, allowances, leave credits, company uniform, health maintenance organization (HMO) Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO)

37

GRI 402: Labor/ Management Relations

402-1 Minimum notice periods regarding operational changes

GRI 404: Training and Education

404-1 Average hours of training per year per employee

24

404-2 Programs for upgrading employee skills and transition assistance programs

24

404-3 Percentage of employees receiving regular performance and career development reviews

23

GRI 405: Diversity and Equal Opportunity

405-1 Diversity of governance bodies and employees

23

405-2 Ratio of basic salary and remuneration of women to men

23

GRI 406: Nondiscrimination

406-1 Incidents of discrimination and corrective actions taken

No incidents of discrimination reported

GRI 408: Child Labor

408-1 Operations and suppliers at significant risk for incidents of child labor

No incidents of child labor reported

GRI 409: Forced or Compulsory Labor

409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labor

No incidents of forced or compulsory labor reported

GRI 411: Rights of Indigenous Peoples

411-1 Incidents of violations involving rights of indigenous peoples

No incidents of violation of indigenous peoples’ rights

GRI 413: Local Communities

413-1 Operations with local community engagement, impact assessments, and development programs

KMBI cascades operational changes during the yearly General Assemblies

25-26

Spiritual GRI 103: Management Approach 2017

38

103-1 Explanation of the material topic and its Boundaries 103-2 The management approach and its components

KMBI 2019 Integrated Annual and Sustainability Report

23 23, 25, 28

KABALIKAT PARA SA MAUNLAD NA BUHAY, INC. (A MICROFINANCE NGO) (A Non‐stock, Non‐profit Organization)

STATEMENT OF ASSETS, LIABILITIES AND FUND BALANCE

DECEMBER 31, 2019 (With Comparative Figures for 2018)

Note

ASSETS

Current Assets Cash and cash equivalents Loans and other receivables Other current assets Total Current Assets

4 5 6

Noncurrent Assets Financial assets at fair value through other comprehensive income (FVOCI)

7

2019

2018

P =96,156,937 P =105,765,494 1,147,399,292 1,026,123,297 18,575,833 13,852,616 1,262,132,062 1,145,741,407

11,120,269

10,997,653

Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO)

39

40 KMBI 2019 Integrated Annual and Sustainability Report

Noncurrent Assets Financial assets at fair value through other comprehensive income (FVOCI) Property and equipment Intangible assets Other noncurrent assets Total Noncurrent Assets

See accompanying Notes to Financial Statements.

(806,726) 523,408,807

(684,110) 560,478,824 7

P =1,488,571,625 P =1,336,462,372

110,706,518

104,111,375

47,461,168 – 283,960 47,745,128 813,053,565

19

65,013,109 16,052,255 293,570 81,358,934 928,092,801

413,509,015

19 22 21

Noncurrent Liabilities Net retirement benefit liability Lease liabilities ‐ net of current portion Deferred tax liability Total Noncurrent Liabilities Total Liabilities

P =48,909,596 P =43,693,237 593,539,879 543,806,012 180,624,765 174,268,339 19,790,807 – 3,868,820 3,540,849 846,733,867 765,308,437

457,051,559

11 12 23 22

Current Liabilities Trade and other payables Capital build‐up Provision for probable losses Lease liabilities ‐ current portion Income tax payable Total Current Liabilities

10,997,653 124,308,074 1,455,677 53,959,561 190,720,965

11,120,269 160,610,367 935,538 53,773,389 226,439,563

P =1,488,571,625 P =1,336,462,372

LIABILITIES AND FUND BALANCE

2018

P =96,156,937 P =105,765,494 1,147,399,292 1,026,123,297 18,575,833 13,852,616 1,262,132,062 1,145,741,407

2019

Fund Balance General fund Cumulative remeasurement gains on net retirement benefit liability Cumulative unrealized loss on financial assets at FVOCI Total Fund Balance

4 5 6

Current Assets Cash and cash equivalents Loans and other receivables Other current assets Total Current Assets

7 8 9 10

Note

ASSETS

DECEMBER 31, 2019 (With Comparative Figures for 2018)

STATEMENT OF ASSETS, LIABILITIES AND FUND BALANCE

(A Non‐stock, Non‐profit Organization)

KABALIKAT PARA SA MAUNLAD NA BUHAY, INC. (A MICROFINANCE NGO)

Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO)

41

17 18 16 20 12 23

EXPENSES Operating expenses Administrative expenses Program expenses Provision for impairment losses Interest expense Provision for (reversal of) probable losses

See accompanying Notes to Financial Statements.

TOTAL COMPREHENSIVE INCOME

OTHER COMPREHENSIVE INCOME (LOSS) Not to be reclassified to profit or loss in subsequent periods Remeasurement loss on net retirement benefit liability Unrealized gain (loss) on financial assets at FVOCI

19 7

21

NET INCOME

INCOME TAX EXPENSE

5 14 15

REVENUES Interest income on loans receivable Service income Other income ‐ net

INCOME BEFORE INCOME TAX

Note

2019

P =67,139,121

(4,611,512) (851,449) (5,462,961)

(6,595,143) 122,616 (6,472,527) P =37,070,017

72,602,082

13,788,472

86,390,554

414,026,247 153,109,209 27,706,208 16,191,232 11,084,872 (18,330,016) 603,787,752

P =612,717,383 75,311,994 2,148,929 690,178,306

2018

43,542,544

15,580,204

59,122,748

458,493,585 177,650,062 33,397,126 17,066,279 14,695,999 6,356,426 707,659,477

P =683,609,711 81,381,569 1,790,945 766,782,225

FOR THE YEAR ENDED DECEMBER 31, 2019 (With Comparative Figures for 2018)

STATEMENT OF COMPREHENSIVE INCOME

(A Non‐stock, Non‐profit Organization)

KABALIKAT PARA SA MAUNLAD NA BUHAY, INC. (A MICROFINANCE NGO)

KABALIKAT PARA SA MAUNLAD NA BUHAY, INC. (A MICROFINANCE NGO) (A Non‐stock, Non‐profit Organization)

STATEMENT OF CHANGES IN FUND BALANCE FOR THE YEAR ENDED DECEMBER 31, 2019 (With Comparative Figures for 2018)

Balances as at December 31, 2018 Net income Other comprehensive income (loss): Remeasurement loss on net retirement benefit liability Unrealized gain on financial assets at FVOCI Balances as at December 31, 2019

Balances as at December 31, 2017 Net income Other comprehensive income (loss): Remeasurement loss on net retirement benefit liability Unrealized loss on financial assets at FVOCI Balances as at December 31, 2018

See accompanying Notes to Financial Statements.

42

KMBI 2019 Integrated Annual and Sustainability Report

Note

19 7

19 7

Cumulative Remeasurement Cumulative Gains (Losses) on Net Unrealized Loss on Retirement Benefit Financial Assets at General Fund Liability FVOCI P =413,509,015 P =110,706,518 (P =806,726) 43,542,544 – –

– (6,595,143) – – – 122,616 P =457,051,559 P =104,111,375 (P =684,110)

P =340,906,933 P =115,318,030 P = 44,723 – – 72,602,082

– (4,611,512) – – – (851,449) P =413,509,015 P =110,706,518 (P =806,726)

Total Fund Balance P =523,408,807 43,542,544

(6,595,143) 122,616 P =560,478,824

P =456,269,686 72,602,082

(4,611,512) (851,449) P =523,408,807

Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO)

43

2019 (18,361,844) (P =9,330,286) (278,271)

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR CASH AND CASH EQUIVALENTS AT END OF YEAR

OPERATIONAL CASH FLOW FROM INTEREST Interest received Interest paid

See accompanying Notes to Financial Statements.

P =684,080,246 14,695,999

P =96,156,937

105,765,494

(30,326,759) (77,224) 870,725 (29,533,258)

P =59,122,748

48,528,982 17,066,279 10,956,798 6,356,426 (572,972) 278,271 – 141,736,532

(138,342,274) (4,723,217) 186,172

49,733,867 5,216,359 53,807,439 (15,242,623) 38,564,816

8 20 19 23 15 15 5

CASH FLOWS FROM OPERATING ACTIVITIES Income before tax Adjustments for: Depreciation and amortization Impairment losses Retirement benefit costs Provision for (reversal of) probable losses Gain on disposal of property and equipment Unrealized foreign exchange loss (gain) Reversal of allowance for impairment losses Operating income before working capital changes Decrease (increase) in: Loans and other receivables Other current assets Other noncurrent assets Increase (decrease) in: Capital build‐up Trade and other payables Net cash generated from operations Income taxes paid Net cash provided by (used in) operating activities

2019

CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of: Property and equipment Intangible assets Proceeds from disposal of property and equipment ‐ 2 ‐ Net cash used in investing activities

CASH FLOW FROM A FINANCING ACTIVITY Lease payments

NET DECREASE IN CASH AND CASH EQUIVALENTS (Forward)

EFFECT OF FOREIGN EXCHANGE RATE CHANGES

ON CASH AND CASH EQUIVALENTS

Note

FOR THE YEAR ENDED DECEMBER 31, 2019 (With Comparative Figures for 2018)

STATEMENT OF CASH FLOWS

(A Non‐stock, Non‐profit Organization)

P =613,899,417 11,084,872

P =105,765,494

143,511,036

313,687

(P =38,059,229)

2018 –

(33,193,337) (1,705,565) 91,972 (34,806,930)

P =86,390,554

23,289,913 16,191,232 7,826,806 (18,330,016) (91,972) (313,687) (14,678) 114,948,152

(215,043,950) (1,405,133) 149,216,606

107,856,823 (145,651,476) 9,921,022 (13,173,321) (3,252,299)

2018

KABALIKAT PARA SA MAUNLAD NA BUHAY, INC. (A MICROFINANCE NGO)

Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO) 12 San Francisco St., Karuhatan, Valenzuela City (02) 8291-14-84 to 86 www.kmbi.org.ph

fb.me/KMBIMFNGO

@kmbi_org

@kmbi_org