KMBI 2018 Integrated Annual and Sustainability Report

2018 Integrated Annual and Sustainability Report

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

1

CORPORATE IDEALS OUR VISION

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.

OUR MISSION

KMBI is a Christ-centered development 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

CONTENTS 02

Corporate Ideals

14

Our Clients

28

Our Stakeholders

04

The Chairman’s Message

16

What We Have Accomplished

29

Partners and Affiliations

06

The President’s Message

18

CAMPS 2018

30

Where We Work

08

The Board of Trustees

20

Employee Welfare

34

Material Topics

10

Seven Strategic Directions

22

Project 3200

36

GRI Index Checklist

12

What We Offer

24

Socioeconomic and Spiritual Programs

38

Audited Financial Statements

ABOUT THIS REPORT The 2018 Integrated Annual and Sustainability Report is the second integrated report of the organization.

The report is prepared in accordance with the Global Reporting Initiative (GRI) Standards: Core option, and it demonstrates KMBI’s commitment to keep its stakeholders, including employees, Program Members, partners and other community members abreast of the organization’s efforts towards sustainability.

Produced and published by: Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO) 12 San Francisco St., Karuhatan, Valenzuela City (02) 291-14-84 to 86 http://www.kmbi.org.ph

The report can be accessed and downloaded at KMBI’s corporate website.

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

I

n a short span of time, KMBI has attained one more glorious step ahead with 32 years of unrelenting servitude to the poor. Reviewing KMBI’s activities and efforts this year, I can proudly say that 2018 has been a productive year for KMBI.

This is a test of endurance that requires renewal of our minds, so that we can carry on with the faithful work upon which we are called.

KMBI has continued its endeavors to become a venue to share best practices in microfinance and educate the sector on various issues and challenges being faced by the industry. Indeed, God has been faithful to us and to the communities we serve as we raise our flag higher in the competitive realm of microfinance.

Four years since the recovery of the KMBI Head Office in Karuhatan, we have been rallying with strong financial and operational standing in 2014. Revenues for 2018 reached PhP 687.98 Million with a 21% increase from the previous year.

These numbers alone speak of the kind of foundation that we have—a strong one anchored on solid

ground. The trials and tests we have faced in 2014 became our greatest testimony of God’s grace and mercy.

I am optimistic that as we continue to expand in both our financial and non-financial services, we can achieve more breakthroughs and provide only the best services that our Program Members deserve.

Throughout the year, the management team has been engaged in substantial partnerships. We have been meeting with like-minded organizations as well as representatives from related industries and networks to explore possible opportunities for the organization. We always think what is best for the collective, not what is most beneficial to an individual.

We are halfway through the realization of our “Paghandom sa Damlag: 2020 Vision”. This is a test of endurance that requires renewal of our minds, so that we can carry on with the faithful work upon which we are called. I am thrilled to witness the future unfold right before our eyes!

David D. Gutierrez Chairman

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2018 Integrated Annual and Sustainability Report

102-14

5

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

K More than operational figures, we make sure that our main business stays in place— transformation.

MBI has concluded the third year of its Paghandom sa Damlag: Vision 2020 Business Plan. Indeed, God has given us another year filled with opportunities to continue reaching out to the poor.

We would like to thank the Board of Trustees as well as the Management Team for their dedication and valuable contributions to sustain our efforts in achieving our goals.

This year, we have intensified our efforts to tap the assistance of other institutions to develop even more cohesive processes and systems. We received technical assistance from the International Labour Organization (ILO) in developing an integrated product for client risk management; we will be working with them in the next several months.

We also made changes to the name of the organization, with the addition of “(A Microfinance NGO)” suffix in compliance to the requirements of the Microfinance NGO Regulatory Council (MNRC). While seemingly a minute amendment, this is a significant manifestation of our dedication to partner with the government by being fully compliant with the industry regulations.

We continue to be the leading Microfinance NGO in terms of insurance payout, with over 263,000 lives covered

by Microinsurance this year. We stay true to our commitment to offer superior services to our Program Members and their families—services that provide a sense of financial and emotional security.

But more than operational figures, we make sure that our main business stays in place—transformation. This year, we held a follow-through of the first Transformational Development (TD) Forum which we started last 2017, as a response to the overflowing positive reception that the first installment received. We signed a partnership with the Asian School of Development and Cross-Cultural Studies (ASDECS) to strengthen exchange of ideas and perspectives on integral transformation in connection to development work.

We still have two more years left to hurdle through the realization of our 2020 vision, and it makes me optimistic to see KMBI brimming with passionate leaders and dedicated staff working together to help the poor. Looking at the faith of these people, I believe that the best is indeed coming!

Eduardo C. Jimenez President

KMBI LEADERS

From left clockwise: Ms. Hazel Christine R. Bayaca, TDTG Deputy Executive Director; Ms. Madelyn P. Frijillano, MSG Deputy Executive Director; Ms. Rachelle M. Basiya, COG Deputy Executive Director; Mr. Edwin B. Aruelo, Training Director; Mr. Friedrich Fort C. Nicolas, IT Director; Ms. Sheila Dianne P. Ostrea, Visayas Regional Director; Ms. Lanie C. Montano, Luzon Regional Director; Ms. Amelita T. Andilab, Mindanao Regional Director; Mr. Hector H. Celajes, Jr., GSD Director; Ms. Ma. Wilma C. Velarde, Finance and Accounting Director; and Ms. Sharon O. Dionco, HCD Director.

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2018 Integrated Annual and Sustainability Report

102-15

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

THE BOARD OF TRUSTEES

102-18

Background Standing (L-R): Mr. Sergio G. Edeza, Trustee; Mr. Eduardo C. Jimenez, President; Mr. Edgardo F. Garcia, Corporate Treasurer; Mr. Lemuel David A. Salmo, Trustee; Dr. Rodolfo P. Estigoy, Trustee; Atty. Romel R. Bagares, Corporate Secretary; Foreground Sitting (L-R): Ms. Mila M. Bunker, Trustee; Mr. David D. Gutierrez, Chairman; and Dr. Virginia P. Juan, Trustee.

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.

Pursuant to the Corporation Code and By-Laws of KMBI, the Annual General Membership (AGM) Meeting was held last February 2018. KMBI seeks to admit one representative each from Luzon, Visayas and Mindanao as Corporate Members in the next three years. The Board of Trustees comprises of Mr. David D. Gutierrez, Chairman and Vice-President; Mr. Eduardo C. Jimenez, President and Vice-Chairman; Mr. Edgardo F. Garcia, Corporate Treasurer; Atty. Romel R. Bagares, Corporate Secretary; Ms. Mila M. Bunker, Trustee; Dr. Virginia P. Juan, Trustee; Mr. Lemuel David A. Salmo, Trustee; Mr. Sergio G. Edeza, Trustee; and Dr. Rodolfo P. Estigoy, Trustee.

Other Corporate Members of the organization include: Mr. Sebastian Quiniones; Mr. Kak Sin Koo; Mrs. Yolanda dela Cruz; Atty. Servillano Mendoza; Dr. Ricardo B. Jumawan; and Mrs. Lydia Malot, KMBI Program Member of Davao Branch and Citi Microentrepreneurship Awardee in 2015. The General Membership ensures that the composition of the Board provides balance and diversity of skills, experience and knowledge of the industry and that the Trustees, as a group, have the necessary core competencies relevant to KMBI’s operations.

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.

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2018 Integrated Annual and Sustainability Report

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.

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.

COMPOSITION OF THE BOARD AND BOARD COMMITTEES FOR THE YEAR 2018 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

Property Development Committee^^

Chairman

Member

Member

Mr. David A. Salmo

Member

Atty. Rainier Q. Chu^

Member

Bishop Jose D. Dalino^

Member

Member

Mr. Kak Sin Koo^

Member

Member

Mr. Sebastian Quiniones^

Member

^ Corporate Members ^^ Ad hoc committee

9

Member

7

Paghandom sa Damlag: Vision 2020 is KMB of the Seven Strategic Directions which ser

STRATEGIC DIRECTIONS

2

It is a product of one of the most exhaustive Committee have gathered to assess the per through a meeting of minds and hearts arri

Paghandom sa Damlag encapsulates the pe economic, environmental and social condit topics in this integrated annual and sustain

4

ENSURE

SUSTAINABILITY OF KMBI

50% 1

58 3

DEVELOP FAITH-BASED

OUTLOOK & VALUES

DELIVER

& EFF TRANSFOR

STRENGTHEN NG BOARD A GOVE GOVERNANCE

& LE LEADERSHIP DERSH P

OF PEOPLE

81%

45% • 108.18% Operational Self-sufficiency • Initial study done on social enterprises

• Implemented use of Gawaing Bahay and Pasok na sa Kaharian • Implementation of Retreat, Prayer Time (partial), TD Forum, LAMP Memory Verse

• On-going development and implementation of Board Governance Manual • On-going implementation of Board and Management Accountability Framework

• Group Loan, P Individual Loan • Agri-insurance Adopt-a-Dayca Scholarsh are imp • Success Circle rev ENTREP Modul out, KEY/CMA A • Center Leaders Weddings, com regularly

BI’s five-year business plan. It is the organization’s road map, running from 2016 up until the year 2020, and is comprised rve as the basis for specific plans, programs, and interventions.

e and participative planning activities over the years. In 2015, the Board of Trustees and the Expanded Management rformance of the organization vis-a-vis the needs and demands of KMBI’s stakeholders, primarily its clients – and ived at the five-year business plan.

erspective of sustainability promoted in the GRI standards with an additional focus on spiritual development alongside tions as components of the broader context of sustainability. Thus, it has been used as a basis for identifying material nability report.

NHAN NHA HA 6 EENHANCE

R CONSISTENT

FECTIVE

RMATION ACTIVITIES

PERSONAL PE ONAL O ONA A VALUING VA

19%

8% 5

S & 7 BUILD CLOSE

HEALTHY RELATIONSHIPS ELATIONSHIP

FOSTER AN

ATMOSPHERE OF TRUST

BUILT ON INTEGRITY

74%

Pureit, Agri-Loan, n are implemented e, Microinsurance, care, Wellness and hip Programs plemented vival is at early stage, les are being rolled Awards are regular • Company and statutory s’ Conference, Mass benefits, enhanced relocation mmunity outreach package, continual study y conducted on staff benefits • Membership to industry groups accredited by regulators wiith consistent communication efforts

• Advanced Education Program partially approved and implemented • Initial study being done on training institute

55%

• Full implementation of K-FIT Program with monitoring and evaluation

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

WHAT WE OFFER

102-2

Microfinance is all about giving access to financial services to low-income clients that are mostly self-employed women who would be otherwise excluded from the services of commercial banks. More than microfinance, KMBI seeks to fulfill its main goal of holistic transformation. We do this by touching beyond the financial aspect of one’s life.

FINANCIAL SERVICES

AGRICULTURAL MICROFINANCE PROGRAM (AMF)

INDIVIDUAL MICROENTERPRISE PROGRAM (IMEP)

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.

The Individual Microenterprise Program extends credit provision to graduated Program Members who need additional capital beyond the terms offered by the Group Loan Program.

CAPITAL BUILD-UP (CBU)

MICROINSURANCE

UNILEVER PUREIT LOAN PROGRAM

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.

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.

KMBI sees the importance of health and sanitation in sustaining families and businesses. Hence, the Pureit Loan Program seeks to deliver safe and clean drinking water to the household of both members and non-members.

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.

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2018 Integrated Annual and Sustainability Report

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. The EDS also acts as a liaison for business development service offices to determine and better serve the demands of clients.

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 (CLC) KMBI enhances the leadership capacities of Center Leaders in handling and empowering their groups.

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Working Hands to Success

T

his year’s Citi Microentrepreneurship Awards (CMA) recognized KMBI Program Member, Marisa Ganding, as the Special Awardee for Start-up Microbusiness. She runs a spa and wellness center with three branches in Mindanao.

Marisa started out as a masseuse in General Santos City, earning PhP 50.00 per massage with a maximum of 5 clients a day. She had worked like this for a decade, and decided to move to a medical spa where she realized that the time was ripe for starting a business. “Compared to working, running a business allows you to help more people,” she said.

Marisa started with home services. With consistent efforts, she had managed to draw in more customers, allowing her to save up capital which she used to invest on a massage center with three beds.

She discovered KMBI through her mother who is also a member of the program. She used the capital she borrowed from KMBI to support her business needs until her loan amount increased, which was instrumental to establishing two more branches in her area. Marisa hopes to chart the entire Mindanao with her massage services in the future.

“Thank you, KMBI. I would not have done it without your help,” she said during her town hall celebration.

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PWD: Persevering with Determination

A

s the adage goes, “disability does not equal inability.”

This is what the story of Maxima Calud from Kabacan, North Cotabato, wants to tell us. Despite her blindness, Maxima makes and sells hanging nets to make ends meet. Her husband, Joaquin Calud, serves as her eyes and helped her establish their own Sari-Sari store.

Because of her disability, Maxima is often shut out of basic livelihood opportunities. She related that some lending institutions are doubtful of her ability to generate enough income to pay off her loan. But with KMBI, her disability did not hinder her chance of getting additional capital. She used the loan she got from KMBI to expand her business.

A proud member of KMBI, Maxima produces at least 12 dozens of orchid and flower baskets in a day. Her products have already reached prominent areas like Manila, Leyte and Cebu. She also owns a piggery and takes care of the livestock daily. Through regular center meetings, Maxima was able to meet genuine friends in the form of her fellow Program Members.

Maxima is an inspiration to her neighbors, customers and business partners. She exudes positivity despite difficulties and gives off a vibe that inspires people to accept what they can’t do and work on what they can.

In a gathering of KMBI Program Members last December, Maxima was given opportunity to speak to her fellow Program Members and facilitate a livelihood training. With the help of her family, she shared with other Program Members the how-tos of weaving hanging nets. Despite her disability, she possesses deep willingness in helping her fellows create a living.

With her four children, one whom is currently pursuing Nursing, Maxima envisions all of them finishing their studies and reaching the top of their dreams. She does not find her current situation a reason to lose hope; instead, it teaches her to push forward for her family.

Maxima may be deprived of sight, but she can certainly see opportunities in the face of handicap.

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

WHAT WE HAVE

OPERATIONAL PERFORMANCE CLIENT OUTREACH

LOAN PORTFOLIO

AVERAGE LOAN SIZE

2016

2017

2018

2016

2017

2018

2016

2017

2018

119,281

149,080

170,652

684.5M

840.27M

1.04B

9.56K

9.765K

10.26K

NO. OF STAFF

NO. OF CENTERS

NO. OF BRANCHES

2016

2017

2018

2016

2017

2018

2016

2017

2018

871

1,071

1,237

4,607

5,603

6,578

45

54

65

LIVES INSURED

2016

2017

158,817

297,7891

2018 275,9082

PORTFOLIO-AT-RISK

LOANS DISBURSED

2016

2017

2018

2016

2017

2018

2.45%

2.42%

3.07%

2.154B

2.65B

3.267B

NOTE: The 2016 figures from the comparative report have been updated. For items with superscript, please see footnote on page 37 GRI index checklist

2018 Integrated Annual and Sustainability Report

ACCOMPLISHED 102-6, 102-7, 102-8, 201-1

FINANCIAL PERFORMANCE

OPERATIONAL INDICATORS

2016

2017

2018

Increase (Decrease)

Percentage Change

Total Assets

1.15B

1.32B

1.336B

16M

1.2%

Total Liabilities

757.92M

856.12M

813.05M

(43.07M)

(5.03%)

Fund Balance

393.84M

467.12M

523.40M

56.28M

12.05%

Net (loss)/Income

60.48M

69.73M

72.60M

2.87M

4.12%

2016

2017

2018

Increase (Decrease)

Percentage Change

Current Ratio

1.16

1.21

1.50

0.29

23.96%

Debt to Equity Ratio

1.92

1.83

1.55

(0.28)

(15.30%)

CBU to Outstanding Loan Ratio

47.88%

52%

52%

-

-

LR to Total Assets

59.43%

63.50%

78%

14.5%

22.83%

Financial Self-sufficiency

113.13%

111.95%

99.37%

(12.58%)

(11.24%)

Operational Self-sufficiency

114.71%

113.96%

108.18%

(5.78%)

(5.07%)

ASSET/LIABILITY RATIOS

2017-2018

2017-2018

2017-2018

2017-2018

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

201

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2018 Integrated Annual and Sustainability Report

18

S

taff empowerment is one of the main highlights of 2018. In April, KMBI mounted the biennial Leadership Enhancement and Development (LEaD) Camp back to back with the hosting of the 27th APPEND Leadership Conference at the SMX Premier, Lanang, Davao City.

These two events were dubbed together as CAMPS 2018.

The LEaD Camp, themed “Live a Holy Life; Accomplish God’s Purpose!”, was a congregation of over 800 KMBI staff nationwide. The championship of the KMBI Sports Fest was also held during the festivities.

KMBI was also selected to host this year’s APPEND Leadership Conference, attended by more than 1,300 practitioners from various Microfinance NGOs. With the theme “Past Meets Future” centered on Hebrews 12:1-2, the assembly traced the roots of microfinancing in the Philippines back to humble beginnings of APPEND and its contributions in the sector in the past three decades, as well as the various challenges and opportunities that the whole industry awaits in the years ahead.

The CAMPS 2018 mirrors KMBI’s continuous commitment to strengthen competence and leadership capabilities of its employees and partner organizations.

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

Employee Welfare 401-4, 404-1, 404-2

KMBI considers Human Capital as its most valued asset. Through regular training, staff are equipped with technical knowledge and competencies that will help them function better.

25

No. of Hours

The organization provides, through the Training and Advanced Education Department, an average of about 18 hours of internal training and about 4 hours of external training for every staff. Rank and file employees are the primary recipients of internal training through KMBI’s on-boarding course, the One KMBI Program (OKP) and the Global Leadership Summit (GLS) Echo.

average no. of training hours internal training

20 15 10 5 0

Senior Management

Junior Management

average no. of training hours EXternal training

Rank & File

All Employees

In addition to institutionalized courses for staff development, respective departments regularly conduct orientation and reinforcement sessions with the operations staff to apprise them of enhancements in programs and services as well as in the roll out of new ones.

45 40

No. of Hours

Supervisory

35 30 25 20 15 10 5 0

Senior Management

Junior Management

Supervisory

Rank & File

All Employees

Getting Onboard with KMBI The ONE KMBI Program (OKP) is a training intended for newly hired staff to help them understand the organization’s purpose and its relevance to its operations. This year, 334 new employees underwent OKP and were oriented to their roles as facilitators of transformational programs alongside financial services.

Graduates of this onboarding course are expected to have a better understanding of the situation in the microenterprise landscape and develop a wider vision of serving the poor through their work at KMBI.

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2018 Integrated Annual and Sustainability Report

Graduates of the Introductory Course to Management, a training program intended to equip supervisors and up with proper management roles. This year, 135 staff have been transitioned to supervisory mindset through the ICM.

KMBI ensures hiring of quality staff to fill-in existing positions and to supply manpower for operational expansion. KMBI also ensures that employees receive equal pay irrespective of gender, subject to approved salary structure based on position and level of competency.

No. of employees hired

590

KMBI also has a relatively young workforce, with a little over half of its total number of employees aged below 30 years old.

RATIO OF BASIC REMUNERATION MALE AND FEMALE

Employee Distribution By gender per employee category All Employees Rank and File Supervisory Junior Management Senior Management 46%

54%

47%

53%

41%

59%

45% 49%

51%

55%

Employee Distribution

By AGE GROUP per employee category

All Employees Rank and File Supervisory Junior Management Senior Management 0%

Male

Female

25% Under 30

21

50% 30-50

75% Over 50

100%

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

PROJE

KMBI vows to plant fruitbearing seedlings in denuded areas for the benefit of the generations to come.

22

Operations staff join the tree planting activity at Mt. Lumot, Dona Remedios Trinidad, Bulacan, as part of KMBI’s 32nd anniversary celebration

2018 Integrated Annual and Sustainability Report

ECT 3200

304-2, 304-3

In 2018, 3,200 seedlings were planted in celebration of KMBI’s 32nd anniversary. The tree planting activities were held in all areas of operations of KMBI nationwide. Staff from the Credit Operations Group, support groups, the management team and the Board of Trustees volunteered to participate in this concerted effort for the environment.

KMBI works with two people’s organizations and the Community Environment and Natural Resources Office (CENRO), to implement the Enhanced National Greening Program (E-NGP). Through the E-NGP, the organization gives concrete support to the government’s reforestation efforts and through the partnership with people’s organizations, the Samahang Pangkaunlaran ng Barangay Camachin and the Cacao Upland Growers Inc., KMBI engages and empowers the local community.

This reforestation stint is a long-term commitment of the organization to local communities, in which KMBI vows to plant fruitbearing seedlings in denuded areas for the benefit of the generations to come. In time, the locals can harvest these fruits and sell to the local market, thus giving them resources to explore more business opportunities that will bring economic development to their area.

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3200

SEEDLINGS PLANTED in various forests across the Philippines in 2018

ENHANCED NATIONAL GREENING PROJECT (E-NGP) Through the E-NGP, KMBI gives concrete support to the government’s reforestation efforts through partnerships with local entities and people’s organizations.

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

SOCIOECONOMIC AND SPIRITUAL PROGRAMS

413-1

Alongside the provision of financial services, social protection programs that address differing needs of communities and member families are carried out yearly.

In 2018, 290 scholarships were released to benefit graduating college students. Through the Dalawang Iskolar kada PUH program, KMBI helps Program Members send their children to college in the hope that the scholars be able to reach higher and bigger dreams once they complete their education. KMBI was able to provide about 30 more scholarships this year than in 2017.

KMBI also continues its Adopt-a-Daycare program. This year, the organization partnered with 84 Daycare Centers in its areas of its operations. More than 4,000 young children received school supplies, toys and other gifts as well as benefited from story-telling, and other activities.

Primary learning institutions are critical to inculcating good values to children in their formative years. KMBI aims to help these institutions in facilitating character building through the Adopt-a-Daycare Program. With this program, KMBI provides the facility needs of Daycare centers and donates materials to aid in the learning process of students.

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2018 Integrated Annual and Sustainability Report

For its Program Members, KMBI has instituted wellness programs, entrepreneurial training and spiritual formation programs. The Wellness Caravans this year were held in Valenzuela City, Koronadal and Angono. Addressing physical, spiritual, and economic wellbeing, the caravan is meant to impart a well-rounded view of wellness and help improve several aspects of the Program Members’ life. The three areas of implementation in all had 837 attendees.

The organization’s entrepreneurial training programs on the other hand has almost 58,000 beneficiaries, the majority of which attended the Branch Financial Literacy Training.

With the KMBI Development Foundation Inc. and APPEND Inc., the Iponaryo, livelihood workshops, social enterprise, business permit, online marketing and other relevant topics of training were also made available to select Program Members.

KMBI mounts training programs based on the profile and needs of its Program Members.

MAKING DREAMS HAPPEN

Spiritual development is of course a focus at KMBI. The Integral Transformation Framework of the organization encapsulates the view that development work for a Microfinance NGO must also include spiritual formation programs and not only financial services.

The Dalawang Iskolar kada PUH Program provides opportunities for graduating college students to finish their course. Each branch is allotted a maximum of four (4) students to fund. With this grant, Program Members are given a chance to fulfill their dreams for their children.

How OUR NON-FINANCIAL SERVICES fared in 2018

DALAWANG ISKOLAR KADA PUH

WELLNESS CARAVAN

290 scholars

837 attendees

ADOPT-A-DAYCARE 84 Daycare centers

4,151 pupils

CENTER LEADERS’ CONFERENCE

MASS WEDDING

6,914 attendees

406 couples

25

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

Several non-financial programs are consistently implemented for the benefit of Program Members.

The Center Leader’s Conference (CLC) was held in all 54 existing branches and was able to empower a total of 6,914 center officers. The CLC hones the skills of center leaders as better entrepreneurs, mothers, and members of the community.

KMBI regularly conducts Mass Weddings to facilitate union for unmarried cohabiting couples who otherwise have no financial means to get married and enjoy the legal benefits of matrimony.

Meanwhile, the programs for Mass Wedding are annually anticipated by Program Members and staff.

The opportunity for partners to be united in the bonds of marriage has been essential in sanctifying their union, especially for those who cannot afford to do so.

This 2018, mass wedding activities have seen over 400 couples wed.

For its staff, KMBI carries out a holistic spiritual formation program through weekly Accountability Group (AG) meetings, Daily Morning Reflection for branch staff, memory verses, monthly corporate fellowship and prayer time. At least an hour a week of corporate time is allotted to the program. A Spiritual Support Program, which runs through the help of mentor pastors in the community where branches operate, boosts the implementation of KMBI’s initiatives.

Center meetings are at the heart of KMBI’s microfinance operations. This program caters to Program Members in the aspect of values formation that is critical to building harmonious relationships with their families, peers, and communities.

These spiritual development programs are in place to ensure that staff are not just growing professionally, but also in all other aspects of one’s being.

Meet KMBI’s 30 Outstanding Program Members These are women whom KMBI prides to call its outstanding Program Members. They are called such for their loyalty and unwavering support to KMBI’s programs. In line with KMBI’s 32nd anniversary celebration, the organization paid back to its 30 recognized outstanding Program Members who flew to Manila to personally meet the KMBI Board of Trustees, the Management team and key officers behind KMBI’s products and services.

The Program Members also went onboard for an intensive enterprise training, equipping them with advanced business skills that they can impart to their peers once they return to their homes. Apart from enterprising skills, this training was also aimed at leadership enhancement to further their influence and contribution to their communities.

26

2018 Integrated Annual and Sustainability Report

T

he Second Transformational Development Forum was held on December 7, 2018 at Sequoia Hotel, Quezon City. Representatives from like-minded organizations participated in the discussion on Perspectives in Christian Development Work.

This year’s talk, with 111 participants, built on the previous year’s topic of presenting transformational development frameworks of different organizations.

The TD forum also included the signing of a memorandum of agreement with the Asian School of Development and Cross-cultural Studies (ASDECS), sealing a partnership for ASDEC’s learning conference.

27

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

OUR STAKEHOLDERS 102-17, 102-40, 102-42, 102-43, 102-44, 404-3

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.

Industry partners, suppliers and networks At KMBI, we affirm transparency and open communication. Our partners add value to the work that we do by investing their resources to the organization. We keep close lines with our partners by celebrating years of connectedness and fostering long-term healthy relationships which are integral to sustainability.

We ensure that our suppliers share the same goal and values with KMBI, and that they have a deep understanding of the business of the organization.

We enforce strict policies on selecting suppliers as part of our 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.

Staying true to one of our Strategic Directions, we affirm consistency in the effective and truthful delivery of our transformational services to those who need it most.

Local communities Driven by the need to extend our services beyond our Program Members and their families, we continue to devise programs that cater not only to our clients, but also to the people living within the localities that we serve. We aim to build community leaders now and in the future by equipping them with adequate resources to help them move out of poverty. Among our community endeavors are educational assistance, reforestation, hospitalization, and many more.

Employees

We pay high regard to the networks that we belong to, 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. We do this by taking a proactive approach to efforts initiated by the networks and responding to their needs.

The workforce is the primary channel of delivery of our services. We capacitate our people by regularly providing internal and external training, semestral performance appraisals, and competitive incentive schemes to encourage maximum productivity among staff. We hold weekly accountability groups and devotions to maintain healthy bonds and ensure that employees are looking out for one another, in an effort to instill solidarity within working groups.

Program Members

Regulators

Our main business would not be possible without clients patronizing our services. We allocate a huge share of our net income to strengthen the provision of non-financial services. We value social responsibility and strive to make a long-term positive impact on the communities where we operate.

We at KMBI give utmost respect to industry regulations.

Regulators are set in place to manage microfinance operations in view of upholding the highest degree of ethical, moral, and corporate standards. We are committed to becoming responsive to the needs of the governing entities by keeping abreast of movements within the industry and securing compliance with local regulations.

28

2018 Integrated Annual and Sustainability Report

PARTNERS AND AFFILIATIONS 102-13

NGOs and Other Networks

Ahon sa Hirap, Inc. Alalay sa Kaunlaran, Inc. Asia-Pacific Rural and Agricultural Credit Association APRACA - CENTRAB APPEND Inc. ASA Philippines Foundation Asian School of Development and Cross-Cultural 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 Center for Community Transformation Community Economic Ventures Inc. ECLOF Philippines

Katuwang Resource Center, Inc. MBSolve Insurance Agency, Inc. Microfinance Council of the Philippines, Inc. Microfinance Information Data Sharing Inc. Microfinance NGO Regulatory Council Mindanao Microfinance Council Negros Women For Tomorrow Foundation, Inc. Nickosia Opportunity-Kauswagan Bank, Inc. People’s Alternative Livelihood Microfinance Foundation of Sorsogon, Inc. Pinoy Ako Insurance Services Philippine Society for Training and Development Rangtay sa Pagrang-ay, Inc. Resources for the Blind REACH, Inc. Taytay sa Kauswagan, Inc.

Program Partners and Service Providers

Ang Hortaleza Foundation Bayan Academy BPI Sinag Collins International Trading Corporation First Life Financial Company, Inc. For His Glory Multipurpose Cooperative Habitat for Humanity Intellicare (HMO Provider) KPMG Manulife Philippine Bible Society Rayel and Butuyan Law Offices Sequoia Hotel Seda Vertis North SNS Security Services Standard Insurance SUN Cellular Sunking. Greenlight Planet Unilever Pure-It Unilever Knorr Lutong Nanay Unilever Kabisig Water.org

Partners’ Appreciation Night In October, KMBI celebrated connections with partners and networks through the biennial Partners’ Appreciation Night, held at 55 Events Place, Quezon City. 150 delegates of partner institutions from a wide variety of industries convened in an evening dedicated to the value of connectedness. 30 selected Program Members also graced the event to meet the institutions behind KMBI’s product offerings and how these connections work together to make its social and financial services more inclusive and accessible to the poor.

The Partners’ Appreciation Night was first launched in 2016 to pay tribute to the role of partnerships in aligning different industries to a single objective.

29

Banks

Bank of Commerce Philippine Business Bank Philippine National Bank – Allied Producers Bank Security Bank Corporation/ Savings Local government and government agencies

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

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

Where We Work

102-3, 102-4

KMBI Head Office 12 San Francisco St., Karuhatan, Valenzuela City Tel. No. (02) 291-14-85

Balanga 2/F Tuazon Bldg. Capitol Drive, San Jose, Balanga City, Bataan

KMBI Panay Office 130 Panay Avenue, Brgy. South Triangle, Diliman, Quezon City Tel. No. (02) 291-14-84, (02) 373-1339, (02) 373-1297

Mabalacat 2/F China Bank Savings Bldg. Mac Arthur Highway, Dau, Mabalacat, Pampanga Tel. No. (045) 901-9774

Tuguegarao 2/F Tuddao Bldg. Campos St. College Ave. Corner Caritan Centro Tuguegarao City Tel. No. (078) 375-2156

Tarlac 2/F Unit 201 & 202 JTM Bldg. M. H. Del Pilar St. corner Zafiro St. Brgy. San Nicolas, Tarlac City Tel. No. (045) 925-7634

Cauayan 4/F CLU Bldg. Maharlika Highway District II Cauayan City, Isabela Tel. No. (078) 652-3910

Paniqui Out of Town Annex Bldg. #538 A. Magallanes St. Poblacion Sur, Paniqui, Tarlac Tel. No. (045) 985-6476

Santiago 3/F Psalm 23 Bldg. National Road, Victory Norte, Santiago City Tel. No. (078) 305-1072

Rosales Unit 1 &2 RGT Bldg. Brgy. Tomana East, Rosales, Pangasinan

Solano 2/F kmci East Bldg. National Hi-way Brgy. Roxas, Solano, Nueva Vizcaya Laoag Avenue West Brgy. 8 Gen. Luna corner Panganiban St. Laoag City, Ilocos Norte Tel. No. (077) 600-2466 San Fernando Unit 1-A 3/F U FIVE Bldg. Mac Arthur Highway Dolores City, San Fernando, Pampanga Tel. No. (045) 402-6446 Angeles 2/F Eloisa Narsico Building, Mac Arthur Highway corner Magalang Road. Brgy. Sto Cristo Angeles City Tel. No. (045) 458-4453 Olongapo G/F Rementilla Bldg. 1630 Rizal Ave. East Tapinac, Olongapo City Tel. No. (047) 611-0477

San Carlos 2/F Jelines Bldg. Brgy. Palaris, San Carlos City, Pangasinan Tel. No. (075) 523-0318 Bayambang 2/F Lagoy’s Bldg. Zone VII Bayambang, Pangasinan Baliwag #1733, 3/F Writ Bldg. Ano St. Poblacion, corner Roberto Chico St., Baliwag, Bulacan Tel. No. (044) 764-0818 San Miguel 2/F Dona Amelia Building, Maharlika Highway, Camias, San Miguel Bulacan Balagtas #197 2/F Mc Arthur Buiding, Mc Arthur Highway, Balagtas, Bulacan San Jose 3/F Umerez Bldg. Tungko Mangga, San Jose Del Monte, Bulacan Tel. No. (044) 815-0076

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2018 Integrated Annual and Sustainability Report

Valenzuela #12 San Francisco St. Karuhatan, Valenzuela City Tel. No. (02) 356-5799

Mendez Satellite Unit #126 Unit 2 3/F JLC Bldg. Aguinaldo Highway, Mendez Crossing East, Tagaytay City, Cavite Tel. No. (046) 412-1808

West Avenue #68 Unit F 3/F Cabral Bldg. West Ave., West Triangle, Quezon City Tel. No. (02) 240-2598

Bacoor 3/F O. M. V. Bldg. Blk. 12 Lot 13 & 14 Phase 2A, Avenida Rizal St. cor. Evangelista St. Bahayang Pag-asa Subd., Molino V, Bacoor, Cavite Tel. No. (046) 435-2484

Quezon City 1 Block 26 Lot 41, Gabriela Silang Street, New Capitol Drive Estates Commonwealth Avenue, Batasan Hills, Quezon City Tel. No. (02) 952-4210 Novaliches #970 Room 306-309 3/F Our Lady of Mercy Bldg. Quirino Hi-way Brgy. Nova Proper, Novaliches Tel. No. (02) 355-7244 Manila Unit 1B 3/F TRP Bldg. Gonzalo Puyat St., Quiapo, Manila Tel. No. (02) 252-6872 Malibay #2755 3/F TRIM Bldg. Taft Ave., Brgy. 84, Pasay City Tel. No. (02) 777-4644 Antipolo 354 2/F E & E Bldg. M. L. Quezon St., San Roque, Antipolo City, Rizal Tel. No. (02) 247-7046 Angono 3/F Aurora Building Quezon Ave., Brgy. San Isidro, Angono, Rizal Tel. No. (02) 806-5137 Binangonan Satellite Unit Quarry Road Brgy. Pantok Binangonan Rizal San Mateo #125 Unit 8 & 9 3/F RNC Bldg. Gen. Luna Ampid, San Mateo, Rizal Tel. No. (02) 721-9712

San Pablo #2 2/F Unit 2C & 2D Nino Jesus Bldg. Purok 1, Maharlika Highway Brgy. San Francisco, San Pablo City, Laguna Tel. No. (049) 523-8839 Calamba 2/F Auyonick Bldg. Brgy. Parian, Calamcba City, Laguna Tel. No. (049) 531-0116 Lipa #18 2/F MA and H Bldg. C. M. Recto Ave. Brgy. 9 Lipa City, Batangas Tel. No. (043) 778-2214 Tanauan Satellite Unit 2/F R Venue Building, Unit 10&11 Avelino Street, Brgy. 3, Tanauan Batangas Biñan 2/F Unit 3 RK2 Building National Highway,Brgy San Vicente Binan, Laguna Sta. Cruz Satellite Unit 2/F EM Building, P Burgos Street, Sta Cruz, Laguna Naga 2/F Prieto Bldg. Panganiban Dr., Dinaga, Naga City, Camarines Sur Tel. No. (054) 881-1511 Goa 2/F Bentoy Square Bldg., San Jose St., Goa, Camarines Sur

Tanay #19 J. M. Catolos St. Brgy. Katbayani, Tanay, Rizal Tel. No. (02) 997-3072

Iriga LT Bldg., Lot2-A Gonzales St. San Francisco, Iriga City, Camarines Sur Tel. No. (052) 881-7089

Upper Cavite 2/F RCS Bldg. Old Carmona Rd. Brgy. Sampaloc 1, Palapala, Dasmarinas, Cavite Tel. No. (046) 450-0533

Ligao 3/F Cate’s Bldg., Mabini St., Brgy. Bagumbayan, Ligao City, Albay Tel. No. (054) 826-0262

31

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

Tabaco Satellite Unit 3/F Ang Seng Yong Bldg., Ziga Ave., San Juan, Tabaco City, Albay

Cadiz 2/F Avon Bldg. Juan Luna St. Poblacion 4, Cadiz City, Negros Occidental Tel. No. (034) 720-7404

Daet 2/F Lacson Bldg. Governor Panotes Ave., Brgy. 7 Daet, Camarines Norte Tel. No. (054) 885-0559

Dumaguete 3/F Rolcien Bldg. 134 Dr. A. Aldecoa Drive, Daro, Dumaguete City Tel. No. (035) 522-9437

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

Roxas 2/F Hernandez Bldg. Roxas Ave. Brgy. IX, Roxas City, Capiz Tel. No. (036) 651-0116

Mandaue 3/F Cotiaoking Bldg. North Rd., Tabok, Mandaue, Cebu City Tel. No. (032) 239-8281

Passi Satellite Unit 2/F Deza Bldg. Brgy. Man-it, Passi City, Iloilo Tel. No. (036) 536-1007

Lapu-Lapu Satellite Unit 2/F Unit 1, M&Y Realty Building, 3H-Basak, Lapu Lapu City

Kalibo #14 2/F Gutladera Bldg. Quezon Ave. Brgy. Estancia, Kalibo, Aklan Tel. No. (036) 500-7192

Danao 3/F VAM Bldg. Pio Del Pilar St. Poblacion, Danao City, Cebu

Oton Silla Bldg.,Mabini St., Poblacion South, Oton, Iloilo City

Bogo N1 SIM Bldg. P. Rodriguez St. Brgy. La Purisima, Bogo City, Cebu Tel. No. (032) 232-7376

Kidapawan 3/F Roma Bldg. Quezon Blvd. Brgy. Sudapin, Kidapawan City Tel. No. (064) 572-0941

Carcar Satellite Unit Dr. J. P. Rizal St. Poblacion 1, Carcar, Cebu City

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

Talisay 2/F Unit C 201 South Agora Bldg. P. Deiparine St. Tabunok, City of Talisay, Cebu Tel. No. (032) 383-2063

Kabacan 2/F Melai’s Bldg. Mantawil St., Kabacan, Cotabato City Tel. No. (064) 572-6365

Bacolod RM. 302-303 3/F VSB Bldg. 7th Lacson St. Brgy. 7 Bacolod City, Negros Occidental Tel. No. (034) 434-2577

Midsayap 2/F LLL Tarongoy Bldg. Sto Nino St., Poblacion 6, Midsayap, Cotabato Tel. No. (064) 521-1822

Kabankalan 2/F Jomabo Bldg. Guanzon St. Brgy. 3 Kabankalan City, Negros Occidental Tel. No. (034) 431-2440

Malita Satellite Unit Glorofredo Balane Residence Tugas, Poblacion, Malita, Davao Occidental

Victorias 2/F Jomabo Bldg. Osmena Ave. Cor. Magsaysay St. Brgy.

5, Victorias City, Negros Occidental Tel. No. (034) 717-7057

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

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2018 Integrated Annual and Sustainability Report

Surigao 3/F R & E Laurente Bldg. Rizal Cor. Gonzales St., Washington, Surigao City Tel. No. (086) 827-1569 San Francisco 3/F Bernardo Paqueo Bldg. Brgy. 4 San Francisco, Agusan Del Sur Tel. No. (085) 839-3348 Tandag Door 5 & 6 WM Bldg. National Hi-way La Suerte, Brgy.

Dagocdoc, Tandag City, Surigao Del Sur Mangagoy G/F CAP Bldg. Abarca St. Mangagoy, Bislig City, Surigao Del Sur Bayugan Satellite Unit Door 5 & 6 2/F HED Bldg. Purok 6, Crossing Maygatasan, Bayugan City, Agusan Del Sur Metro Davao 1 2/F VAB Bldg. Mac Arthur Hi-way Ulas, Davao City Tel. No. (082) 296-8274 Metro Davao 2 2/F Bernardo Bldg., A. Bonifacio Street, Brgy. 4-A Poblacion, Davao City Tel. No. (082) 225-4172 Samal Satellite Unit 2/F One Bldg. Brgy. Miranda-Pichon, Island Garden City of Samal, Davao Del Norte Tagum Door 12-A 2/F Suarez Bldg. Mabini St. Magugpo South, Tagum City, Davao Del Norte Tel. No. (084) 216-3292 Nabunturan Satellite Unit 2/F Junora Property Building Purok 7, Poblacion Nabunturan Compostella Valley Mati Door #4 2/F Ville Bldg. Madang St. Brgy. Centro, Mati City, Davao Oriental

Lupon Lamanillao Bldg. Market Ave., Lupon, Davao Oriental General Santos 1 Door 206-207 2/F GP Johnston Bldg. Magsaysay Ave. Brgy. Dadiangas South, Gen. Santos City Tel. No. (083) 552-0686 General Santos 2 2/F Benjamin Napala Bldg. Magsaysay Ave., Gen. Santos City Tel. No. (083) 552-0687 Kiamba Unit Purok Bougainvilla Poblacion, Kiamba, Sarangani Province Koronadal Door 1 3/F UGA Bldg. Gensan Drive, Koronadal City, Cotabato Tel. No. (083) 520-2279 Surallah Macascas Bldg. Apitong St. Zone 1, Libertad, Surallah, South Cotabato Tel. No. (083) 878-5014 Tacurong 2/F Le Gre Bldg. National Hi-way Poblacion, Tacurong City, Sultan Kudarat Tel. No. (064) 477-0099 Cagayan De Oro 1 Door 1 2/F ADM Bldg. Max Suniel St. Cor V. Neri St. Carmen, Cagayan De Oro Tel. No. (088) 859-1957 Cagayan De Oro 2 2/F Hill Point Business Center, Puerto, Cagayan de Oro Valencia 2/F Quality Appliances Bldg. T. N. Pepito St., Poblacion, Valencia City, Bukidnon Tel. No. (088) 570-9080 Malaybalay 2/F MRMA Bldg. Fortich St. Brgy. 7, Malaybalay City, Bukidnon Tel. No. (088) 813-7261

33

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

Material Topics Material Topic: Human Rights and Labor Why this is material

Material Aspects

GRI Indicator

Description

Aspect Boundary

Our core values mirror our

Employment

401-2

No. of employees hired in 2017

Internal

love for fellowmen. With no respect to age, gender,

Labor Management/ Relations

402-1

Advisory on operational changes

Internal

religion, or culture, we strive to promote

Diversity and Equal Opportunity

405-1

No. of employees by gender and employee category

Internal

inclusion, solidarity, and equal growth among our employees.

405-2

Ratio of salary distribution by gender

Internal

Non-discrimination

406-1

Incidents of employee discrimination

Internal

Child Labor

408-1

Cases of child labor

Internal

Forced or Compulsory Labor

409-1

Incidents of forced or involuntary servitude

Internal

Rights of Indigenous

411-1

Violation of indigenous peoples’ rights

Internal

Peoples

Material Topic: Local Communities Why this is material

Material Aspects

GRI Indicator

Description

Aspect Boundary

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

413-2

Operations with significant actual and potential negative impacts on local communities

Internal and external

Material Topic: Product Responsibility Why this is material

Material Aspects

GRI Indicator

Description

Aspect Boundary

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

Marketing Communications

417-2

Non-compliance on service information and labeling

Internal and External

404-3

Non-compliance concerning marketing and communications

Internal and External

Material Topic: Indirect Impact Why this is material

Material Aspects

GRI Indicator

Description

Aspect Boundary

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

34

2018 Integrated Annual and Sustainability Report

Material Topic: Training and Education

Why this is material

Material Aspects

GRI Indicator

Description

Aspect Boundary

Human Capital is one of our most important

Training and Education

404-1

Conduct of employee assessment or performance

Internal

evaluation

assets; continuous improvement through training and education is both a need and a

404-2

Programs for upgrading employee skills and transition assistance programs

Internal

404-3

Average hours of training per yer per employee

Internal

responsibility of the organization.

Material Topic: Economic Why this is material

Material Aspects

GRI Indicator

Description

Aspect Boundary

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

201-3

Defined benefit plan obligations and other retirement plans

Internal

201-4

Financial assistance received from government

Internal and External

Material Topic: Product Responsibility Why this is material

Material Aspects

GRI Indicator

Description

Aspect Boundary

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

Anti-competitive behavior

206-1

Legal actions for anti-competitive behavior

External

GRI Indicator

Description

Aspect Boundary

304-3

Habitats Protected and Restored

Internal and external

Material Topic: Environment Why this is material

Material Aspects

Biodiversity 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.

35

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

GRI Index Checklist GRI Standard

Disclosure

Page number

Omission

General Disclosures GRI 102: General Disclosures 2017

102-1 Name of the Organization

Cover page

102-2 Activities, brands, products, and services

12-13

102-3 Location of headquarters

30

102-4 Location of operations

30-33

102-5 Ownership and legal form

KMBI is a non-stock, non-profit MF-NGO

102-6 Markets served

30-33

102-7 Scale of the organization

16

102-8 Information on employees and other workers

21

102-9 Supply chain

28

102-10 Significant changes to the organization and its supply chain 102-11 Precautionary Principle or approach

4, 6, 10, 11 34

102-12 External initiatives

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

102-13 Membership of associations

29

102-14 Statement from senior decision-maker

4

102-15 Key impacts, risks, and opportunities

5

102-16 Values, principles, standards, and norms of behavior

2

102-18 Governance Structure

8-9

102-40 List of Stakeholder Groups

28

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

No entity included

102-46 Defining report content and topic Boundaries

34-35

102-47 List of material topics

34-35

102-48 Restatements of information

There were no restatements

102-49 Changes in reporting

No significant changes in reporting

102-50 Reporting period

January to December 2018

102-51 Date of most recent report

July 2018

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

35

103-2 The management approach and its components

35

GRI 201: Economic Performance

201-1 Direct economic value generated and distributed

17

201-3 Defined benefit plan obligations and other retirement plans

9

201-4 Financial assistance received from government

36

No financial assistance received from government

2018 Integrated Annual and Sustainability Report

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

21 14, 24-25

Regulatory Compliance GRI 103: Management Approach 2017

103-1 Explanation of the material topic and its Boundaries

34-35

103-2 The management approach and its components

34-35

GRI 206: Anticompetitive Behavior

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

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

35

Environment GRI 103: Management Approach 2017

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

35 22-23, 35

Human Rights and Labor GRI 103: Management Approach 2017

103-1 Explanation of the material topic and its Boundaries

34

103-2 The management approach and its components

34

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)

401-3 Parental leave 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 404-2 Programs for upgrading employee skills and transition assistance programs

21 20-21

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

21

GRI 405: Diversity and Equal Opportunity

405-1 Diversity of governance bodies and employees

21

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

21

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

22-23

Spiritual GRI 103: Management Approach 2017

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

24 18, 26

ERRATA:

From page 16 1

The page 26 of the 2017 Annual and Sustainability Report contained a discrepancy wherein the number of Microinsurance (MI) enrollees indicated was 466,565.

Correct figures are now shown on page 16 of this report.

2 For copies of the 2018 Annual Report with USB packaging, the latter indicates 263,412 “Lives Insured”, which was determined using a different formula. The correct number of MI enrollees is shown on page 16 of this report, and was calculated using a formula recommended by the Finance and Accounting Department.

The same computation method for the number of MI enrollees will be adopted from this report forward.

37

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

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

FINANCIAL STATEMENTS December 31, 2018 and 2017

38

2018 Integrated Annual and Sustainability Report

KABALIKAT PARA SA MAUNLAD NA BUHAY, INC. (A Microfinance NGO) (A Non-stock, Non-profit Organization) STATEMENTS OF ASSETS, LIABILITIES AND FUND BALANCE December 31 Note

2018

2017

ASSETS Current Assets Cash and cash equivalents Financial assets at fair value through profit or loss (FVPL) Loan receivables - net Other receivables - net Other current assets

7

P105,765,494

P143,511,036

11 8 9 10

1,006,484,101 19,639,196 13,852,616 1,145,741,407

1,475,122 821,821,237 15,485,299 12,447,483 994,740,177

Noncurrent Assets Financial assets at fair value through other comprehensive income (FVOCI) Available-for-sale (AFS) financial assets Property and equipment - net Other noncurrent assets

11 11 12 13

10,997,653 124,308,074 55,415,238 190,720,965

10,373,980 114,014,226 204,116,864 328,505,070

P1,336,462,372 P1,323,245,247 LIABILITIES AND FUND BALANCE Current Liabilities Trade and other payables Capital build-up (CBU) Provision for probable losses Income tax payable Noncurrent Liabilities Retirement benefit liability - net Deferred tax liability

Fund Balance General fund Cumulative remeasurement gain on retirement benefit liability Fair value reserve on financial assets at FVOCI Fair value reserve on AFS financial assets

14 15 26

P43,693,238 543,806,012 174,268,339 3,540,849 765,308,438

P38,922,852 435,949,189 343,020,217 2,976,106 820,868,364

16 25

47,461,168 283,959 47,745,127

35,022,850 233,551 35,256,401

813,053,565

856,124,765

5

413,509,015

351,757,729

16 11 11

110,706,518 (806,726) 523,408,807

115,318,030 44,723 467,120,482

P1,336,462,372 P1,323,245,247 See Notes to the Financial Statements.

39

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) STATEMENTS OF COMPREHENSIVE INCOME Years Ended December 31 Note

2018

2017

REVENUES Interest income calculated using the effective interest method (EIR) Service income

18 18

P613,899,417 75,181,425 689,080,842

P505,293,703 63,647,902 568,941,605

EXPENSES Operating expenses Administrative expenses Impairment losses Interest expense

21 22 20 15

423,200,396 171,641,266 16,191,234 11,084,872 622,117,768

341,690,901 126,058,355 11,579,677 8,846,425 488,175,358

66,963,074

80,766,247

26

18,330,016 313,687

49,198

11 19

783,777 19,427,480

124,832 183,542 357,572

86,390,554

81,123,819

13,504,513 283,959 13,788,472

11,159,751 233,551 11,393,302

72,602,082

69,730,517

16

(4,611,512)

3,542,547

11

(851,449) (5,462,961)

3,542,547

OPERATING INCOME OTHER INCOME - Net Reversal of provision for probable losses Foreign exchange gain - net Realized gain on fair value changes of financial assets at FVPL Other income INCOME BEFORE INCOME TAX INCOME TAX EXPENSE Current Deferred 25 NET INCOME OTHER COMPREHENSIVE INCOME (LOSS) Items that will not be reclassified to profit or loss Remeasurement gain(loss) on retirement benefit liability Net unrealized loss on financial assets at FVOCI TOTAL COMPREHENSIVE INCOME

P67,139,121

See Notes to the Financial Statements.

40

P73,273,064

41

See Notes to the Financial Statements.

P351,757,729

69,730,517

Total comprehensive income

Balance as at December 31, 2017

69,730,517 -

Net income Other comprehensive income: Remeasurement gain on retirement benefit liability

P282,027,212

Balance as at January 1, 2017

72,602,082

-

340,906,933 72,602,082

(10,850,796)

P115,318,030

3,542,547

3,542,547

P111,775,483

P110,706,518

(4,611,512)

(4,611,512)

115,318,030 -

-

P351,757,729

P413,509,015

11 16

3 ,8, 11

P115,318,030

General Fund (Note 5)

Balance as at December 31, 2018

Total comprehensive income for the year

Balance at January 1, 2018, as restated Net income Other comprehensive income: Net unrealized loss on financial assets at FVOCI Remeasurement loss on retirement benefit liability

Balance as at January 1, 2018 Adjustment on initial application of Philippine Financial Reporting Standard (PFRS) 9

Note

Cumulative Remeasurement Gain on Retirement Benefit Liability (Note 16)

P -

-

-

P -

P44,723

-

-

P44,723

P -

-

(851,449) (P806,726)

-

-

(44,723)

P44,723

(851,449) -

44,723 -

44,723

P -

Fair Value Fair Value Reserve on Financial Reserve on AFS Financial Assets at FVOCI Assets (Note 11) (Note 11)

KABALIKAT PARA SA MAUNLAD NA BUHAY, INC. (A Microfinance NGO) (A Non-stock, Non-profit Organization) STATEMENTS OF CHANGES IN FUND BALANCE FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

P467,120,482

73,273,064

69,730,517 3,542,547

P393,847,418

P523,408,807

67,139,121

(851,449) (4,611,512)

456,269,686 72,602,082

(10,850,796)

P467,120,482

Total Fund Balance

2018 Integrated Annual and Sustainability Report

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

I appeal to you therefore, brothers, by the mercies of God, to present your bodies as a living sacrifice, holy and acceptable to God, which is your spiritual worship. Do not be conformed to this world, but be transformed by the renewal of your mind, that by testing you may discern what is the will of God, what is good and acceptable and perfect.

Romans 12:1-2

42

A Commitment Run was held as the culmination of the 2018 General2018 Assembly, themed Kabalikat” Integrated Annual“Padayon, and Sustainability Report where KMBI Key Officers participated, symbolic of the long road ahead that requires sacrifice and dedication from the participants to achieve the long-term vision of the organization.

43

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

back cover

Kabalikat para sa Maunlad na Buhay, Inc. (A Microfinance NGO) 12 San Francisco St., Karuhatan, Valenzuela City (02) 291-14-84 to 86 http://www.kmbi.org.ph

44