amando m tetangco, jr : launch of the albay mayon credit surety fund speech by mr amando m tetangco, jr, governor of the bangko sentral ng pilipinas ( the central bank of the philippines ), at the launch of the albay mayon credit surety fund ( csf ), legaspi city, albay, 12 august 2010. * * * governor joey salceda, distinguished leaders of the various sectors in albay, members of cooperatives in albay, fellow workers in government, special guests, marhay na aga sa indo gabos! good morning. on behalf of the members of the monetary board and my colleagues at the bangko sentral ng pilipinas, we welcome albay province under the leadership of governor salceda to the credit surety fund movement or what we call csf. with today ’ s launch, the albay mayon credit surety fund becomes the 12th csf to be created since 2008. with csf, entrepreneurs gain access to bank loans even without collaterals. before csf, financially - challenged entrepreneurs source funds from informal lenders at very high interest rates. csf is also a positive for banks. even without collaterals, bank loans made under csf are effectively insured against default by the surety fund set up jointly by the lgus and other partner organizations. you may ask, does it really work? well, based on our experience from the first 11 csfs it works! i will share some csf updates with you : as of 31 july 2010, the eleven ( 11 ) csfs set up ahead of albay are in the provinces of aurora, bohol, cavite, compostela valley, davao del norte, davao oriental, negros occidental, negros oriental and north cotabato as well as in the cities of cebu and iloilo. the combined assets of the cooperatives and ngos who are members of the first eleven ( 11 ) csfs is valued at p8 billion, about p2. 6 billion of which represents equity. these eleven csfs are made up of one hundred seventy - three ( 173 ) cooperatives and three ( 3 ) ngos with total membership of close to 200, 000. the sheer financial muscle and reach of the csfs speak of the tremendous potential of the program. the total trust fund of the eleven ( 11 ) csfs have reached p9

with these financial institutions. in this regard, the bank employs best international practices on prudential supervision methods to ensure financial system stability. a greater part of the standards introduced was focused on good governance practices and the assessment of fit & proper persons for directors and management of these financial institutions. to date, the reforms have vastly improved the conditions and outlook of the financial sector landscape of the country. in the banking sector, there is marked improvements in asset quality with nonperformining loans as a percent of total assets declining from 2. 3 percent in 2000 to 1. 4 percent in september 2005. return on assets of the banking system, which was negative 1. 1 percent reversed sharply to over 6. 0 percent at the end of september 2005. in addition, the banking system remains liquid at 15. 5 percent of total deposits, compared to 4. 0 percent in 2002. these indicators reflect that the banking system is financially sound and provides a strong foundation for sustained macroeconomic conditions. in the superannuation industry, the positive results over the last few years speak for themselves compared to the bad experiences some 6 - 7 years ago where contributors lost a lot of their savings. the tale is different today. prudent and good management are enabling contributors to benefit from their funds. the declaration of huge profits by posf and nasfund are clear testimony of these reforms. similarly, improvements are continuing to be instilled in the life insurance industry. the bank recognizes the importance of the savings and loans movements in ensuring the economic and social well being of the members who participate in it. this can only be realized in a sustainable way if the operators of the societies continue to ensure that these institutions are managed in a prudent manner and supported by strong governance. improved management of the societies combined with stringent level of supervision by the bank of png has enabled the industry to record improvement in its overall performance. between june 2004 and september 2005 total assets increased by over 50 percent to k312 million. the rugged geographical terrain of the country makes access to financial service difficult for the semiformal, informal and the rural population. financial institutions themselves face these difficulties in reaching out. in our endeavours to bring out financial services to these sectors the bank of papua new guinea in collaboration with the asian development bank, the national government and ausaid established the “ wau microbank ” under the micro finance project. the pilot project is slowly growing into a viable complementary player in the development of the financial system