1. Financial Literacy Campaign
The Philippine Consulate General
Jeddah
Kingdom of Saudi Arabia
24 April 2009

2. Invocation

3. National Anthem

4. Welcome Remarks
Consul General Ezzedin H. Tago
Philippine Consulate General
Jeddah

5. Audio Visual Presentation
Paghahanda Sa Kinabukasan

6. The BSP’s
Financial Learning
Campaign (FLC)
DEPUTY GOVERNOR DIWA C. GUINIGUNDO
22-25 April 2009
22-
Kingdom of Saudi Arabia

7. Outline
I. Importance of Remittances
II. Significance of Financial Planning
III. Types of Financial Instruments
IV. Source of Financing for Business
8

8. 1
Importance of
Remittances

9. Benefits of Remittances
• Promote
economic activity through higher
consumption
• Generate employment
• Increase foreign exchange supply
• Contribute to savings
• Provide additional funds for the government

10. Remittances can be harnessed for investments, in the
form of:
human resource capital investments through education and
health care for beneficiaries;
physical capital investments through acquisition of real
properties, including land purchases and home construction;
financial capital investments through savings in bonds and
other financial instruments; and
investments in business ventures such as in small- and
micro- enterprises (SMEs).
11

11. 2
Significance of
Financial Planning

12. FINANCIAL PLANNING
Importance
1. To save for the future
2. To acquire protection against unforeseen
untoward events
3. To achieve financial independence
13

13. Three STEPS to achieving
FINANCIAL FREEDOM
3
Invest
2
Save
1
Plan

14. Setting-
Setting-up Family Goals
Family goals are usually centered on the following:
a. Education
b. Housing
c. Health
d. Retirement
e. Protection against unforeseen events

15. YOUR FINANCIAL PLAN
IMMEDIATELY 2 years 10 years 20 years
TIMELINE
Graduation Fund Funds for Build Dream LIFE
GOALS Retirement
for Child 1 Business House Fund
(P 50K) Undertaking (P 3 Mn.) (P 3 Mn.)
Mn.)
(P 100K)
Create a timeline on when you want it to happen
Specify amount needed

16. Why Families are not able to Save
a. Dependency on family member working
overseas
b. Luxurious lifestyle
c. Other family issues that drain resources
Early marriage
Family break-up
Lack of interest in school
Personal problems, vices

17. FINANCIAL PLANNING
Income – Expense = Savings
Income – Savings = Expense
18

18. April 2009 Can be used for:
Income 1. Tuition fees
Target Savings xxx 2. Housing
Expenses 3. Investments
Food 4. Business
venture
School Allowance
Electricity
Water
Transportation
Clothing
Entertainment
Others
19

19. 3
Types of Financial
Instruments

20. PESO REMITTANCE
CONSUMPTION SAVINGS SMEs/MICROFINANCE
Bank instruments (TD/SD/ Savings in Cooperatives
Mutual funds/UITF) TD/SD Agri-
Agri-business
Treasury instruments
T-bills, RTBs, T-notes
T- Stock Market Retail business
Insurance (life, non-life,
non-
Education, pension) Real Estate Lending business
Others Others
21

21. LOWER YIELD BUT HIGHER YIELD BUT NO
GUARANTEED RETURN GUARANTEED RETURN OF
OF PRINCIPAL PRINCIPAL
1. Savings Deposit 1. Mutual Funds
2. Time Deposit 2. Unit Investment Trust
3. Treasury-
Treasury-bills Funds (UITFs)
4. Retail treasury bonds (RTBs) 3. Stocks
5. Long-
Long-term Negotiable 4. Insurance
Certificates of Deposit
(LTNCD)
22

22. INVESTMENT INSTRUMENTS
RTBs TBills UITFs Mutual Variable
Funds Insurance
Who May
Buy
Individual
Institutional
Where to GSEDs GSEDs Banks •Brokers Insurance
Buy •Banks cos.
•Ins.
agents
Minimum P5,000 P100,000 P10,000 P1,000 ---
Investment
As of February 6, 2009

23. INVESTMENT INSTRUMENTS
RTBs TBills UITFs Mutual Insurance
Funds
Yield Fixed- Zero NAVPU NAVPS NAVPU
rate coupon
coupons
Guaranteed Yes Yes No No No
Return of
Principal
Tax Feature 20% 20% 20% --- ---
Holding 3 and 5 91-, 82-, 5 to 365 --- ---
Period years 364- days days

24. RETAIL TREASURY BONDS
Example: 5-year RTB with 5.875% coupon rate
5-
P30,000 x 5.875% x 5 years = P8,812.50
(investment) (coupon rate p.a.) (total income)
After-
After-tax Income:
*/
P8,812.50 - P1,762.50 = P7,050.00
(total income) (20% tax)
*/ Credited quarterly

25. RETAIL TREASURY BONDS
Quarterly Coupon:
P7,050.00 ÷ 20 = P352.50/quarter
(after-
(after-tax income) (# of quarters in 5 years)
Return on Investment:
= P352.50 (proceeds per quarter) x 100
P30,000 (initial)
= 1.18% per quarter for a 5-year RTB,
5-
5.875% coupon rate

26. TREASURY BILLS
Selling Price
Formula:
SP = PP + [(PP) (i) (h/360)]
(i
i = (SP – PP) / PP x (360/h)
Where,
SP: selling price
PP: purchase price */
i : yield for holding period
h : holding period
*/ Calculated based on present value formula

27. TREASURY BILLS
Example: 91-day T-bill at 13% yield
91- T-
P1,000,000.00 - P981,994.75 = P18,005.25
(investment) (selling price) (discount/interest
earned)
After-tax Interest Earned:
After-
P18,005.25 - P3,601.05 = P14,404.20
(discount/interest earned) (20% tax)

28. TREASURY BILLS
Return on Investment:
= P1,014,404.20 (proceeds) – P1,000,000 (initial) x 100
P1,000,000 (initial)
= 1.44% for a 91-day T-bill, 45-day holding period, 13% yield
91- T- 45-

29. UNIT INVESTMENT TRUST FUND
Example: 30-day UITF
30-
P100,000.00 ÷ 1.157867 = 86,365.71
(initial investment on (NAVPU) (units of participation)
Feb. 20, 2009)
P102,490.19 = 1.1867 x 86,365.71
(proceeds on investment (NAVPU) (units of participation)
on March 22, 2009)

30. UNIT INVESTMENT TRUST FUND
Return on Investment:
= P102,490.19 (proceeds) – P100,000 (initial) x 100
P100,000 (initial)
= 2.49% for a 30-day UITF
30-

31. MUTUAL FUND
Example: 60-day Mutual Fund
60-
P100,000.00 ÷ 1.2341 = 81,030.71
(initial investment on (NAVPS) (shares)
Feb. 20, 2009)
P102,309.37 = 1.2626 x 81,030.71
(proceeds on investment (NAVPS) (shares)
on April 21, 2009)

32. MUTUAL FUND
Return on Investment:
= P102,309.37 (proceeds) – P100,000 (initial) x 100
P100,000 (initial)
= 2.31% for a 60-day MF
60-

33. MUTUAL FUNDS
Medium to
Types High Risk Low Risk
Bond Funds (Fixed)
Money Market Funds
Equity (Stock Funds)
Balanced Funds

34. VARIABLE INSURANCE / INVESTMENT
LINKED INSURANCE
Example: One-year Variable Insurance with a P750,000 face amount
One-
P23,655.00 ÷ 1.8924 = 12,500
(regular annual premium (NAVPU) (units of participation)
payment on Jan. 10,
2009)
P24,842.50 = 1.9874 x 12,500
(proceeds on investment (NAVPU) (units of participation)
on Jan. 10, 2010)

35. Return on Investment:
= P24,842.50 (proceeds) – P23,655 (initial) x 100
P23,655 (initial)
= 5.02% for a one-year Variable Insurance */
one-
*/ Income could cover for future premiums

36. 4
Source of Financing
for Business

37. MICROFINANCE 101
Broad range of financial services such as deposits, loans, payment services,
money transfers and insurance products offered to the poor and low-income
households for their small enterprises.
Unique Characteristics:
• Open to small savers or micro-borrowers
• Approval and disbursement of loans are fast
• Individual borrowers can avail of loans
• Grant of loans based on the borrowers’ and household’s expected project
cash flow
• Small loans ranging from as low as P2,000-P5,000 to a maximum of
P150,000 (collateral-free)
• Unsecured and short-term loans

38. SNAPSHOT OF MICROFINANCE IN THE BANKING SECTOR
(As of 31 December 2008)
Micro Loans Portfolio Savings
No. of
Banks Component
Banks Amount No. of (in millions)
(in millions) Borrowers
Microfinance Oriented
Banks
Rural Banks 5 724.10 128,494 445.76
Thrift Banks* 4 192.93 57,780 57.95
TOTAL 9 917.02 186,274 503.70
“Regular” Banks with
Microfinance
Operations
Rural Banks 167 4,046.63 580,532 1,073.99
Cooperative Banks 25 913.28 88,198 167.34
Thrift Banks 19 342.53 10,170 4.04
TOTAL 211 5,302.44 678,900 1,245.37
TOTAL 220 6,219.46 865,174 1,749.07

39. CREDIT SURETY FUND PROGRAM
• Allows MSMEs who are members of a cooperative to gain access
to credit from banks in the absence of acceptable hard collaterals.
• MSMEs defined (under Small and Medium Enterprise Development Council
Resolution No. 01 Series of 2003 dated 16 January 2003)
By Asset Size:
Micro : Up to Php 3,000,000
Small : Php 3,000,001 -- Php 15,000,000
Medium : Php 15,000,001 -- Php 100,000,000
Large : above Php 100,000,000
Based on the number of employees:
Micro : 1 -- 9 Employees
Small : 10 -- 99 Employees
Medium : 100 -- 199 Employees
Large : More than 200 Employees
40

40. CREDIT SURETY FUND PROGRAM
• A multi-sectoral program composed of:
- Creation of a trust fund that will serve as security for the loans:
(1) national government through the Industrial Guaranty and Loan Fund (IGLF)
(2) the local government led by the Provincial Governor
(3) MSMEs under the cooperatives
- Provision of loans:
(4) participating banks
- Provision of rediscounting for up to 80% for the MSME loans
(5) Bangko Sentral ng Pilipinas (BSP)
41

41. CREDIT SURETY FUND PROGRAM
• Granting of Loans:
- Managed and administered at the provincial level to be more responsive to the
credit needs of the MSMEs in each province.
- Loans to be approved by the CSF Oversight Committee
- Loanable amount: depends on the evaluated project loan proposal
- Interest rate: 8-12% per annum
- Additional fee: guarantee fee of 2-5% of the loan
- In case of borrower default, CSF will cover the debt while cooperatives will run
after their members.
- Banks that extend loans secured by the CSF can rediscount up to 80% of
such loans with the BSP.
42

42. CREDIT SURETY FUND PROGRAM
• Participating Banks:
- Allied Bank
- United Coconut Planters Bank
- Land Bank of the Philippines
- Development Bank of the Philippines
- BPI Family Bank
- Rural and cooperative banks with rediscounting line with the BSP
43

43. CREDIT SURETY FUND PROGRAM
• Provinces that launched the program:
- Cavite
- Aurora
- Bohol
• Provinces to replicate the program:
- Davao City
- Davao del Sur
- Cotabato
- Batangas
- Bulacan
- Laguna
- Quezon
- Mindoro
44

44. The Financial Learning
Campaign is a flagship program
of the BSP to promote
Financial Planning, Savings
and Investments

45. PERANG PADALA, BIGYAN
NG HALAGA,
TIPIRIN, PALAGUIN AT
PAGYAMANIN,
PARA MAGANDA
KINABUKASAN NATIN !
46

46. Website: www.bsp.gov.ph
E-mail: bspmail@bsp.gov.ph

47. Audio Visual Presentation
Entrepinoy

48. Remittance & Investment
Protection Tips
Dottie M. Bernas
Bank Officer III
Bangko Sentral ng Pilipinas

49. Open Forum
Rosabel B. Guerrero
Deputy Director
Bangko Sentral ng Pilipinas

50. Closing Remarks
Juanita D. Amatong
Monetary Board Member
Bangko Sentral ng Pilipinas

51. Thank You