|Brief History||Country Program||Area of Operations||Partners|
|Poverty Focus||Distinctive Features||Funding|
Land Bank of the Philippines (LBP) is a financial institution wholly owned by the Philippine National Government. It was created under the Agrarian Reform Law enacted by Congress in 1963. Later, LBP became the first universal bank by charter with expanded commercial banking powers to sustain its social mission of spurring countryside development. The bank is directly under the administrative supervision of the Department of Finance (DOF). As a bank, it is under the regulatory supervision of BSP. It is audited by the Commission on Audit.
LBP’s major mandate is to provide the financial support needed for the acquisition of lands in favor of tenant farmers under the government’s land reform program. Its current scope of operations includes program-based lending to agri-based enterprises through rural financial institutions principally rural banks/cooperative rural banks and cooperatives. LBP is also engaged in regular commercial banking.
The mandate of LBP to undertake microfinance operations is spelled out in two laws: RA 8425 known as the Social Reform and Poverty Alleviation Act, and RA 9178 known as the Barangay Microenterprise and Business Enterprises (BMBE) Act passed by Congress in the year 2002. Both laws mandate LBP and other government financial institutions (GFIs), to set up a special credit window for microenterprises and to promote microfinance programs for the poor.
According to the JBIC Study, LBP’s current involvement in microfinance is the guarantee that it has provided to the loans obtained from ADB-IFAD Rural Microenterprise Finance Project (RMFP) and the World Bank for the funding needs of PCFC. As of December 31, 2004, the loans of LBP to PCFC amounted to PhP 1.52 billion. LBP has not directly lent to retail MFIs for microfinance purposes. However, some LBP branches are known to have lent to MFIs, mostly rural banks/cooperative rural banks and cooperatives under the Countryside Loan Fund (Rural Finance III) provided by the World Bank. LBP started its microfinance operations in 2004 on a “limited engagement” basis. There are twelve MFIs initially identified by the 5 LBP regional area heads as potential LBP conduits for microfinance. These MFIs are rural banks, cooperative rural banks, cooperatives and NGOs. As of December 2005, wholesale loans to these MFIs amounted to PhP 104.46 million.
Financial reports from the Commission on Audit show that as of end 2004, the bank had resources of PhP 287.7 billion, gross loan portfolio for all loan programs of PhP 151.3 billion, and a net income for the year 2004 of PhP 2.25 billion.
LBP has 340 branches and field units and has a network of 1,500 countryside financial institutions.
According to the JBIC Study, the respective management of LBP and PCFC have agreed to perform complementary activities in microfinance rather than directly compete with each other. Under their complementation strategy, LBP will work with MFIs that require credit lines of 200 million pesos and above while PCFC will continue to service MFIs with smaller loan requirements. In addition, LBP can serve certain areas that PCFC is unable to service cost-effectively. These areas include island provinces such as Sulu, Tawi-Tawi, Basilan, Camiguin, Siquijor, Guimaras, Biliran, Romblon and Masbate.
As indicated earlier, LBP is mandated by law to set up a special credit window for microenterprises and to promote microfinance programs for the poor under the Social Reform and Poverty Alleviation Act and the Barangay Microenterprise and Business Enterprises Act.
In the past 13 years, LBP has consistently ranked among the top five commercial banks in the country. As of December 2004, LBP is the fourth largest bank in terms of assets (PhP 287.7 billion) and net loan portfolio (P134.58 billion) and third in terms of deposits (PhP 214.91 billion).
LBP is the main depository bank of the government. As such, a bulk of its funding requirements comes from the government. Land Bank services the banking requirements of the national government, local government units and government-owned and controlled corporations. As of December 2004, 65 percent of the deposit portfolio (PhP 214.91 billion) comes from government while the rest was gathered from private depositors.