Financial Inclusion MEAL

Financial Statement Analysis

LIFTs approach to financial statement analysis is through the review and analysis of
MFOs/MFIs statementsbalance sheet and income statements. Specifically, analysis of
financial ratios allows for the evaluation of risks, performance, safety and soundness and
gauging future performance.
Financial Indicators

1. Outreach
number of clients
depth (client poverty level)
2.

Portfolio Quality
portfolio at risk
aging of delinquency
loans at risk
write-off and restructuring/refinancing (against total loan portfolio)

3.

Financial Sustainability
operational sustainability
financial sustainability
return on assets
capital adequacy ratio

4. Efficiency
operating expense to average total assets
financial structure (loan portfolio/total assets, earning assets/total assets, return on
loan portfolio)

Source: MFO/MFI financial statements and financial management reports

Measurement Framework
The measurement framework is a tool to assist both the implementing partners and LIFT in
managing the process of monitoring, analyzing, evaluating and reporting progress toward
achieving the project level outcomes, project outcomes and outputs.
Type

Outcome/Output

Indicators

PLO

Operational
sustainability

OSS ratio

PLO Financial
sustainability

FSS ratio

PLO Wealth raking

of clients
improved
PLO Asset value of
clients
increased
PO Clients
capacity of
borrowing
increased
PO Efficiency of
MFI increased

% of clients
improved in

Target

Y1
actual

% of clients
increased their
assets
% of clients with
more than 6
loan circle
Return on Assets

Return on loan
portfolio

Provision of
microfinance
services

Operating
expense to
average total
assets
Number of
clients accessed
to agricultural
loan
Number of
clients accessed
to small
business loan
Number of
clients accessed
to other loans
% of clients with
wealth raking of
poorest

Y2
actual

Y3
actual

Data
Collection
Methods

Frequency
of
Collection
Quarterly

Who is
Responsible
for Data
Collection

Effective
portfolio
management

% of clients with
wealth raking of
poor
% of clients from
rural area
(village)
Loan portfolio
(agri loan)
Portfolio at risk
(PAR>30)
Loan write off

Restructured
loan amount
PLO: Purpose Level Outcome
PO: Project Outcome
O: Output

IP Quarterly Reporting
1.
2.
3.
4.

Financial Indicators
Financial Statements
Loan Portfolio by type of loan
Loans disbursed by type of loan

IP Annual Reporting
1. Socio-economic profile: gender, income, land, status of household (Data Source:
MFO/MFI client database)
2. Client Survey (Data Source: Annual MFO/MFI Client Survey)
3. Progress out of Poverty Index (PPI) (Data Source: MFO/MFI client database)
4. Social Performance Indicators (SPI) (Data Source: Annual Questionnaire)

IP Learning Questions
1.
2.
3.
4.
5.

Impact at household (Data source: LIFT HH Survey)

Impact at household level (Data Source: PPI)
MFO/MFI sustainability (Data Source: financial reports--indicator analysis)
Indebtedness (Data Source: HH Survey/Socio-economic data)
Demand for debt consolidation loans (Data Source: Loan Portfolio and Disbursed by
Type of Loan)
6. Supply versus demand driven financial servicesgroups vs individual lending, loansize rationing, types of financial services demanded (Data Source: Client Survey)

Guidelines and Reporting Requirements

LIFT Operational Guidelines:

http://www.lift-fund.org/operational-guidelines

Quarterly report: Performance report, balance sheet, and income statement:

http://www.lift-fund.org/financial-reporting-microfinance

Narrative Report for annually and six-monthly time: including update of measurement
framework and answers of evaluation and learning questions: http://www.liftfund.org/narrative-progress-reporting

Financial Report for annually and six-monthly time: expenditure report: http://www.liftfund.org/financial-reporting-microfinance