The COOPPESOS

A set of Performance
Standards for
Philippine Credit
Cooperatives

Background
Is a performance standard to measure the
performance of Philippine credit cooperatives
Is analogous to:
US NCUAs CAMELS Rating System
WOCCUs PEARLS Monitoring System
RBAPs EAGLE Performance Monnitoring System,
and
BSPs CAMEL Rating System for Philippine Rural
Banks

OBJECTIVES/PURPOSE
S

As a supervisory and regulatory tool

The Cooperative Development Authority will
ensure that the credit cooperatives will have the
necessary operational and financial discipline to
ensure the safety and soundness of their
operations and thus, result to greater public
confidence
The CDA will use these standards to evaluate
the performance of credit cooperatives.

OBJECTIVES/PURPOSE
S As a management tool
The standards will allow the management
of the cooperative to detect/spot the
troubled/problem areas and determine the
necessary adjustments to its policies
and/or the way the cooperatives
operations are handled.

MAJOR CATEGORIES
OPERATIONAL

FINANCIAL

C COMPLIANCE

P PORFOLIO QUALITY

O ORGANIZATION

E EFFICIENCY

O OPERATION

S STABILITY

P PLANS & PROGRAMS

O OPERATIONS
S STRUCTURE OF ASSETS

The Rating
System
CATEGORY

MAXIMUM RATING

C COMPLIANCE

20 %

O ORGANIZATION

26 %

O OPERATION

40 %

P PLANS & PROGRAMS

14 %

The Rating
System
CATEGORY

MAXIMUM RATING

P PORFOLIO QUALITY

25 %

E EFFICIENCY

20 %

S STABILITY

30 %

O OPERATIONS

10 %

S STRUCTURE OF ASSETS

15 %

THE
COOP
Indicators

Compliance with Legal

Requirements
These are questions which look on
whether the credit cooperatives complies
with the various legal requirements
imposed by the:
1. Cooperative Development Authority
2. Bureau of Internal Revenue
3. Local Government Units
4. Department of Labor and Employment

Maximum Raw Score

1. Cooperative Development
Authority
a. Updated bond of accountable officers

b. Registration of Amendments, if any

1
1

c. Allocation of Net Surplus

d. Issuance of Share Capital Certificate

e. Submission of Annual Report, Audited

Financial Statement & Information Sheet
within the prescribed period

Maximum Raw
Score

2. Bureau of Internal Revenue

a. Registration as Non-EVAT
b. Filling of Account Information
c. Withholding of Appropriate Taxes
(including tax on honorarium)
d. Certification of Tax Exemption

1
1
1

e. Registration of Books of Account

1
5

Maximum Raw Score

3. Local Government
Unit
a. Local Government Unit

1
1

Maximum Raw Score

4. Department of Labor and
Employment

a. Minimum Wage & 13th Month Pay

b. SSS

c. Phil Health

d. PAG-IBIG (HDMF)

e. Retirement Benefits

Organizational Structure and

Linkages

These are questions involving the

governance and membership structure
of a cooperative. It also determines the
level of affiliation and linkages of a
cooperative with cooperative
federations/unions and other
organizations in the promotion and
development of the cooperative
movement.

Maximum Raw Score

1. Governance and Membership
15
Participation
a. Gender Integration (Availability of sex-disaggregated 1
data on officers & staff, loan borrowers & depositors)
b. Attendance of majority of members
in: * Annual General Assembly
* Membership Education/Consultation
c. Capital Build-up and Savings Mobilization
* 70% of members regularly contributing to share
* At least 70% of the members are
capital
depositors
d. Acceptance of the Audited Financial Statement by
the GA
e. Approval of the development plans by the GA
f. Adoption of proper procedures for the election
of the BOD

2
2

2
2
2
2
2

Maximum Raw Score

2. Conduct of regular premembership

Maximum Raw Score

3. Affiliation and Linkages

a. Laboratory Cooperative
* Community Development
b. Participated actively in federation/union
activities/program
c. Paid annual due, CETF, loans and other
accounts to the federation/union

1
3

d. Business alliance with:

* federation
* Other cooperatives
e. Submission of Audited Financial Statements
using SCA and Annual Reports to the
federation/union

1
1
1
1
1

OPERATIONS AND MANAGEMENT

These are indicators that determine the

presence or absence of the necessary
system, policies and procedures for
efficient and effective management of
credit cooperative.

Maximum Raw
Score
1. Manual of Operational Policies with
Specific Provisions on:
24
a. Membership
b. Loaning
c. Savings/Time Deposits
d. Financial Management
* Asset/Liability
* Accounting
* Internal Control
e. Human Resource Development
*
*
*
*
*

Hiring, Promotion and Firing

Staff Development
Compensation/Benefits
Performance Appraisal
Job Description

2
4
4
2
3
4
1
1
1
1
1

Maximum Raw Score

2. Board of Directors / Committees

a. Board of composition in accordance with by-laws

b. Meetings of the Directors

c. Meetings of the Committees

d. Periodic review of policies

e. Updated minutes of meetings

f. Updated committee reports

Maximum Raw Score

3. Management

A. Fulltime qualified manager

b. Policy on succession of manager and other top

positions
c. Personnel File

d. Organizational Structure

PLANS/PROGRAMS & PERFORMANCE

This questions includes parameters

that determines whether the credit
cooperative has a development plan
and an approved annual plan and
budget. It also looks whether the credit
cooperative reviews its performance
vis--vis the projections in its business
plan.

Maximum Raw Score

1. Presence of:

a. Vision, Mission and Goal

b. Development Plan
c. Approved Annual Plan and Budget
d. Code of ethics

1
2
2
2

Performance Review vis-a-vis

Projections

THE
PESOS
Indicators

PORTFOLIO QUALITY
These indicators are concerned with
measuring the level of protection of the
credit cooperative loan portfolio against
risks of losses due to delinquency.

PORTFOLIO AT
RISK

Formula

Balance of Loans
with one-day missed
payment
_________________
Total Loans
Outstanding

Purpose

To measure
the risk of
default in the
loan portfolio

Score

Equivale
nt Points

5% or Less
>5% to 10%
>10% to 15%
>15% to 20%
>20% to 25%
>25%

15
12
9
6
3
0

ALLOWANCE FOR PROBABLE

LOSSES ON LOAN (APLL over 12
months Past Due)
Formula

Total Amount of
Allowance
_________________
Total Outstanding
Loan Balance over
12 months past due

Purpose

To measure
the adequacy
of the
allowance for
probable
losses on
loans

Score

Equivale
nt Points

100%
80% to 90%
60% to 79%
36% to 59%
10% to 35%
9% & below

5
4
3
2
1
0

ALLOWANCE FOR PROBABLE

LOSSES ON LOAN (APLL 1 to 12
months Past Due)
Formula

Purpose

Score

Equivalen
t Points

Total Amount of
Allowance minus
Required Amount of
Allowance for Loans
over 12 months past
due
_________________

To measure the
adequacy of
the allowance
for probable
losses on loans

35%
25% to <35%
17% to <25%
9% to <17%
1% to <9%
<1%

5
4
3
2
1
0

Total outstanding Loan

Balance 1 to 12
months past due

APPLICABLE TERMS
PORTFOLIO AT RISK (PAR)
Refers to the total outstanding balance of loans
with one day missed amortization payment.
Failure to receive payment one day after due date
of amortization, makes the entire loan balance at
risk.

ALLOWANCE FOR PROBABLE LOSSES ON

LOANS
Refers to the allowance provided for
the unpaid entire loan balance based
on PAR with a grace period of 1-30
days.

APPLICABLE TERMS
LOANS RESTRUCTURED
Past due loans whose term have been extended or
renewed after full payment of interest/surcharges
due thereon. Loans restructured will be considered
performing or current when there is good track
record of continuous payment of the amount
agreed upon using the following installments: 3
installments for monthly; 4 installments for semimonthly; 6 installments for weekly and 10
installments for daily. It is considered past due
when it is not performing, i.e. no payments
received after restructuring.

EFFICIENCY
The indicators under this sub-category
measures the efficiency of the credit
cooperative in the delivery of financial
services (savings and credit) to its
members. It also finds out how able the
credit cooperative is in generating sufficient
income to cover expenses in its operations.

ASSET YIELD

Formula

Undivided Net
Surplus
_________________
Average Total Assets

Purpose

To measure
the ability of
the credit
coops assets
to generate
income

Score

At least Inflation
Rate (IR)
1% - 2% below IR

25% to <35%
17% to <25%
9% to <17%
1% to <9%
<1%

Equivale
nt Points

4
3
2
1
0

OPERATIONAL SELFSUFFICIENCY

Formula

Interest Income from

Loans + Service Fees
+ Filing Fees +
Fines, Penalties,
Surcharges
________________
Financing Costs +
Admin Costs

Purpose

Measures the
ability of the
cooperatives to
sustain its
operations

Score

120% & above

110% to < 120%
100% to < 110%
100%
<100%

Equival
ent
Points
4
3
2
1
0

RATE OF RETURN ON MEMBERS SHARE

Formula

Purpose

Interest on share Capital

________________
Average Members Share

Measures the
earning power
of members
share.

Score

>inflation rate
= inflation rate (IR)
1% to 2% below IR
>2% below IR
0 or negative ROR

Equivalent
Points

4
3
2
1
0

APPLICABLE TERM
AVERAGE MEMBERS SHARE
Beginning Members Share + Ending
Members Share Divided by 2.

LOAN PORTFOLIO
PROFITABILITY

Formula

Interest Income from

Loans + Service Fees +
Filing Fees + Fines,
Penalties, Surcharges

________________
Average Total Loans
Outstanding

Purpose

Measures how
profitable the
loan portfolio is.

Score

20% and above

15% to <20%
10% to <15%
5% to <10%
<5% or negative

Equival
ent
Points

4
3
2
1
0

COST PER PESO LOAN

Formula

Purpose

Score

Equivale
nt Points

Financing Cost +
(Admin Costs
Members Benefits
Expense)

Measures how
efficient the
coop is in
managing loan
portfolio.

0.10 & below

>.10 to .15
>.15 to .20
Above .20

2
1.5
1
0

________________
Average total Loans
Outstanding

APPLICABLE TERM

AVERAGE TOTAL LOANS OUTSTANDING

Beginning Total Loans Outstanding + ending
Total Loans Outstanding divided by 2.

ADMINISTRATIVE EFFICIENCY

Formula

Purpose

Score

Equivalen
t Points

Administrative
Costs
________________

Measures the
costs of
managing the
coops assets.

10% & below

>10% to
15%
>15% to
20%
Above 20%

2
1.5
1
0

Average Total
Assets

APPLICABLE TERM
AVERAGE TOTAL ASSETS
Beginning Total Assets + Ending Total Assets divided
by 2.

STABILITY
These indicators of this sub-category
measures whether the credit cooperative
can deliver the financial services to its
members in a sustained manner. The
increase in institutional capital is also
encouraged to maintain sufficient liquidity
to meet the financial needs of its
members.

SOLVENCY

Formula

Purpose

Score

Equivalen
t Points

(Assets +
Allowances) (Total
Liabilities
Deposits + Past
Due Loans + Loans
Restructured +
Loans under
Litigation)
________________
Deposits + Share
Capital

Measures the
degree of
protection that the
coop has favor
members savings
and shares in the
event of liquidation
of its assets and
liabilities.

110% &
above
100% to
<110%
90% to
<100%
80% to
<90%
70% to
<80%
Below 70%

10
8
6
4
2
0

LIQUIDITY

Formula

Purpose

Liquid Assets Short term Measures the coops

Payables
ability to service its
________________ members deposit on
time.
Total Deposits

Score

Equivalent
Points

15% & above

12% to <15%
9% to <12%
6% to <9%
1% to <6%
Below 1%

10
8
6
4
2
0

APPLICABLE TERMS

LIQUID ASSETS
Assets that can be converted into cash within
30 days. This includes cash, cash in bank,
investment in marketable securities.
SHORT-TERM PAYABLES
These include liabilities payable within 30
days except deposits.

NET INSTITUTIONAL CAPITAL

Formula

Purpose

Score

Equivalent
Points

(Reserves + Allowances
from Probable Losses on
Loans) (Past Due
Loans) + Loans under
Litigation + Problem
Assets

Measures the level

of institutional
capital after
deducting the
losses

10% & above

7% to <10%
5% to <7%
3% to <5%
1% to <3%
Below 1%

10
8
6
4
2
0

________________
Total Assets

APPLICABLE TERMS

PROBLEM ASSETS
These are investments in closed banks,
cooperatives and other institutions.

OPERATIONS
This sub-category promotes a new emphasis
for Philippine credit cooperatives, that is,
minimizing dependence on external
borrowings and instead focus on mobilizing
savings from its members, thereby enhancing
the coops role as a savings entity
(alternative to banks) for its members.

GROWTH IN MEMBERSHIP

Formula

Purpose

Score

Equivale
nt
Points

Actual Increase in
the No. of Members

Determines the
performance of
change in
membership vis-vis target.

75% to <100% of
target
50% to <75% of target
25% to <50% of target
1% to <25% of target
Status quo
Decreasing or no devt
plan

5
4
3
2
1
0

________________
Target Increase in
the No. of Members

TREND IN EXTERNAL
BORROWING
Formula

Purpose

Ending External
Borrowings
Beginning External
Borrowings

Determines the
percentage of
change in
external
borrowings.

________________
Beginning External
Borrowings

Score

No. Ext.
Borrowing
Decreasing
compared to
previous period
Status Quo.
Increasing
compared to
previous period

Equivalent
Points

5
3
2
0

STRUCTURE OF
ASSETS

These indicators will help ascertain

the quality and the structure of the
assets of the cooperative. These
ratios also assess the effective use of
these assets to generate revenues.

ASSET QUALITY

Formula

Purpose

Non-Earning Assets

Measures the
percentage of
total assets that
are not producing
income.

________________
Total Assets

Score

5% and below
>6% to 8%
>8% to 10%
>10% to 12%
>12% to 14%
14% and above

Equivalent
Points

5
4
3
2
1
0

APPLICABLE TERMS
NON-EARNING ASSETS
Assets that do not give direct revenues to the
cooperative. i.e. cash on hand, non-interest
bearing checking accounts, accounts
receivable, assets in liquidation, fixed assets
(land building, equipment, etc.), pre-paid
expenses and other deferrals, and problem
assets.

ASSET STRUCTURE

Formula

Purpose

Score

Equivalent
Points

Total Deposits

Measures the
percentage of total
assets financed by
deposits.

>55% to 65%
>45% to 55%
>65% to 70%
>35% to 45%
>70% to 75%
35% & below
Above 75%

5
3

________________
Total Assets

1
0

ASSET STRUCTURE

Formula

Net Loans
Receivables

________________
Total Assets

Purpose

Measures the
percentage of
the total assets
invested in loan
portfolio.

Score

Equivalent
Points

>70% to 80%
>60% to 70%
>80% to 85%
>50% to 60%
>85% to 90%
>40% to 50%
>90% to 95%
40% & below
Above 75%

2
1.5
1
0.5
0

ASSET STRUCTURE
Formula

Total Members Share

Capital

________________
Total Assets

Purpose

Measures the
percentage of total
assets financed by
members share
capital.

Score

>35% to 45%
>30% to 35%
>45% to 55%
>25% to 30%
>55% to 65%
Above 65%
Below 25%

Equivalent
Points

3
2
1
0

OVER-ALL RATING SYSTEM

Rating 1 (96 to 100) EXCELLENT
The credit cooperative has strong
performance that consistently provides safe
and sound operations. Credit cooperatives
in this group comply with cooperative rules
and regulations and are resistant to
external shocks and financial disturbances.
They are also able to withstand unexpected
adverse changes in business environment.
These institutions do not need supervisory
concern.

OVER-ALL RATING SYSTEM

Rating 2 (90 to 95) VERY Good
The credit cooperative shows satisfactory
performance that consistently provides safe
and sounds operations. Credit cooperatives in
this group are able to withstand business
fluctuations well. However, there are some
areas of concern that require important
attention and if unchecked, can potentially
develop into conditions of greater concern.
Supervisory response is limited to minor
adjustments to ensure that operations
continue to be satisfactory and sustainable.

OVER-ALL RATING SYSTEM

Rating 3 (80 to 89) GOOD
The credit cooperatives performance is
flawed to some degree and is of
supervisory concern. Results of key
performance measures indicate that
safe and sound operations may be
adversely affected. Credit cooperatives
in this group are nominally resistant to
adverse business conditions and may
deteriorate if identifiable area of
weakness are not corrected immediately.

OVER-ALL RATING SYSTEM

Rating 4 (70 to 79) FAIR
The credit cooperative has poor
performance and is of serious
supervisory concern. The credit
cooperatives performance if left
unchecked would lead to conditions
that could threaten its viability. A high
potential for failure is present but is not
yet imminent. Credit cooperatives in
this group require very close
supervisory attention.

OVER-ALL RATING SYSTEM

Rating 5 (below 70) POOR
The credit cooperative has unsatisfactory
performance and is in need of immediate
remedial attention. Credit cooperatives in
this group have a very high probability of
failure and will likely require liquidation.