Good Corporate Governance

In 2019, the Governance Commission for GOCCs (GCG) recognized SBCorp’s governance policies and practices as one of the best among GOCCs in the country. Such distinction was concretized when the Corporation garnered a rating for the GCG Corporate Governance Scorecard (CGS) enabling SBCorp to secure 7th place among 82 GOCCs. The CGS aims to annually assess the corporate governance performance of GOCCs and subsequently recognize well-governed GOCCs. With this achievement, SBCorp has manifested its strict adherence to sound corporate governance principles, best practices and international standards.

SBCorp’s commitment to deliver on its mandate as reflected in its GCG-approved Corporate Scorecard was likewise reaffirmed by GCG. In 2019, the Corporation was able to receive a total rating of (currently subject to GCG validation) which is its 2nd year of breaching the 90% mark.


Corporate-funded Program

SBCorp has utilized its ₱1.9 billion corporate funds to primarily support the financing of MSMEs via the following modalities:

  • Retail Lending with focus on duly registered micro and small enterprises (MSEs);
  • Wholesale Lending which is essentially lending to financial institutions with license to lend for their retailing to MSMEs which may include unregistered micro enterprises; and,
  • Equity or Venture Capital (VC) financing.

SBCorp’s retail lending (₱1.1 billion) and wholesale lending (₱1.2 billion) portfolios are almost equally distributed. The VC portfolio, on the other hand, has a funding allocation limit of ₱50.0 million given that equity financing are inherently high-risk investments. The Corporation’s current equity investments in eight (8) SMEs is around ₱24.2 million.


Government-supported Financing Program

SBCorp plays a central role in the country’s enterprise rehabilitation and economic recovery programs. In fact, SBCorp has been assigned by NG to implement government-supported financing programs for MSMEs.


Enterprise Rehabilitation Financing Program

In 2014 and 2015, NG released a total of ₱200.0 million to provide credit risk support to SBCorp’s ₱600.0 million corporate lending to MSMEs devastated by typhoon Yolanda through its Enterprise Rehabilitation Financing (ERF) Program.

SBCorp was able to lend close to ₱800.0 million to typhoon Yolanda-affected MSMEs through the ERF Program. The program portfolio is now down to ₱168.2 million, around 74% of which represents borrowers who failed to recover from the devastating business reversals due to typhoon Yolanda. This is nevertheless within SBCorp’s portfolio performance expectations given the inherent high risk in terms of enterprise rehabilitation financing. More importantly, potential losses is guaranteed to be within the ₱200.0 million credit risk support provided by NG – thereby avoiding any capital impairment against SBCorp.


Pondo sa Pagbabago at Pag-asenso Program

Further, beginning 2017, NG has instructed SBCorp to implement the Pondo sa Pagbabago at Pag-asenso (P3) Program. The P3 Program aims to provide enterprises with an alternative source of financing that is easy to access and at reasonable cost to boost the development of entrepreneurship in the MSME sector.

The program has been continuously funded via the Special Provisions of the 2017 to 2020 General Appropriations Act (GAA); amounting to ₱1.0 billion per year in 2017 and 2018 and ₱1.5 billion in 2019 and 2020. Each of these annual allocations provide for a mobilization fund component of five percent (5%). Given the explicitly defined nature of the P3 fund as a subsidy in the GAA, its primary purpose is to promote a social good and advance NG’s socioeconomic agenda of providing a viable financing alternative to micro enterprises (MEs).

P3 is a policy fund which sets the maximum effective interest rate to be paid by ME borrowers at 2.5% per month with a maximum loan size per borrower of ₱200.0 thousand. The ME should have been in business for at least one (1) year on continuing basis, with adequate sales and net earnings to repay the P3 loan.

Notwithstanding that the bulk (i.e., ₱1.25 billion) of the P3 fund for 2019 was only released in September of the same year, SBCorp ensured the timely lending of the P3 fund to benefit the end borrowers. In fact, for the period September to December 2019 alone, SBCorp was able to lend out ₱1.89 billion under P3.

Three years on, PDR under the P3 Program remains on the low side at only 2.5%. Majority of the P3 portfolio is lent out via wholesale lending partners (92%), with the remaining (8%) thru direct retail lending to micro enterprises and special programs.


Venture Capital Program

SBCorp has positioned its venture capital operations as a program under its MSME Finance Institute in partnership with State Colleges and Universities (SUCs) for their agribusiness technologies. In 2019, SBCorp approved two (2) VC projects from the University of the Philippines Los Banos (UPLB) with an equity investment of ₱5.0 million each. These are Binhi, Inc. and Elbitech, Inc. However, both projects encountered supply-side challenges (i.e., sourcing of raw materials, purchase of equipment, availability of labor for construction, etc.) during the Covid-19 pandemic.

SBCorp’s VC funds will be supplemented in the next five years via the International Food and Agriculture Development (IFAD) loan of NG, ₱250.0 million of which will be made available for equity financing of agribusiness MSMEs in Mindanao.      


Capacity Building Program

Consistent with its mandate, SBCorp runs capacity building programs focusing on the supply side, i.e., training and consultancy for partner financial institutions on how to effectively finance MSMEs through its Borrower Risk Rating System program.

SBCorp has established its MSME Finance Institute with its first satellite office in UPLB, and with potential of incorporating MSME finance in the university’s business course offerings. Partnerships with other SUCs is also being worked out by SBCorp in order to increase financing of agribusiness enterprises in collaboration with rural banks and cooperatives


Financial Performance (2017 to 2019)

SBCorp’s total equity has been steadily increasing in the last three (3) years as a result of the annual government allocation under the Pondo sa Pagbabago at Pag-asenso (P3) Program. However, while total government allocation amounted to ₱3.5 billion from 2017 to 2019, total assets remained at almost the same level as significant changes were experienced in the Corporation’s liabilities.

In 2018, the provision of the Magna Carta for mandatory allocation to MSMEs expired leading to the decrease in the Corporation’s Notes Payable.  Further in 2019, the Corporation complied with EO No. 58 mandating SBCorp to transfer all guarantee-related funds to PhilGuarantee. This included the ₱750.0 million Credit Risk Guarantee Fund (CRGF), which was booked as a liability.



SBCorp’s Comparative Financial Position

Balance Sheet


2018 (as restated)



₱ 6,527,269,000

₱ 7,032,366,828

₱ 6,467,406,535










Correspondingly, SBCorp’s loan portfolio significantly increased from ₱3.6 billion in 2017 to ₱5.8 billion in 2019. As the lending fund increases over the years, this enabled SBCorp generate more income. Operating revenue has increased from ₱317.9 million in 2017 to ₱354.7 million in 2019. This resulted to an increase in Net Operating Income (NOI) from ₱15.4 million in 2017 to ₱20.9 million in 2019.


SBCorp’s Comparative Results of Operations

Income Statement




Operating Revenue

₱ 317,903,000

₱ 322,934,000

₱ 354,736,000

Operating Expenses




Net Operating Income






Sustainability and Profitability

SBCorp’s ₱1.9 billion capital is intact and has not been impaired at any point in time since inception in 1991. Losses on SBCorp’s corporate-funded financing programs arising from failure of borrowers to pay have been within the pricing capacity of SBCorp’s financing products. SBCorp’s past due rate (PDR) gross of fully provisioned accounts stands at 13.25%. This is expected to go down to single digits – around 6% to 7% – should the Corporation write-off its fully provisioned non-performing loans (NPLs). SBCorp is now in the process of completing the required documentation for its NPLs prior to write-off. More importantly, this performance is within range relative to mainstream financing industry. Per data from the Bangko Sentral ng Pilipinas (BSP), PDR of rural and cooperative banks stands at 13.5% as of 31 December 2019.

Moreover, the Corporation has been able to remit dividends to NG and its other stockholders a cumulative amount in excess of ₱600.0 million as of 31 December 2019. This level of dividends reflects the balancing act – between sustainability and developmental objectives – required of SBCorp as a development finance GOCC and consistent with stockholders’ expectations in exchange for their financial investment.