CONSUMER CREDIT IN THE

PHILIPPINES
Euromonitor International
October 2017
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LIST OF CONTENTS AND TABLES

Headlines ..................................................................................................................................... 1
Prospects ..................................................................................................................................... 1
Card and Auto Lending Drive Growth ....................................................................................... 1
Fintech Innovation .................................................................................................................... 1
Continued Growth Expected ..................................................................................................... 2
Competitive Landscape ................................................................................................................ 2
Bdo and Metrobank Lead ......................................................................................................... 2
Innovation ................................................................................................................................. 2
Government Also Plays A Role ................................................................................................ 2
Category Data .............................................................................................................................. 2
Table 1 Consumer Credit: Outstanding Balance by Category: Value 2012-
2017 ............................................................................................................. 2
Table 2 Consumer Credit: Outstanding Balance by Category: % Value Growth
2012-2017 .................................................................................................... 3
Table 3 Consumer Credit: Gross Lending by Category: Value 2012-2017 ............... 3
Table 4 Consumer Credit: Gross Lending by Category: % Value Growth 2012-
2017 ............................................................................................................. 3
Table 5 Forecast Consumer Credit: Outstanding Balance by Category: Value
2017-2022 .................................................................................................... 4
Table 6 Forecast Consumer Credit: Outstanding Balance by Category: %
Value Growth 2017-2022 ............................................................................. 4
Table 7 Forecast Consumer Credit: Gross Lending by Category: Value 2017-
2022 ............................................................................................................. 4
Table 8 Forecast Consumer Credit: Gross Lending by Category: % Value
Growth 2017-2022 ....................................................................................... 4

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CONSUMER CREDIT IN THE PHILIPPINES Passport 1

CONSUMER CREDIT IN THE

PHILIPPINES
HEADLINES
 The consumer credit outstanding balance grows by 17% in 2017 to reach PHP1.3 trillion
 Auto gross lending is expected to decline slightly in 2018 as a result of tax reform, although
demand is expected to pick up after
 Emerging FinTech companies boost consumer lending
 Consumer credit gross lending increases by 8% in 2017 to reach PHP1.2 trillion
 The consumer credit outstanding balance is expected to record a CAGR of 6% at constant
2017 prices over the forecast period

PROSPECTS

Card and Auto Lending Drive Growth

Growth of consumer credit was sustained by card and auto lending in 2017. The Philippine
economy continued to expand with GDP growth of 6.8%. Purchasing power strengthened
among the growing middle class. Consumer credit gross lending breached the PHP1 trillion
mark for the first time in 2016. This was a result of the continuous growth in the domestic
economy since 2008. Growth drivers include remittances from overseas Filipino workers, the
expanding business process outsourcing industry, the good performance of the services sector
and heightened consumer spending and investment.
Although card gross lending slowed in 2017, brought about by increasing competition in the
financial cards and payments category, it still helped sustain growth of overall consumer credit
as it is the largest category for gross lending.
House Bill No. 5636 includes a more progressive excise tax system, replacing the current-four
bracket system with a five-tier structure which will impose higher rates and raise vehicle prices
over the first two years of the forecast period. While basic cars will be taxed at lower rates, more
expensive cars will be taxed at higher rates. This was initially expected to have a grave impact
on the automotive industry. However, even car manufacturers are not particular alarmed
although they anticipate an initial decline in vehicle sales as car prices will definitely increase.
Players are, however, optimistic that demand will pick up again soon enough.

Fintech Innovation
FinTech companies introducing innovative platforms for lending are changing the landscape
of consumer lending in the Philippines. Capitalising on purchases of mainly durable goods, even
without a credit card, enabled Home Credit to be highly successful. The Prague-based FinTech
company launched in Metro Manila in 2013 and by 2017 had reached 1,000,000 customers.
According to Home Credit’s statistics, mobiles and tablets are the most purchased items,
followed by TVs, electronics, home appliances and computers. Home Credit established
partnerships with various retail stores and manufacturers to further strengthen its service. At the
end of the review period it already had more than 2,500 partner stores nationwide, with
dedicated sales agents to assist the application process. Its success is likely to encourage more
FinTech companies to enter the market.

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Continued Growth Expected

With on-going economic improvement and use of new technologies, consumer credit is set to
continue to grow. Political instability may be a threat, but is not expected to damage the
economy. Philippine resilience will still allow the Philippine economy to ride these issues and
weather the difficult global environment. Lending companies will continue to make lending more
convenient, as the arrival of Credit Information Corp improves security.

COMPETITIVE LANDSCAPE

Bdo and Metrobank Lead

BDO led consumer lending, followed by Metrobank as of 31 March 2017, with both recording
strong growth over 2016.
BDO capitalises on the country’s robust economy and its wide presence in almost all
categories. The lending arm of BDO is considered as its growth driver. The bank has witnessed
rising affluence among Filipinos even in rural areas, specifically driven by demand for home
loans among overseas Filipino workers. Meanwhile, the bank’s auto loan portfolio also
expanded due to attractive financing schemes.
Metrobank has attributed growth to its successful release of special promotions for its home
and car loans, as well as to streamlined processes. In 2015, Metrobank was awarded the Best
Automobile Lending Product award by The Asian Banker.

Innovation
Peer-to-peer lending also entered the Philippines. This is unique in that it offers consumers
the chance to lend. Another innovation, Lendr, was introduced by Voyager Innovations, the
company behind PayMaya. This is a 24/7 online platform and a one-stop loan shop accessible
on mobile phones. It serves as a small lending programme and partners with various SME
banks. The service is available to unbanked individuals in remote communities. It is the
country’s first and only data sharing and streamlining tool approved by the Central Bank (BSP).

Government Also Plays A Role

Government bodies have a role in consumer lending. PAG-IBIG, also known as the Home
Development Mutual Fund of the Philippine government, had a strong year in 2016, recording its
highest housing loan portfolio and number of members. The vast majority of PAG-IBIG’s
housing loan portfolio is for low-cost housing, which benefited 70,000 families of minimum wage
earners in 2016. SSS (Social Security System), on the other hand, reports that its recent loan
programme received an overwhelming response. The main objective of the programme is to
help relieve the burden of calamity-stricken workers, who face difficulties in repaying SSS loans
after the disasters which have devastated some parts of the country.

CATEGORY DATA
Table 1 Consumer Credit: Outstanding Balance by Category: Value 2012-2017

PHP bn
2012 2013 2014 2015 2016 2017

Auto Lending 160.0 186.4 231.3 304.3 380.4 490.5

Card Lending 180.9 191.8 203.9 222.3 244.5 283.8

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Durables Lending - - - - 10.5 20.0

Education Lending 12.5 15.0 16.2 17.8 19.2 21.1
Home Lending 17.0 17.7 18.3 19.0 19.7 20.8
Consumer Credit 725.4 804.3 878.8 989.7 1,116.8 1,307.0
Other Personal Lending 355.0 393.4 409.1 426.3 442.5 470.8
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
trade interviews, trade sources

Table 2 Consumer Credit: Outstanding Balance by Category: % Value Growth 2012-

2017

% current value growth

2012-17 CAGR 2012/17 Total

Auto Lending 25.1 206.6

Card Lending 9.4 56.8
Durables Lending - -
Education Lending 11.0 68.6
Home Lending 4.1 22.1
Consumer Credit 12.5 80.2
Other Personal Lending 5.8 32.6
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
trade interviews, trade sources

Table 3 Consumer Credit: Gross Lending by Category: Value 2012-2017

PHP bn
2012 2013 2014 2015 2016 2017

Auto Lending 32.2 37.8 44.6 54.3 65.2 81.6

Card Lending 505.0 585.7 684.6 793.8 917.7 977.8
Durables Lending - - - - 2.8 5.5
Education Lending 4.7 5.1 5.8 6.3 6.9 7.5
Home Lending 1.9 2.0 2.1 2.2 2.3 2.5
Consumer Credit 638.9 725.4 832.8 956.6 1,098.3 1,182.8
Other Personal Lending 95.2 94.8 95.7 100.0 103.5 107.9
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
trade interviews, trade sources

Table 4 Consumer Credit: Gross Lending by Category: % Value Growth 2012-2017

% current value growth

2012-17 CAGR 2012/17 Total

Auto Lending 20.5 153.7

Card Lending 14.1 93.6
Durables Lending - -
Education Lending 9.8 59.5
Home Lending 5.5 30.9
Consumer Credit 13.1 85.1
Other Personal Lending 2.5 13.3
Source: Euromonitor International from official statistics, trade associations, trade press, company research,
trade interviews, trade sources

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Table 5 Forecast Consumer Credit: Outstanding Balance by Category: Value 2017-

2022

PHP bn
2017 2018 2019 2020 2021 2022

Auto Lending 490.5 520.9 560.0 604.2 653.8 710.0

Card Lending 283.8 316.3 350.7 386.5 425.0 464.1
Durables Lending 20.0 21.8 23.7 25.6 27.6 29.5
Education Lending 21.1 22.3 23.6 24.9 26.3 26.5
Home Lending 20.8 21.2 21.5 21.8 22.1 22.4
Consumer Credit 1,307.0 1,386.1 1,475.2 1,570.2 1,672.4 1,779.8
Other Personal Lending 470.8 483.6 495.6 507.0 517.7 527.2
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

Table 6 Forecast Consumer Credit: Outstanding Balance by Category: % Value

Growth 2017-2022

% constant value growth

2017-22 CAGR 2017/22 Total

Auto Lending 7.7 44.7

Card Lending 10.3 63.6
Durables Lending 8.1 47.5
Education Lending 4.7 25.8
Home Lending 1.5 7.8
Consumer Credit 6.4 36.2
Other Personal Lending 2.3 12.0
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

Table 7 Forecast Consumer Credit: Gross Lending by Category: Value 2017-2022

PHP bn
2017 2018 2019 2020 2021 2022

Auto Lending 81.6 81.1 88.7 96.7 105.3 115.6

Card Lending 977.8 1,128.2 1,309.6 1,525.1 1,775.0 2,063.6
Durables Lending 5.5 6.2 7.0 7.6 8.1 8.6
Education Lending 7.5 7.9 8.4 8.8 9.2 9.3
Home Lending 2.5 2.5 2.6 2.6 2.7 2.8
Consumer Credit 1,182.8 1,335.0 1,526.0 1,751.4 2,011.4 2,311.4
Other Personal Lending 107.9 108.9 109.8 110.5 111.1 111.5
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

Table 8 Forecast Consumer Credit: Gross Lending by Category: % Value Growth

2017-2022

% constant value growth

2017-22 CAGR 2017/22 Total

Auto Lending 7.2 41.7

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Card Lending 16.1 111.0

Durables Lending 9.4 57.0
Education Lending 4.2 23.1
Home Lending 2.4 12.5
Consumer Credit 14.3 95.4
Other Personal Lending 0.7 3.3
Source: Euromonitor International from trade associations, trade press, company research, trade interviews,
trade sources

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