Credit scorer sees default remaining low in Philippines

MANILA, Philippines — Chicago-based credit scorer TransUnion said payment delinquencies in the Philippines are expected to remain at all-time lows despite rising interest rates after the Bangko Sentral ng Pilipinas (BSP) delivered back-to-back rate hikes.

TransUnion Philippines president and CEO Pia Arellano said credit default has been at an all-time low with the 30 days past due at about four percent and the 90 days past due at 0.7 percent.

“So delinquency is managed but portfolios are growing, so that’s definitely a good sign as far as credit is concerned,” she said.

TransUnion has a data covering eight million customers with 18.5 million accounts. Its clients include universal, thrift, and rural banks as well as utilities, automotive makers, government, and financial technology (fintech) firms.

She said consumers are expected to benefit from the healthy competition in the banking industry through competitive interest rates.

“More banks extend more credit, that means it becomes more competitive and active in terms of the marketplace. In the end, it’s still the consumer that benefits given that competition is healthy and the rates should actually be on the downtrend for the consumer,” she said.

The BSP’s Monetary Board has so far raised interest rates by 50 basis points to curb rising inflationary pressures. It delivered its first interest rate in more than three years with a 25 basis point hike last May 10 followed by another 25 basis points last June 20.

Arellano said TransUnion has been tracking consumer loan growth and credit scores as major banks, credit card providers, and financing companies continue to use the services of the only full-service private credit bureau in the Philippines.

She added the credit scorer has been tracking the performance of the industry.

“There’s been a very healthy more than 20 percent increase in total limits extended and total outstanding balances,” Arellano said.

TransUnion Philippines was established in the country in 2011 through a partnership with Ayala-led Bank of the Philippine Islands, BDO Unibank of retail and banking magnate Henry Sy, Citibank, HSBC and Metrobank Card Corp.

Latest data from the BSP showed credit growth eased to 19.4 percent in May from 19.9 percent in April due to the slower increase in motor vehicle loans as well as salary-based general-purpose consumption loans.

Loans extended by banks amounted to P7.54 trillion in end-May, P1.22 trillion higher than the P6.32 trillion released in end-May last year.