Czech financial technology company pours in new PH investment

Home Credit, Czech-owned finance technology company, is investing R18.6 billion up to 2018 in the country in an aggressive expansion of its four-year-old operation amid robust demand for electronic items, particularly smartphones, and cash loans.

Zdenek Jankovsky, Home Credit Philippines’ (HCPH) chief financial officer, announced this after booking profit for the first time as of September this year. With robust business, Home Credit expects significant R800 million in profit by next year.

On top of the R18.6-billion additional investments, Jankovsky said Home Credit had already invested R6.3 billion making the four-year-old fintech company the largest in the country.

The additional investments will be used to expand to more regions, hire more people and scale up its financing capability to include new potential commodities in its portfolio to cover more customers.

Jankovsky said that its workforce is nearing 8,000 of which 5,200 are assigned to 3,300 point of sales outlets throughout the country, which it expects to increase by 50 percent by 2018.

“We are continuing to open more stores in the 39 provinces we are already present in, while preparing to launch in even more provinces,” said Jankovsky.

Its call center in Vertis North is also growing to 1,300 end this year from the current 500 operators. Its 600-seater office in Bonifacio Global City is also ramping up its retail network and workforce expansion across the country.

This should be in line with the company goal to employ 12,000 by end of 2018 as the Prague-based fintech firm is planning to also widen their commodity coverage to include furniture and flight tickets in partnerships with some vendors and travel agents, making them the first mover in these new commodities.

In addition, Jankovsky said they intend to issue their own credit card but are just awaiting for the approval by the Bangko Sentral ng Pilipinas of the implementing rules and regulations for credit card business.

“We are facilitating shopping,” said Jankovsky noting that 70 percent of their customers are buying smart phones.

Home Credit is enjoying better market penetration as it does not have direct competitor but mostly the pawnshops, which offer less secure transaction.

Home Credit provides in-store financing of gadgets, appliances and other goods, even without a credit card, through a simple application process that requires only two valid IDs from the applicant.

Jankovsky said that Home Credit currently has one of the fastest loan processing and approval times in the industry, with majority of applicants approved in less than 5 minutes. Home Credit’s automated system can quickly receive a loan application form and determine if the application is approved or declined.

Home Credit grants a maximum amount of R60,000 for gadgets payable within 6-9 months and applicants of up to 2 years. It also grants cash loans up to R120,000 at 2.99 percent per month for 33 months.

“We make sure customers can afford the installment, which is an average of R1,200 a month,” he said. Payments for these online transactions can also be done via bills payment centers.

Since it started its operation, Home Credit has experienced improving default rate of 5-6 percent from below 10 percent in 2015. Majority of its customers are first time borrowers, who had been deprived of standard formal loan but through the gray market or the loan sharks which offer exorbitant interest rates. The company even boasted of spike in loan applications reaching as high as 11,000 in a day.

Aside from its external financing resources from international group, they have also R2.25-billion syndicated loans from participating banks Citi Philippines, East West Banking Corp., Rizal Commercial Bank Corp., Union Bank and China Trust and Banking Corp.