Debt payment delinquencies in Phl seen to remain low

Debt payment delinquencies in the country are expected to remain at an all-time low despite rising interest rates following the decision of the Bangko Sentral ng Pilipinas (BSP) to deliver back-to-back rate hikes, according to Chicago-based credit scorer TransUnion.

TransUnion Philippines president and chief executive officer Pia Arellano said Filipino consumers are expected to benefit from the healthy competition in the banking industry through competitive interest rates.

“More banks are extending more credit, that means they become more competitive and active in terms of the marketplace,” she said.

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

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

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

According to Arellano, even delinquencies have been at an all-time low with the 30-day past due at about four percent and the 90-day 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) companies.

TransUnion Philippines was established in the country in 2011 through a partnership with the Bank of Philippine Islands, BDO Unibank, Citibank, HSBC and Metrobank Card Corp.

The company helps consolidate the credit information system as well as the collection and sharing of both positive and negative credit data of consumers.

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 as of end-May, P1.22 trillion higher than the P6.32 trillion a year earlier.