An international consumer finance company is expecting a rise in demand for non-bank lenders in the country, even as loans from banks continue to increase, because of higher consumer electronics consumption.
David Minol, CEO of Home Credit Philippines, said that a vast majority of Filipinos still have no bank accounts and many of them are in need of financing despite banks reported increase in lending.
“The demand for appliances and other consumer goods continues to rise, and this applies not just to the upper class, but to the everyday working Filipino as well,” noted Minol.
BMI Research cites a strong medium-term growth for consumer electronics consumption in the Philippines, including audio-visual equipment such as TVs and digital cameras, and handsets as households acquire sufficient disposable income for the first time.
From 2016 to 2020, BMI Research forecasts a compound annual growth rate of 6.8% in the consumer electronics sector.
Data from Euromonitor and GfK show that the Philippines is seeing an increased demand for appliances, with the sector growing by 6% in 2015. Following this, the demand for financing options is set to grow even stronger.
“For many of these Pinoys, these household products are not ‘wants’; they are ‘needs’. This means that availing these products is of utmost importance for their families. And with no access to credit cards or bank financing, they will seek other safe, viable ways,” Minol added.
Since it was established, Home Credit has seen a steady increase in loan applications, most notably during the fourth quarter holiday season, and the summer months when graduation gift items and appliances such as air conditioners are in greater demand. According to Home Credit, the top purchases are mobile phones, with home appliances such as TVs, refrigerators and washing machines a close second.
Present in close to a thousand retail outlets nationwide, Home Credit booths are strategically placed at partners’ points-of-sale.
“We want to be where the consumers are and ensure that the process is fast, easy and simple for them. We’re working with a lot of retail partners that offer a wide variety of product choices to consumers, and with alternative, non-bank financing options such as Home Credit, there is less risk of consumers walking away from the things they need to purchase.
“This also ultimately drives consumption and increases the demand for these goods,” added Minol.
The Home Credit CEO explained that the company has seen encouraging growth since being established in the country in 2013, and has now served nearly 200,000 customers in Metro Manila, key provinces in Northern Luzon and Metro Cebu in the Visayas who have purchased different products including tablets, flat screen TVs, mobile phones, and home appliances such as air conditioners and refrigerators.
The company expanded its operations to Cebu and Pampanga last January.