Connect with us

Hi, what are you looking for?

Top Stories

Editor's Pick

[B-SIDE Podcast] The repayment slowdown: Insights on Filipino debt trends

Follow us on Spotify BusinessWorld B-Side

As household savings were depleted during the pandemic, more Filipinos relied on credit to manage their daily expenses.

Now, with the rising cost of living due to inflation and higher interest rates for borrowing money, consumers are struggling to repay their debts.

This reality is reflected in Collectius’ own internal data, which shows a slowdown in debt repayment rates in the first half of this year compared to 2022, Marie Alexise Charisse Arboleda, head of operations at Collectius, tells BusinessWorld reporter Keisha B. Ta-asan.

Credit card usage is also expected to increase this quarter amid the holiday season.

“During this time, many Filipinos tend to prioritize holiday spending, which includes holiday gifting, over debt repayment,” she said.

“Given the anticipation for high inflation, it is likely that consumers will spend more and we can expect to see a decrease in debt repayment levels across all consumer loans.”

Based on the latest data from the central bank, consumer credit jumped by 22.7% to P1.17 trillion from P950.8 billion a year ago, slightly faster than the 22.6% in July. Credit card loans expanded by 29.7% year on year in August.

“A slowdown in debt repayment rates does pose challenges, but may not necessarily lead to financial crisis in financial stability, especially if it is sufficiently addressed by regulatory measures,” Ms. Arboleda said.

She noted that slower debt repayments can hurt the banks and it may be harder for financial institutions to be able to lend money and provide financial services.

“But banks and other financial institutions are well capitalized in the Philippines and they generally have risk mitigation strategies in place,” she said.

“The (government) might take steps to reduce risks and support the financial system, especially during tough times, and we saw that also during the pandemic,” she added.

Separate central bank data showed lenders’ nonperforming loan (NPL) ratio improved to a four-month low of 3.42% in August from 3.43% in July.

Bad loans declined by 5.9% year on year to P442.9 billion as of end-August. However, this was 0.6% higher than P440.1 billion seen at end-July.

Collectius, a financial technology company, is one of the five Financial Institutions Strategic Transfer Corporations in the Philippines licensed to acquire nonperforming loans or assets accumulated by banks during the coronavirus pandemic.

Follow us on Spotify BusinessWorld B-Side


You May Also Like


As the world seeks sustainable and energy-efficient solutions for heating and cooling, the heat pump market is experiencing a significant surge. According to the...

Editor's Pick

PHILIPPINE STAR/ MIGUEL DE GUZMAN The Department of Environmental and Natural...

Editor's Pick

The Warriors were not happy campers in the aftermath of their loss to the Timberwolves the other day. It wasn’t simply that the setback...


<?xml encoding=”utf-8″ ?????????> The Government’s Terrorism (Protection of Premises) Bill featured in the King’s Speech 2023 on Tuesday (November 7), indicating the Government’s intention...

Disclaimer:, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice.
The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2022 Secrets Of Richdads. All Rights Reserved.