Security Bank, based in Manila and controlled by the Dy family, is set to enhance its consumer lending capabilities by acquiring a 25% stake in Home Credit Philippines for 11 billion pesos (approximately $182 million). The announcement was made public through the Philippine Stock Exchange, although the transaction remains contingent upon regulatory approval, with expectations for completion by the first quarter of 2025. Sanjiv Vohra, CEO of Security Bank, expressed enthusiasm for the acquisition, noting that it presents significant strategic advantages. The collaboration aims to foster synergies, deliver innovative lending solutions, and promote financial inclusion within the Philippine market.
The growing reliance on consumer lending by Philippine financial institutions is largely influenced by the tightening yields on commercial loans. Recent trends indicate that banks are shifting their focus towards more lucrative retail lending. For instance, Union Bank, owned by the Aboitiz family, completed the acquisition of Citibank’s credit card business in the Philippines two years ago, while the Philippine National Bank, under tobacco tycoon Lucio Tan, announced intentions to significantly increase its share of retail loans in the upcoming two to three years. These developments underline a broader shift in the banking landscape, as institutions pivot towards consumer-focused products to sustain profitability amidst challenging lending conditions.
Home Credit Philippines has seen extensive growth since its inception, with MUFG, Japan’s largest banking group, acquiring a 20% stake in the company in 2016. This partnership enabled the expansion of the lender’s client base and led to collaborative efforts with Krungsri, a Thai financial institution, to offer personal loans. In a significant development, MUFG and Krungsri completed a takeover of Home Credit in June 2023 for 24.4 billion pesos, with Krungsri retaining a 75% stake post-acquisition. With this framework in place, Security Bank’s investment is designed to complement Krungsri’s existing operations within Home Credit, indicating a strategic partnership that aims to bolster service quality and outreach.
Security Bank’s entry into Home Credit not only signals an expansion of its consumer lending portfolio but also enhances the bank’s overall market presence. The company has been operational for 11 years, during which it has served over 11 million clients and disbursed more than 350 billion pesos in credit via point-of-sale loans, installment financing, cash loans, and credit card products. Home Credit has established itself as a market leader in point-of-sale financing, largely due to its partnerships with well-known retailers and brands, positioning it advantageously in the competitive consumer lending landscape.
The involvement of Security Bank is poised to further elevate Home Credit’s market standing. Yasushi Itagaki, Group Chief Operating Officer, emphasized that Security Bank’s local insights and existing infrastructure will facilitate continued growth and broader service offerings for Home Credit Philippines. The capital infusion from Security Bank is expected to bolster Home Credit’s capacity to innovate and expand its reach, particularly in retail financing, where demand continues to rise amid evolving consumer preferences.
Frederick Dy, who holds the position of chairman emeritus at Security Bank, is a notable figure in the Philippines’ banking sector, with a reported net worth of $170 million as per Forbes’ 2024 list of the country’s richest individuals. The Dy family owns approximately 19% of Security Bank, which maintains a comprehensive operational footprint with 334 branches and 678 ATMs, alongside possessing a substantial asset base of one trillion pesos. This acquisition not only reinforces Security Bank’s commitment to consumer lending but also reflects broader market trends towards enhanced financial services and inclusive lending solutions within the Philippines.
