Philippine banks are relying on higher-margin consumer loans as yields on commercial loans tighten.
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Security Bank, a Manila-based bank controlled by tycoon Frederick Dy and his family, will acquire a 25% stake in Home Credit Philippines to build its consumer lending business.
Security Bank will pay 11 billion pesos ($182 million) for the shares, according to the Philippine Stock Exchange. The transaction is subject to regulatory approval and is expected to close in the first quarter of 2025.
“We are excited about the strategic benefits of this acquisition,” said Sanjiv Vohra, Chief Executive Officer of Security Bank. “This is a huge opportunity to leverage synergies, provide innovative lending solutions and support financial inclusion.”
Philippine banks are increasingly relying on higher-margin consumer loans as commercial loan yields tighten. Two years ago, the Aboitis family's Union Bank of the Philippines completed the acquisition of Citibank's credit card business in the country, while the Philippine National Bank, owned by tobacco billionaire Chen Zhiyuan, announced at a forum last month that it would Retail loans’ share of total Philippine banks’ portfolios more than doubled within two to three years.
Mitsubishi UFJ Financial Group (MUFG), Japan's largest banking group, acquired a 20% stake in Home Credit Philippines in 2016, expanding the local bank's customer network and establishing a personal loan joint venture with Thai bank Krungsri. MUFG owns 77% of Krungsri, Thailand's fifth largest financial group.
In June 2023, MUFG and Krungsri acquired all of Home Credit for P24.4 billion. Following the sale of the minority stake to Security Bank, Krungsri will retain a 75% stake.
“Security Bank will complement Home Credit Philippines' Krungsri,” said Yasushi Itagaki, group chief operating officer. “Security Bank’s on-the-ground presence and local market knowledge will drive continued growth for Home Credit Philippines.”
In its 11 years of operation, Home Credit has served 11 million customers and provided more than P350 billion in credit through point-of-sale loans, installment financing, cash loans and credit cards. Home Credit is the market leader in point-of-sale lending, with partnerships with top retailers and brands.
In August, when Forbes released its list of the Philippines' 50 richest people in 2024, Dy was the honorary chairman of Philippine Securities Bank and his net worth was US$170 million. With a 19% stake, the bank has 334 employees.
