Analysis by TransUnion, the global information and insights company, shows that the credit card market in the Philippines continued to experience growth, with opportunities for further expansion through greater financial inclusion.
According to insights shared at the recent 2024 TransUnion Financial Services Summit in Hong Kong, credit card origination volumes have consistently grown every quarter since Q3 2022 and closed in on the milestone of one million new cards per quarter in Q3 2023, despite a normal seasonal dip that was observed in the following fourth quarter.
Total outstanding credit card volumes increased year-over-year (YoY) from 9.3 million cards in Q4 2022 to 11.2 million cards in Q4 2023.
Over the same period of time, the credit card penetration rate, meaning percentage of adults holding at least one credit card, reached over 15 percent of Filipino adults.
Together, these trends represent a growth of around 20 percent in both overall volume and penetration rate in thelast year.
Additional data from the Credit Card Association of the Philippines (CCAP) was consistent with the trends observed by TransUnion.
Its data showed credit card spending increased by 39 percent to reach P853 billion in the first half of 2023 — a jump from the 29 percent increase in the previous year.The trends incard originations, total volume, penetration, and spending all indicate a promising growth trajectory for the credit card market in the country.
A deeper dive into the TransUnion insights showed that Gen Z Filipinos are emerging as significant contributors to the increase in credit card originations.
The percentage share of overall originations among Gen Z Filipinos has more than doubled over the past five years – up from just under one in ten (9 percent) in Q3 2019 to more than one in five (22 percent) in Q3 2023. This share will likely increase as moreGen Z consumers reach adulthood.
According to the study, almost all surveyed Gen Z Filipinos (98 percent) see access to credit and lending products as important to achieving their financial goals.
“The credit card market in the Philippines will continue to experience growth as demand remains high,especially amongst younger consumers. Data from TransUnion clearly shows that the younger generation of Filipinos, particularly Gen Z, are quickly emerging as a cornerstone for future market growth. This generation places a higher importance on accessing credit and lending products to achieve their financial goals. As more Gen Z consumers reach adulthood, we expect their share of the credit market to continue increasing,” said Weihan Sun, Principal of Research and Consulting for Asia Pacific at TransUnion.
Despite the promising trend of younger generations participating in the credit market, TransUnion’s analysis showed that more effort is needed to foster greater financial inclusion for women. A breakdown of credit card originations data by gender revealed a gap between male and female borrowers.
Recent quarterly findings showed that male borrowers accounted for 60 percent of credit card originations, while females only comprised 40 percent.
