S&P Global Ratings assigned its ‘BB’ long-term and ‘B’ short-term issuer credit ratings to Asialink Finance Corp. on Monday, citing the company’s strong capitalization and leadership in the used-vehicle financing market.
The ratings agency maintained a stable outlook, reflecting expectations that the non-banking financial institution will preserve its 10-percent to 15-percent market share in the second-hand car and truck segments while diversifying its funding sources over the next 12 to 24 months.
Asialink is one of the fastest-growing finance firms in the Philippines, focusing on loans for individuals and small businesses. Its capital position was recently bolstered by a significant equity infusion from private equity fund Creador, which took an 18-percent stake in the company in 2024.
S&P said it expects the company to maintain a risk-adjusted capital ratio of about 19 percent over the next two years. While loan growth is projected to moderate to between 25 percent and 28 percent annually through 2027, this follows a more aggressive 34 percent growth rate seen between 2021 and 2024.
Despite the positive rating, S&P noted that Asialink faces asset-quality challenges. Credit costs spiked to 2.3 percent in 2024 from 0.6 percent the previous year following rapid expansion in the National Capital Region.
The company’s weak loans ratio, which includes nonperforming loans and foreclosed assets, stood at 11.5 percent at the end of 2024, nearly double the banking sector average.
Management has since tightened underwriting standards to mitigate these risks. Asialink chairman Ruben Lugtu II and Asialink Group chief executive Jordan Jordan Jr., who founded the company in 1997, lead a management team that has largely been in place since inception. The Lugtu family retains a 70 percent majority stake in the firm.
The company operates a network of 525 branches as of Dec. 31, 2024, providing a competitive edge in provincial areas where physical presence is required for loan disbursement and collections.
Its profitability remains high, with a return on average assets of 5.5 percent in 2024, outperforming the 1.5 percent average for Philippine banks.
Asialink’s core business involves small-ticket loans with an average size of P425,000. These loans carry effective interest rates ranging from 23 percent to 30 percent per annum.
The company’s funding remains a point of concentration, with 64 percent of total liabilities coming from bank loans and 31 percent from equity.
Its top 10 lenders account for 80 percent of its bank credit. S&P noted that while Asialink has a low liquidity coverage metric of 0.1x, its consistent cash flow ratio of more than 1x supports its ability to meet short-term debt obligations through retail loan repayments.
S&P said it could upgrade the ratings if Asialink successfully diversifies its funding or if its weak loans ratio declines to between 6 percent and 8 percent.
