Why Swedish lady banker lends to first-time Filipino borrowers

Annica Witschard, a lady banker from Sweden, has accepted an offer to head the Philippine unit of a consumer finance company that gives banks and credit card firms a run for their money.

Witschard moved to Manila with her family in April to become the chief executive of Home Credit Philippines, which lends to ‘unbanked’ people wanting to buy smartphones, appliances, electronics or furniture on an installment basis. 

Witschard is excited about the Philippines’ large consumer market. “The Philippine population is growing.  The middle class here is growing,” says Witschard, who was based in Stockholm, Sweden as chief executive of GE Capital Nordics, before she joined Home Credit Philippines which is headquartered in Pasig City.

Home Credit Philippines CEO Annica Witschard
Witschard says that as the new head of Home Credit Philippines, she can tap her banking experience to grow the business.  “I have a different experience, from a company with a lot of customer focus.  That’s one of the main reasons. We have our hands full at the moment for expansion,” she says.

Home Credit, the parent company based in the Czech Republic, infused P2 billion worth of equity capital in the Philippine unit.  Witschard replaced Czech national David Minol as chief executive in June, after Minol was promoted as regional executive director based in Prague.

Witschard brings with her a broad experience across many functions in consumer financial services and banking. With a degree in International Business at the University of Linköping (Sweden), majoring in Business and Economics, she oversaw the operations of GE Capital Nordics, a subsidiary of GE Capital, that served over 700,000 customers and 5,000 partners in northern Europe.

Home Credit started in 1997 in a village near Brno, the second biggest city in the Czech Republic. Its parent company is PPF (První privatizační fond), which is owned by billionaire Petr Kellner, the richest person in the Czech Republic.  

“We now have 77,400 employees and total assets of 9.9 billion euros,” Home Credit Philippines public relations head Dmitry Borisenko says in a news briefing at Fairmont Hotel in Makati City.

“We provide installment financing for the purchase of electronic gadgets and appliances.  On the average, it takes less than five minutes to approve the loan with Home Credit,” Borisenko says to sum up the company’s operations.

Witschard, who stands five feet and 10 inches tall, says the large Philippine population of more than 100 million presents growth opportunities for Home Credit. She is optimistic about doubling the business this year.  

Home Credit Philippines is currently servicing 280,000 customers, including 180,000 in the past nine months who bought items from 220 merchants. Home Credit began operations in 2013, servicing Manila initially.

“While it took nearly three years to establish 100,000 customers, today we have around 280,00 users.  I would like to say that by the end of this year, we should probably have half a million customers.  So it will be a quick and successful expansion,” she says.

Home Credit employs 2,900 individuals in the Philippines alone and is present in 1,200 shops across 12 provinces.  The plan is to recruit more people in line with the expansion program, says Witschard.

From Metro Manila, Home Credit has expanded to other parts of Luzon and the Visayas.  “We are growing.  Our target is to cover the whole country. We are going to Baguio.  We are going to Iloilo.  It is about being in key places.  It is about being with the right partners,” she says.

She says aside from helping consumers buy the items they need, Home Credit also helps spread financial education in the country.

“A huge majority of Filipinos still have little to no access to financial tools and services, which can have a profound impact on how they live and enjoy their lives. We want to change that. That is why even first-time borrowers are eligible to apply for Home Credit financing. A loan approval then opens the doors for getting a credit history, and ultimately being included in the financial system,” Witschard says.

“Consumers can get their first experience in financial education with us.  We meet them where they are.  They find us less complicated and less bureaucratic,” says Witschard.

Home Credit requires only two identification cards from applicants to approve their loans.   Borisenko says interest rate on loans ranges from 3 percent to 4 percent a month.

On how big the business is so far, Witschard says: “We have 280,000 customers. The average loan is P8,000.”

One challenge facing the company is to reduce the so-called ultimate losses, representing 5 percent to 6 percent of the loans.  “It is a loss that we generate after all possible ways to collect the money,” says Borisenko.

Witchard says to improve the collection efficiency, the company employs credit risk management at a very high level.  “We have a sophisticated credit scoring level,” she says.

Home Credit Philippines launched its operations in Cebu City in the first half of 2016. “Our growth, in terms of number of areas reached and number of customers served, has been encouraging, considering we have only been in the market for less than three years,” says Witschard. 

“But this is only the beginning. With a 100-million strong population, the Philippine market has huge potential, and that is why we are rapidly increasing our presence outside the metro. Given what we were able to achieve over the last nine months, we are determined to see even more remarkable results,” she says.

Topics: Annica Witschard , Home Credit Philippines , chief executive
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