TransUnion, the global information and insights company, said 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 the third quarter of 2022 and closed in on the milestone of 1 million new cards per quarter in the third quarter of 2023, despite a normal seasonal dip that was observed in the following fourth quarter.
Total outstanding credit card volumes increased from 9.3 million cards in the fourth quarter of 2022 to 11.2 million cards in the fourth quarter of 2023.
The credit card penetration rate, or the percentage of adults holding at least one credit card, reached over 15 percent in the same period. These trends represent a growth of around 20 percent in both overall volume and penetration rate in 2023, it said.
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 P853 billion in the first half of 2023 – a jump from the 29 percent increase in the previous year. The trends in card 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 from just under one in ten (9 percent) in the third quarter of 2019 to more than one in five (22 percent) in the third quarter of 2023. The share will likely increase as more Gen Z consumers reach adulthood, it said.
Gen Z Filipinos also comprised a greater share of the new-to-card segment of borrowers – they made up one-third (33 percent) of all new-to-card borrowers in 2023. New-to-card borrowers are those originating their first ever credit card on file according to TransUnion Philippines’ data.
Data from TransUnion’s first-quarter 2024 Philippines Consumer Pulse Study gave additional insights into factors positively affecting active credit participation among younger Filipinos.
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.
They were also found to be some of the most frequent credit monitors in the country, consistently keeping an eye on their credit status to find the best credit offers accessible to them.
“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.
