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Philippine Financing Companies’ Net Worth: A Majority Fall Below PHP15 Million

A recent survey conducted by the Philippine Securities and Exchange Commission (SEC) revealed that a majority of financing companies in the Philippines have a net worth of less than PHP15 million.

Key Findings

• 71% of the 3,302 registered lending companies in the country have a paid-up capital of PHP10 million or more.
• 53 companies have foreign equity participation of over 40%.
• Only 18 out of these companies have a net worth of PHP15 million or more.

Characteristics of Financing Companies

• Most financing companies are small to medium-sized enterprises (SMEs) with simple transaction profiles.
• Only three covered persons reported involvement in complex transactions where it might be difficult to determine the beneficial ownership.

Business Operations

• Lending companies have a total gross revenue of PHP4.4 billion and a total loan portfolio of PHP7.9 billion as of 2019.
• The companies conducted a total of 2,278,821 payday loan transactions, averaging around 43,823 transactions per entity.

Supervision and Regulation

• The SEC is currently supervising 165 lending companies as “covered persons” for anti-money laundering (AML) and combating the financing of terrorism (CFT) purposes.
• These companies are required to submit reports on their transactions and maintain records of their customers’ identities.
• The Philippine Bankers Association (PBA) has issued guidelines for lending companies to comply with AML/CFT regulations, including:
  • Identifying and verifying the identity of customers
  • Monitoring transactions for suspicious activity
  • Reporting any unusual or large cash transactions

Conclusion

The SEC’s report highlights the need for lending companies in the Philippines to improve their AML/CFT compliance and risk management practices to minimize the risks of money laundering and terrorist financing.