Retail News CRM

Tag: first metro securities

  • Philippine Credit Card Bad Debts Jump to P68 Billion as Inflation Bites

    Philippine Credit Card Bad Debts Jump to P68 Billion as Inflation Bites

    Philippine commercial banks saw non-performing credit card receivables surge 11.8 per cent to P68.28 billion in June as living costs strained consumer budgets across the country.

    Bad loans outpaced overall card lending, which expanded 5.3 per cent over the same period to reach P1.294 trillion.

    Data from the Bangko Sentral ng Pilipinas, presented by First Metro Securities head of institutional research Estella Dhel Villamiel at a forum in Manila, showed non-performing card balances climbed from P61.07 billion in March. The share of distressed balances rose from 4.97 per cent to 5.28 per cent of total card receivables in three months.

    Accelerating Bad Debts Across Bank Books

    The expansion in card debt reflects both broader financial inclusion and growing household reliance on credit to manage monthly overheads. While higher transaction volumes naturally lift gross receivables, bad balances are expanding at more than twice the speed of new lending.

    A typical rollover balance of P20,000 incurs roughly P600 in monthly interest at standard 3 per cent card rates before penalties. When wages fail to keep pace with basic expenses, compounding finance charges absorb disposable income that would otherwise flow directly into retail cash registers.

    Mounting Pressure on Retail Margins

    For supermarket chains, department stores and consumer electronics retailers, deteriorating consumer debt signals a clear shift in shopper behavior. High-ticket discretionary purchases slow first as cardholders exhaust their credit lines on groceries, transport and utilities.

    Retail operators facing elevated freight and import bills cannot rely indefinitely on debt-financed foot traffic to protect their sales volumes. If banks tighten revolving credit limits to contain default ratios, store operators will face immediate downward pressure on average basket sizes across metropolitan malls.

    Slowing Investment and Sticky Price Rises

    Macroeconomic indicators highlight why household balance sheets are cracking under everyday pressure. Philippine inflation climbed to 7.2 per cent in September from 6.1 per cent in August, driven by fuel costs and a weaker peso.

    DBS Bank projects Philippine inflation to average 6.5 per cent in 2026 and 5.5 per cent in 2027, with the currency forecast to slide toward P64 per US dollar by late 2027. Labor market softness compounds the strain: August unemployment rose to 5.3 per cent from 3.9 per cent a year earlier, while underemployment climbed from 10.7 per cent to 11.9 per cent.

    Capital Formation Drops as Consumption Stalls

    Second-quarter national accounts revealed household consumption grew 2.8 per cent and gross domestic product expanded 2.3 per cent, but gross capital formation dropped 9.2 per cent. A sharp contraction in capital formation points to weaker future job creation, limiting the wage growth required to service existing card balances.

    Commercial lenders and retailers will look to fourth-quarter holiday spending figures to measure real demand, before credit statements arriving in January reveal whether repayment delinquency breaches the 5.5 per cent mark.

  • Philippine Consumer Spending Slows to 1.9% as Inflation Hits Retailers

    Philippine Consumer Spending Slows to 1.9% as Inflation Hits Retailers

    Philippine household spending growth slowed to 1.9 percent in the second quarter of 2026 as surging inflation and borrowing costs forced consumers into survival mode.

    The pullback in domestic consumption dragged first-half gross domestic product expansion down to 2.6 percent, marking the weakest growth rate for the country outside the pandemic period since 2009.

    Household Budgets Turn to Essentials

    Data presented by Estella Dhiel B. Villamiel, head of institutional research at First Metro Securities Brokerage Corporation, showed that local buyers are cutting non-essential purchases to cope with escalating food and transport bills. Headline inflation reached 7.2 percent in September, pushing the year-to-date average to 5.4 percent, well above the central bank target range of 2.0 to 4.0 percent.

    Shoppers are purchasing fewer items despite spending more cash at cash registers across the country. Capital formation dropped 9.2 percent year-on-year in the second quarter, reflecting a broad retreat by corporate investors and commercial project developers.

    Car Sales and Credit Under Strain

    Higher interest rates are accelerating the consumer slowdown. Bangko Sentral ng Pilipinas lifted its reverse repurchase rate to 5.0 percent on August 27, raising the cost of vehicle financing, home mortgages, and personal revolving credit.

    Traditional car sales dropped roughly 10 percent year-on-year by the end of August as buyers deferred big-ticket acquisitions. Credit card transactions reached record volumes, but non-performing credit card debt jumped 46.4 percent, indicating mounting cash-flow pressure on salaried workers.

    Labour Market Pressures Mount

    The broader consumer downturn is eroding employment gains across retail and services. Unemployment climbed to 5.3 percent from 3.9 percent a year earlier, with rolling 12-month net employment metrics recording a loss of 307,000 positions.

    Higher underemployment rates show that existing jobs fail to match current living expenses. Rising import costs have also kept the Philippine peso weak against the US dollar, increasing wholesale prices for imported inventory and packaging supplies.

    Shipping Bottlenecks and Recovery Triggers

    Villamiel noted that domestic recovery depends heavily on resolving maritime transport disruptions in the Middle East. Commercial vessel traffic through the Strait of Hormuz has fallen to single-digit daily transits compared with a normal average of 33 ships per day, driving up global crude risk premiums.

    To hit the government full-year growth target of 3.5 to 4.5 percent, economic output must accelerate to between 4.4 and 6.4 percent across the second half of 2026. Retailers and consumer brands now face a compressed fourth-quarter holiday trading season while waiting for shipping lanes to normalize and inflation to ease from its projected 6.1 percent full-year average.