Tala Philippines targets sustained loan growth

TALA Financing Philippines, Inc. expects to sustain strong loan growth this year as demand for unsecured lending remains robust among consumers facing rising living costs and weak income growth, its top executive said.

“We target loan growth of about 30% to 40% year on year,” Moritz Gastl, general manager at Tala Philippines, told BusinessWorld on the sidelines of an event late on Thursday.

The digital lending platform, which provides small unsecured loans through its mobile app, expects its customer base to expand significantly over the next few years. Tala serves about 3.7 million users and aims to increase this to 6-7 million by 2027, he said.

Demand for short-term cash loans is expected to remain strong as many consumers in lower-income segments continue to face financial pressure.

Mr. Gastl said the firm’s core customer base — largely composed of lower-income households — continues to struggle with stagnant wages even as the cost of goods and services remains elevated.

“There’s a lot of pressure on consumers because while inflation is not that high, for our customer base, their income isn’t going up commensurately,” he said. “As a result, there’s even more demand for cash, in particular unsecured loans.”

He added that loan demand could continue to rise over the next couple of years as households cope with higher prices and global economic uncertainties that may push costs higher.

Despite the strong outlook for lending, Tala said it plans to maintain a measured pace of expansion to protect the quality of its loan portfolio.

Mr. Gastl said the company is focused on ensuring that borrowers have the capacity to repay their loans as it expands its customer base.

“We need to make sure that customers are able to take on credit and are able to pay us back,” he said.

He noted that the firm’s nonperforming loan ratio remains within a range comparable to levels seen in the traditional banking sector.

Tala also expects lending conditions to improve as credit infrastructure in the Philippines continues to develop.

Mr. Gastl said broader access to credit data could allow lenders to assess borrowers more accurately and extend financing to previously underserved segments while managing risks.

He cited the role of the Credit Information Corp. in expanding the availability of borrower data, which could help financial institutions detect fraud and make more informed lending decisions.

“Once it becomes easier to get access to data, once it’s easier to figure out whether someone is fraudulent or not, at that point we can decide better if we should lend to certain customers or not,” he said.

Tala said it intends to continue expanding its digital lending platform while keeping growth sustainable as demand for small consumer loans rises in the country. — Aaron Michael C. Sy