In 2016, James Kudrowski founded the company Right Choice Capital in Singapore and now holds the post of its executive director. The company specialises in providing financial services and personal systems for small and medium-sized enterprises. Right Choice Finance is a subsidiary of Right Choice Capital and was founded mainly to provide financial services in the Philippines. The market there is specific by the large share of people who borrow outside the banking system. It is estimated that the whole market of non-bank loans could amount up to 35 billion US dollars.
A common problem with non-banking loan providers in the Philippines was the inflated loan rates. The APR was quite often over 100%, which was causing significant problems to smaller enterprises and individuals with repaying their loans. That was one of the reasons why Right Choice Finance (RCF) pledged that its APR will in no case exceed 60%. The RCF loans are already starting from acceptable 12%. However, it is important to note that economic indicators see the Philippines as a less stable country. Both their GDP and inflation are much more volatile and, as a result, their current basic interest rates are at 4%.
The Philippines are a quickly developing country with annual GDP fluctuating around 6% throughout the last five years. The unemployment rate, which has been coming closer to 5% for a long time now, gives no reason to worry. The state debt to GDP ratio is not high (41.9%) and even the high yields of state bonds (ten-year bonds yield 4.61%) do not burden the Treasury too much. Average bank rates, which also include mortgages, are currently slightly over 6%.
Banks in the Philippines are very cautious and have very strict conditions for granting loans; at the same time, they don´t want to lend to people or companies without a credit history. This creates a good environment for non-banking loan providers. Moreover, the Philippines have an extremely low household debt - only 9.4% to GDP. In other Asian countries, the index is about 70%. The Filipinos are also considered quite good debtors. The share of loans in default, which were issued by banks, is only 3%.
The people in this Christian country, with population exceeding 100 million, most often take out loans to finance healthcare (60%), education (19%) or their own businesses (12%). About 62% of people in the Philippines have a job. RCF focuses on employees of its clients, which are small and medium-sized enterprises, and therefore has a very good idea of the income of applicants who come from that segment. The main advantage of RCF in the region is the integration of a scoring model with a personal system of a company. Apart from personal loans for employees of companies to which RCF provides personal systems, RCF also provides loans to SMEs. RCF currently has a credit portfolio of over 4.5 million euro and thanks to the quickly growing economy and the number of inhabitants it estimates that within next five years they could expand it to 58 million. In line with their expansion, RCF is also planning to open branches in other Southeast Asia states in the future.
Author: editorial staff (js)