Pawnbroking industry expands on diversification, digitalization

THE PHILIPPINE pawnbroking industry continued to grow in terms of assets, network and capitalization as they expanded their products and services, the Bangko Sentral ng Pilipinas (BSP) said on Thursday.

“The pawnshop industry has evolved through time amid continuous diversification, innovation and digitalization,” BSP Governor Benjamin E. Diokno said at a briefing on Thursday.

“Pawnshops, particularly the major players, are now multi-product or multi-service institutions with group structures and multiple financial service access touchpoints,” Mr. Diokno said.

The BSP said aside from extending loans on pledged assets, pawnshops have diversified their offerings to include remittances, money changing, bills payment and cash agency, among others.

The industry’s assets stood at P96.9 billion at end-2021, up by 4.7% from the previous year’s P92.5 billion, the BSP said.

Pawnshops’ capitalization also grew by 2.6% year on year to P42.2 billion at end-2021.

The central bank said this was primarily driven by capital accumulation from their profitable operations as the industry’s income reached P3.9 billion in 2021. 

“The pawnshop industry’s capital position also remains adequate to support risk-taking activities,” Mr. Diokno said.

“In 2021, pawnshops posted P3.9 billion in earnings, mainly from pawning operations. Income from corollary business activities, particularly remittance operations, also supplemented earnings,” he added.

The pawnbroking industry’s liquidity also remains adequate as their liquid assets account for 22.9% of the total, Mr. Diokno said.

Pledged loans or sangla increased by 2.7% year on year to reach P54.5 billion as of end-2021.

Items being pawned have also evolved, Mr. Diokno said. Aside from jewelry, pawnshops now accept gadgets, watches, musical instruments and luxury items such as designer bags and accessories.

Meanwhile, the industry’s reach expanded to 1,156 head offices and 14,350 branches nationwide at end-March from 1,152 head offices and 14,236 branches at end-2021.

The central bank said pawnshops are now present in 1,361 of 1,634 cities and municipalities or 83.3% of all local government units.

“The industry’s multiple financial access points, wide geographical reach, and role of providing accessible loans to households and small entrepreneurs, including the unbanked, all underscore the crucial role of pawnshops in promoting financial inclusion,” Mr. Diokno said.

The interoperability of branches has also improved amid the industry’s digitalization, he noted.

“For instance, customers may now pawn-renew-redeem from any branch at the customers’ convenience. Online pawning transactions are also gaining traction especially at the height of the pandemic, which limited customers’ mobility,” the BSP chief added.

The central bank said it continues to pursue “responsive and holistic policy initiatives and supervisory approaches” to ensure the industry’s and the financial system’s safety and soundness. — K.B. Ta-asan