Private credit fuels ‘buy now, pay later' lending boom in Asia
Hong Kong – Maria Hazel Regalado, a 48-year-old mother of four in the Philippines, needed a computer in 2024 so she could work from home. Ms Regalado didn't have the cash or a credit card. A friend suggested she get a 'buy now, pay later' (BNPL) loan from Billease, an online lender.
The computer cost 37,999 Philippine pesos (S$852), almost as much as she earns in a month. Still, Billease approved her application within minutes. She agreed to make 12 monthly payments of 4,493 pesos each, including principal and interest. The effective annual rate: 42 per cent.
'At first I was hesitant, but I didn't have much choice,' says Mr Regalado. 'I really needed that laptop.'
Globally, BNPL loans in 2024 soared five times in value to US$334 billion (S$429 billion) from five years ago, according to technology analysis and consulting firm Juniper Research.
In the United States, merchants typically pay any fees, so customers get no-interest loans as long as they keep current. But the developing world has a different model: charging eye-popping interest rates to cash-strapped borrowers.
While Indonesia, Malaysia and Thailand have been tightening regulation and warning consumers about the cost and risk of BNPL loans, companies such as Manila-based First Digital Finance Corp., which operates as Billease, say they're opening up consumer finance in underserved markets.
These lenders, which make loans outside both traditional banking and the world of publicly traded bonds, initially catered primarily to small and medium-size companies but have been expanding into consumer finance.
Top stories
Swipe. Select. Stay informed.
Singapore Some ageing condos in Singapore struggle with failing infrastructure, inadequate sinking funds
Singapore PUB investigating wastewater discharge in Eunos: Pritam
Singapore Water gel guns among newer tools NParks uses to manage monkeys in estates
World Trump's 100% semiconductor tariffs may hit chipmakers in Singapore, other SEA nations
World Trump eyes 100% chips tariff, but 0% for US investors like Apple
Life Feeling extra patriotic? Here are 7 other SG60 songs beyond official NDP theme Here We Are
Singapore SCDF officer who molested female subordinate gets 15 months' jail
Business DBS shares hit record-high after Q2 profit beats forecast on strong wealth fees, trading income
Billease has tapped private debt investors including UK-based Lendable, which has raised money from Shell's charitable foundation, development banks and investment firms catering to wealthy families. So have two of its biggest competitors, both based in Singapore: Kredivo Group has borrowed from money manager Janus Henderson Group's Victory Park Capital Advisors, and Apaylater Financials, which does business as Atome, has looked to the growing private credit operations of BlackRock the world's largest money manager.
The private credit companies typically lend out money to South-east Asian BNPL outfits at annual rates of 10 per cent to 15 per cent, making the deals attractive to the companies' investors.
In Jakarta, Indonesia's capital, ads for the BNPL companies are almost inescapable both online and on billboards, city buses and commuter trains. One for Kredivo encourages customers to use BNPL loans for smaller daily purchases, even for train fares and items at convenience stores. 'It's that flexible!' the tagline reads.
Huy Pham, a senior finance lecturer at the Royal Melbourne Institute of Technology Vietnam who specialises in financial technology, says BNPL loans can lead to splurges from consumers with unstable incomes, exposing both them and their lenders to growing risks. 'At the end of the day, if customers are not able to pay back the loans, then the platforms will be in trouble,' Mr Pham says.
Indonesia's BNPL-related debt in May reached almost US$1.9 billion, up 40 per cent from a year earlier. According to the country's Financial Services Authority, 3.74 per cent was nonperforming – meaning borrowers were more than 90 days behind on their payments – up from 3.22 per cent a year earlier.
BNPL lenders say they obey debt collection rules and the rates they charge reflect the risks of the population they're serving. They say they don't purport to be compliant with Muslim law and most banks in the country also collect interest on loans. Andy Tan, Atome's chief commercial officer, says his company must contend with customers who disappear and erase their online presence, among other kinds of fraud. 'Credit risk is something we monitor day in and day out,' he says.
But if customers can keep paying back their loans, the profit for lenders like Billease will be enormous. The company typically charges 3.5 per cent a month on its loans, but it also turns the money it lends over many times a year. The estimated expected annual return on this cash: 90 per cent. BLOOMBERG
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
17 minutes ago
- Straits Times
Russia and India talk up ‘strategic partnership' after Trump tariff hike
Sign up now: Get ST's newsletters delivered to your inbox Indian national security adviser Ajit Doval was quoted as saying that New Delhi was looking forward to a visit from President Vladimir Putin by the end of the year. MOSCOW/NEW DELHI - Russia and India stressed their commitment to a 'strategic partnership' in bilateral security talks in Moscow on Aug 7, a day after US President Donald Trump announced higher tariffs on imports from India because of its purchases of Russian oil. Interfax news agency quoted Indian national security adviser Ajit Doval as saying that New Delhi was looking forward to a visit from President Vladimir Putin by the end of the year. At Mr Doval's meeting with Mr Sergei Shoigu, secretary of Russia's Security Council, both sides emphasised the importance of the countries' relations. Mr Trump's imposition of an additional 25 per cent tariff on goods from India, coming into force on Aug 28, signals the most serious downturn in US-India relations since his return to office in January, threatening to disrupt India's access to its largest export market. 'We are committed to further active cooperation in order to form a new, more just and sustainable world order, ensure the supremacy of international law, and jointly combat modern challenges and threats,' Mr Shoigu told Mr Doval in televised comments. Interfax quoted Mr Doval as saying: 'We have now established very good relations, which we value very much, a strategic partnership between our countries'. India and China have become the top buyers of Russian seaborne crude oil since Moscow launched its full-scale invasion of Ukraine in February 2022, precipitating Western efforts to choke the Russian economy. Top stories Swipe. Select. Stay informed. Singapore Liquor licences for F&B, nightlife venues extended to 4am in Boat Quay, Clarke Quay Singapore Some ageing condos in Singapore struggle with failing infrastructure, inadequate sinking funds Singapore CDC, SG60 vouchers listed on e-commerce platforms will be taken down: CDC Singapore Fine for man who damaged PAP campaign materials on GE2025 Polling Day Singapore Jail for driver who drove over leg of special needs woman in accident on church driveway Singapore Wastewater overflow in Bedok and Chai Chee due to choked sewer at BTO worksite: PUB Singapore Ex-Hyflux director fined over firm's failure to disclose Tuaspring info Business S'pore firm looks to buy SMEs lacking successors, launches CEO training programme to foster renewal Mr Trump had threatened measures against countries buying Russian oil before he announced the new tariff on Indian goods, which raised the total duty to 50 per cent. On Aug 5, the Kremlin accused the United States of exerting illegal trade pressure on New Delhi, saying India has the right to trade with whomever it chooses. India's state refiners have stopped Russian oil purchases as the discounts narrowed and Mr Trump warned countries not to buy Moscow's oil, industry sources said. Private refiners Reliance Industries and Nayara are Russia's top oil clients in India, trade data shows. An Indian official familiar with the matter said Mr Doval would discuss India's purchases of Russian crude during his visit to Moscow. He was also expected to discuss India's defence collaboration with Russia, the official said. India signed a US$5.5 billion (S$7 billion) deal with Russia in 2018 for five S-400 Triumf long-range surface-to-air missile systems, which New Delhi says it needs to counter a threat from China. But deliveries of the systems have been delayed several times. Moscow is expected to deliver units of the final two S-400 systems to India in 2026 and 2027. New Delhi has traditionally relied heavily on arms imports from Russia, although it has dramatically reduced those imports and shifted to Western buyers in recent years. REUTERS
Business Times
43 minutes ago
- Business Times
Keppel raises S$6.3 billion in private funds for education and data centre assets
[SINGAPORE] Keppel has secured S$6.3 billion in funds under management so far this year for its private fund strategies, including education assets and data centres, the global asset manager and operator said on Thursday (Aug 7). The company said the raising includes around S$907 million in capital commitments from global institutional investors for its Keppel Education Asset Fund II and Keppel Data Centre Fund III. The company aims to oversee US$150 billion of funds by 2030. Christina Tan, CEO of fund management and also its chief investment officer said, 'Keppel's private funds continue to attract robust investor interest, underscoring the strength of our platform and the appeal of strategies aligned with transformative megatrends'. The Singapore-based asset manager last week reported net profit of S$431 million for the six months ended June, while also announcing a S$500 million buyback programme. REUTERS
CNA
43 minutes ago
- CNA
CNA Explains: Why India buys Russian oil and will it yield to Trump's tariff pressure?
SINGAPORE: US President Donald Trump on Wednesday (Aug 6) announced an additional 25 per cent tariff on India over its purchase of Russian oil, bringing the combined levy to 50 per cent. This brought ties between India and the US to a new low. CNA looks at how India's Russian oil imports have grown in recent years, why this is an issue for Trump and the potential impact of the higher tariffs. Why does India import oil from Russia? As one of the world's largest oil consumers, India relies on foreign suppliers for more than 85 per cent of its oil needs. The country traditionally relied on the Middle East for its oil supply. However, the outbreak of the Ukraine war in 2022 and Western sanctions on Russia presented an opportunity for New Delhi to obtain discounted crude from Moscow. The cheaper oil has reduced costs for Indian refiners. In 2024, Russia accounted for nearly 36 per cent of India's total crude oil imports, up from roughly 2 per cent before the war, according to data released by the country's commerce ministry. The price advantage of Russian oil has narrowed over the years, dropping from around 14 per cent in the 2023 to 2024 financial year to about 7 per cent in 2024 to 2025. But it remains economically attractive for India. Why is the US concerned? The US has said that India's purchase of Russian crude is fuelling Moscow's war effort in Ukraine. Although Ukraine's Western allies have repeatedly sought to hobble Russia's export earnings, Moscow has been able to redirect energy sales from Europe to other countries, including India and China. Apart from geopolitical reasons, there are economic considerations. Trump's trade advisor Peter Navarro told reporters on Wednesday that India was the 'maharaja of tariffs'. New Delhi's high tariffs and non-tariff barriers meant the US sends 'a lot of dollars overseas to India to buy their products in an unfair trade environment', he said. 'India then uses American dollars to buy Russian oil.' How will Trump's latest tariffs affect India? Indian exporters warned that additional US tariffs risked making businesses "not viable", especially for small- to medium-sized enterprises where profit margins are already thin. "The 50 per cent reciprocal tariff effectively imposes a cost burden, placing our exporters at a 30 to 35 per cent competitive disadvantage compared to peers from countries with (a) lesser reciprocal tariff," said S C Ralhan, president of the Federation of Indian Export Organisations. He added that the tariffs were 'a severe setback' for India's exports. Manoranjan Sharma, the chief economist at Indian credit rating agency Infomerics Ratings, told Reuters that the tariffs would hit India's gross domestic product and affect employment to a certain extent. But while the tariffs were concerning, he said there was no reason for alarm as India is 'a largely domestically driven economy', with exports accounting for about 18 per cent of India's GDP. Sharing that view, Ranjeet Mehta, secretary-general of India's PHD Chamber of Commerce and Industry, said that the Indian economy is 'very resilient and very robust'. 'This is an opportunity to diversify to other markets of the world,' she told Reuters. 'I think that this is the time to really realign the supply chain and focus on economies other than the US for the time being. However, we request, we urge both the government of India and the government of the US to engage in a dialogue so that these disruptions can be sorted out." Can India diversify its oil sources? India's foreign ministry said on Monday that it began importing from Russia because traditional oil supplies were diverted to Europe after the outbreak of the Ukraine war. India still sources crude oil from parts of the Middle East, such as Iraq, Saudi Arabia and the United Arab Emirates. The region accounted for 45 per cent of the country's total imports in 2024. According to Minister of Petroleum and Natural Gas Hardeep Singh Puri, India has diversified its sources of supply to about 40 countries. More supply is coming onto the market from Guyana, Brazil and Canada, he added. So India could find other suppliers to meet its energy needs relatively easily. The question is cost - as none of India's other alternatives offer the same price advantage as Russia. What next for India? The Indian government on Wednesday called the additional tariffs 'unfortunate'. 'We reiterate that these actions are unfair, unjustified and unreasonable,' foreign ministry spokesman Randhir Jaiswal said in a statement, adding that India would take all actions necessary to protect its interests. Jaiswal said India has already made its stand clear that the country's imports were based on market factors and were part of an overall objective of ensuring energy security for its 1.4 billion people. One analyst said the new tariffs put Prime Minister Narendra Modi in a bind. "India is now in a trap - because of Trump's pressure, Modi will reduce India's oil purchases from Russia, but he cannot publicly admit to doing so for fear of looking like he's surrendering to Trump's blackmail," said Ashley Tellis at Washington's Carnegie Endowment for International Peace. Reuters previously reported that India's state refiners had paused Russian oil purchases. Can the US do the same to China? China is the biggest importer of Russian crude ahead of India. Türkiye is also a major buyer, and Trump has warned that countries purchasing Russian exports could face sanctions if Moscow fails to reach a peace deal with Ukraine. But Trump could find it difficult to impose such tariffs on Beijing, Dr Susan Stone told CNA. Dr Stone, Credit Union SA Chair of Economics at the University of South Australia, noted that US trade with China was five times larger than its trade with India. 'China's been showing its willingness to retaliate, and of course, it has the economic heft behind it to make those retaliatory measures more painful, maybe than other countries to the US,' she said. 'So it'll be interesting to see if the US threatens China, and then if it does, how that plays out.' As part of a negotiating period with Beijing, Trump has placed 30 per cent tariffs on goods from China, a rate that is lower than the combined import taxes that India faces. Ajay Srivastava, a former Indian trade official, told AP that Trump's decision on India was 'hypocritical' given that China buys more Russian oil. 'Washington avoids targeting Beijing because of China's leverage over critical minerals, which are vital for US defence and technology,' he said.
