Income of pawnshops from remittance services continues to rise as more institutions tap pawnshops because of their wider reach compared to banks and other financial institutions.
In a virtual briefing, Bangko Sentral Gov. Benjamin Diokno said the latest five-year record ending in 2018 shows that income of pawning firms from remittance services rose by 50 percent relative to the previous five-year period.
“As the pawnshop industry evolves, a number of industry players engage in corollary activities such as remittance and money changing. And these activities provide additional income and expand the profitability of pawnshops,” Diokno said.
He, however, said pawning operations remain the primary source of income of pawnshops with a share of 64 percent of the total.
He said pawning activities rose by about 35 percent from 2014 to 2018, but there was a 15-percent average decline in these activities from end-December 2019 to end-June 2020 based on a latest survey.
During the pandemic, he added more pawnshop customers redeemed their loans and less customers obtained new loans.
He, however, did not elaborate on the factors behind the drop in pawning activities during the pandemic.
Meanwhile, the BSP chief said industry players remain optimistic on their operations even during the coronavirus since they continue to adapt to technological innovation to be able to cater to more customers and provide additional services.
He said pawnshops play a big role in the distribution of the government’s cash aid for those affected by the pandemic.
BSP data show that as of end-July this year, the industry has about 14,416 head offices and branches around the country, higher than the 12,913 head offices and branches of universal and commercial banks, thrift banks, and rural and cooperative banks.
Citing BSP reports, Diokno said about 68 percent of pawnshops were open during the lockdown and the number increased to 80 percent after the enhanced community quarantine, from middle of March to end of April in Luzon, and until end of May 2020 for the National Capital Region, was lifted.
“Pawnshops will continue to play a key role in inclusive finance because of their extensive network that serve as financial access points for low-income individuals, small businesses, and social amelioration beneficiaries,” he added.