GCash’s record quarter shows Mynt is now a lender that happens to run a wallet

Mynt, the parent company behind GCash, the Philippines' leading e-wallet, has reported a record quarter in terms of revenue, rising 16.6 per cent year-on-year to ₱24.0 billion (approximately US$400 million). This marks the highest revenue figure in Mynt's history. The timing of the release is significant, as investors were advised to wait until Q3 numbers were disclosed following Mynt's successful IPO on October 20, which raised ₱60.9 billion (roughly US$1 billion) – the largest IPO in Philippine history.

Prior to the IPO, Mynt's second quarter had underperformed compared to the first. The stock, initially priced at ₱6.60 (about 34 per cent below its ₱10 ceiling), saw its first trading week close at ₱6.27. Despite this, the Q3 results reassure investors, with nine-month revenue growing 12.2 per cent to ₱67.1 billion (about US$1.1 billion) and net income increasing 17.4 per cent to ₱16.5 billion (roughly US$275 million).

The loan portfolio, however, is expanding at a faster rate than the user base, with monthly active users up 9.7 per cent to 42.1 million and daily transactions averaging 64.4 million over nine months, a 16 per cent increase. The most remarkable growth is in credit, with the loan book swelling 43.3 per cent to ₱79.3 billion (about US$1.3 billion) – more than quadruple the growth rate of the user base.

Nearly one in every five monthly users is an active borrower, indicating Mynt is lending to customers that traditional banks typically avoid. However, there are two caveats to consider. Firstly, the release presents a record quarterly net income, but it only reports profit on a nine-month basis, making it difficult to compare Q3 profit against Q2.

Secondly, operating expenses grew in line with revenue, and most one-off IPO costs are expected to be booked in the fourth quarter, potentially affecting the margin story. The macro environment is also challenging, with the peso hitting a record low in October and the Philippine Stock Exchange index falling to an 11-month low. Despite these challenges, GCash remains confident, emphasizing that there is significant room for growth in both payments and lending.