GCASH In Q3, Lending's Gross Profit Exceeded the Whole Company's Operating Profit

Lending Is Now the Whole Profit Engine

In the third quarter of 2026 GCash's lending business earned P5,716.2 million after its funding costs and loan-loss provisions, more than the whole company's operating profit of P5,581.4 million, because in the quarter the payments business no longer earned enough to cover the operating expenses. Mynt, Inc. (GCash's operator) reports one segment under its accounting rules but splits revenue into payments and lending in its management discussion, and charges each only its own direct costs. A year earlier payments' gross profit paid for all operating expenses with P345.5 million to spare; this quarter it fell P289.0 million short (P11,727.9 million against P12,016.9 million). Lending filled the gap and more, so operating profit rose 31.4% in the quarter after falling 6.3% in the first half of 2026.

Lending's profit growth is bigger than the whole company's

Lending's gross profit rose P2,013.5 million in the quarter, from P3,702.7 million, against a rise of P1,334.2 million in group operating profit. Payments' gross profit grew only P364.3 million (3.2%) while operating expenses grew P998.8 million (9.1%); the table in the segments section sets out each unit. Over the nine months payments' gross profit (P33,200.6 million) still covers operating expenses (P31,772.7 million), by P1,427.9 million against P5,848.2 million a year earlier, so the shortfall is a one-quarter event so far. Two cautions on this yardstick: the company describes operating expenses as the "shared infrastructure and support" of all its units, not payments' own cost, and interest income on deposits (P1,459.2 million in Q3 against P1,071.5 million; two-thirds of the nine-month figure was on customers' trust cash) sits below the operating line, outside both units' gross profit. Lending also supplied 89.0% of the growth in Adjusted Revenues (P3,052.5 million of P3,429.3 million), the company's revenue measure that nets the cost of prepaid mobile load against revenue.

Lending is growing by lending more to each borrower, and credit costs have so far fallen

On-book loans, the loans GCash keeps on its own balance sheet, grew 56.0% in a year while Active Borrowers (users with a live loan) grew 5.1%, so the book per borrower rose about 48%, to roughly P9,300. The company's explanation is a shift to "tenured borrowers who have continuously exhibited good credit behavior and have received more favorable credit terms such as lower interest rates, longer tenor options, and/or higher credit limits over time". Credit costs have fallen alongside: provisions for credit losses^» were 25.7% of average loans over the trailing twelve months, against 31.3% a year earlier, and the net interest margin after those losses (NIMAL^») rose 2.1 points to 25.5%. The larger loans have had little time to go bad, which the bad-loan finding below tests.

Part of the cost relief is a comparison effect

In the quarter 57% of the extra gross profit reached operating profit, against 14% over the nine months, but the year-earlier quarter was a low base. Operating margin was 23.2% in Q3 2026 against 20.5% in Q3 2025 and 17.3% in Q4 2025, and below the 26.1% of the first half of 2026; Q3's operating profit is 1.0% under the first half's quarterly average of P5,636.9 million, so the quarter is a recovery from a weak base, not a step above the first-half level. Management says technology and operations spending peaked in the first quarter (it rose 5.5% in Q3 against 20.9% in the first half) and that sales and marketing fell 5.5% because it was moved earlier in the year, while general and administrative expense rose 20.3%; the marketing and administrative findings below test the two weaker explanations.

Nine-month net profit growth leans on income below the operating line

Of the P2,434.9 million rise in nine-month net profit, P1,818.7 million (74.7%) came from income below the operating line and P575.0 million (23.6%) from operating profit. The quarter reversed the split: operating profit supplied 78.5% of Q3's P1,699.9 million rise. The finding on income below the operating line shows what it is made of.

The Prescription

GCash should keep lending more to borrowers who have shown they repay, but pace it against a published credit-cost ceiling and show investors how each year's loans perform as they age. Lending now carries the whole operating profit, and credit cost is the number that decides it: one point of credit cost is about P595 million a year on the average on-book loans (P46,511.6 million a year ago and P72,555.0 million now), or about 2.9% of trailing-twelve-month operating profit of P20,304.7 million. The company has not published how delinquency differs by loan age, which is the one disclosure that would let a reader judge whether the 56.0% larger book is as safe as the ratios say. The P9.4 billion of IPO money should be committed to that book only as fast as the credit cost holds.

What it should stop doing is explaining cost growth with a change that is already in last year's numbers. General and administrative expense grew 20.3% in Q3, faster than revenue's 16.5%, under an explanation (a tax-regime change in April 2025) that cannot account for growth in a quarter that both years carried. Management should state what the 20.3% is made of and hold the line below revenue growth, because with payments' gross profit now below operating expenses in the quarter, any overhead growth that outruns revenue comes out of lending's profit.

Key Financial Metrics

PHP billion; margin is operating income as a percent of net revenue. The company reports the first half only as a six-month figure, so the two half-year bars show half of it (the same margin either way); Q3 2025 is nine months less the first half, Q4 2025 is the full year less nine months, and Q3 2026 is nine months less the first half.

Third quarter and nine months ended 30 September 2026 vs the same periods of 2025, in PHP millions, with US$ at P62.60 per US$1 (the 30 September 2026 rate in the filing), applied to both periods so the US$ growth rate equals the PHP rate.

Revenue grew 16.5% in the quarter because lending revenue (CreditTech) rose 40.6% while payments rose 3.3%, both on the Adjusted Revenues basis. The reported 12.5% for nine months understates the underlying growth, because the comparison period still held revenue from online-gaming links that the central bank (Bangko Sentral ng Pilipinas, BSP) ordered removed in August 2025. The company's own Ongoing Revenues, which leave that revenue out of the base, grew 47.3% in the first half and 44.0% over nine months; backing the two rates out implies that about P13.2 billion of year-earlier nine-month revenue (22.1% of it) no longer exists. That is an inference from rounded rates, since the filing does not state the amount. The company says revenue and costs both run higher in the second half, so a comparison of the third quarter with the first half mixes seasonal and underlying effects; this post compares each quarter with the same quarter a year earlier and uses the first-half average only as a reference. EBITDA is the company's own measure and sits P683.3 million above nine-month operating profit, which equals its depreciation and amortization; the company's reconciliation also strips out interest on deposits and other items that sit below the operating line. Free cash flow is left blank because a lender's operating cash flow moves with its loan book; the cash flow statement is covered under the cash finding below.

Balance sheet at 30 September 2026 against 31 December 2025 (PHP millions, US$ at P62.60):

The cash decline is the company's seasonal unwinding of customer and partner balances after the December peak; corporate cash rose.

Where the Nine Months' Revenue Went

Net revenue, and how much of it was left as operating profit and net income, in one view. Figures are the nine months ended 30 September 2026, the same as the metrics table.

PHP billion, nine months ended 30 September 2026. Operating costs are net revenue less operating income; other items & tax are operating income less net income, a net figure being non-operating income of P5.1 billion less income tax of P5.5 billion (16,855.1 + 5,094.9 - 16,452.9 = 5,497.1).

Segments: Lending Up by Half, Payments Flat

GCash reports one segment under its accounting rules: the filing says the chief operating decision-maker sees information at revenue level only and the group does not allocate costs, assets or liabilities to its business units. The bridge below therefore uses the company's own definitions of direct cost from its management discussion (transaction processing costs for payments; funding costs and credit-loss provisions for lending) and ends at the group's operating profit. Adjusted Revenues basis, PHP millions.

The unit rows can differ from the filed total by P0.1 million in Q3 2026 because the filing rounds each line. The block not attributed to any unit is the operating expenses, which the company reports in four lines (nine months: technology and operations P17,198.8 million, sales and marketing P7,163.5 million, general and administrative P6,984.5 million, other P426.0 million), and it is the reason P48.6 billion of gross profit becomes P16.9 billion of operating profit. Adjusted Revenues differ from reported revenue only by the cost of prepaid load (P277.6 million over nine months), which sits in both revenue and costs, so operating profit is the same on both bases.

Payment Solutions

Payments moved more money for roughly the same revenue: gross transaction value (GTV^») rose 24.0% in Q3 and revenue 3.3%, with the take rate^» flat quarter on quarter at 0.25%. The company calls this the first quarter of year-on-year growth since the directive, and gives two reasons: the year-ago comparison "resetting from mid-August" and underlying growth. The reset is large: the nine-month figure implied in the Key Financial Metrics section less the same calculation for the first half (47.3% growth) leaves about P3.2 billion of Q3 2025 revenue from the period before 16 August 2025 that no longer exists, so payments' revenue growth without it would be about 38%, an estimate and not a figure the filing gives. On 4 July 2026 GCash cut its bank-transfer fee from P15 to P10 a transaction, a cut of one-third, after the central bank lifted its freeze on such fee increases and issued a rule that e-payment fees be "reasonable, fair, and transparent"; the filing does not say what the cut cost. Transaction processing costs stayed at 11.9% of payments revenue in both years' third quarter. Payments' gross profit grew 3.2% in the quarter but is still 2.5% lower over nine months.

Digital Financial Services

Lending revenue rose 40.6% in the quarter, and its gross margin (revenue after funding costs and provisions) rose to 54.0% from 49.2%, as provisions fell to 41.2% of lending revenue from 46.1%. Funding costs grew faster than revenue (43.1% in the quarter) because the notes payable that partly fund the book grew; the company says the loan book is still largely funded by internally generated cash. It is also keeping more of what it lends: loans sold to partner banks over nine months were P3,770.4 million against P6,192.6 million, sold at carrying value with no gain or loss recorded, and off-book loans fell 23.6% to 8.5% of the total portfolio. WealthTech (savings, funds and insurance products) is 0.6% of revenue and fell 22.6% in the quarter, which the company puts down to weak consumer appetite for wealth products.

Key Operational Metrics

Third quarter and nine months ended 30 September 2026 vs the same periods of 2025, except where noted. Arrow = the way the number moved; green = good for the business, red = bad, grey = flat or not clearly either.

Loans, borrowers and ratios are point-in-time or trailing-twelve-month figures as the company defines them; the blended yield is stated per month (trailing-twelve-month lending revenue as a percentage of average gross loans, divided by twelve), so 4.5% is a monthly yield, about 54% a year. The company reads the lower yield as the price of lending on better terms to proven borrowers, offset by lower credit costs. The filing's financial-soundness note prints a return on equity of 26.6%, a different method from the 27.3% above (which the company computes on average equity over the trailing twelve months); the table uses the company's own key-indicator figure.

Beyond the Usual

Marketing Spend Fell 5.5% in Q3 Only Against an Unusually Heavy Year-Ago Quarter

Sales and marketing was P2,973.8 million in Q3 2026 against P3,145.3 million a year earlier, and the filing says the fall was "driven by our efforts to frontload our user acquisition efforts earlier this year". The quarterly figures do not show a front-loaded year: first-half 2026 spending was P4,189.7 million (7,163.5 - 2,973.8), an average of P2,094.9 million a quarter, so Q3 was about 42% above that average, and because the half-year total is less than twice Q3's level, at least one of the first two quarters spent less than Q3 did. The year-ago quarter was the unusual one: P3,145.3 million was twice the first-half 2025 quarterly average of P1,546.5 million (6,238.2 - 3,145.3, divided by two), and 15.3% of Adjusted Revenues against 12.4% now. The filing also says the second half is typically associated with "higher expenses, including those related to increased sales and marketing", so a Q3 above the first-half average is partly expected. The 5.5% fall is real, but it is a fall from a peak; whether Q4 2026 repeats it depends on a Q4 2025 base the filing does not give.

General and Administrative Expense Grew 20.3% in Q3, After the Tax-Regime Change the Filing Blames Was Already in the Base

General and administrative expense was P2,745.6 million in Q3 against P2,282.4 million (up P463.2 million, 20.3%), faster than Adjusted Revenues (up 16.6%). For the nine months (up 31.9%) the filing says the increase was "primarily driven by FUSE's license transition in April 2025" from a value-added-tax regime to a gross-receipts-tax regime, which adds a tax on revenue and turns input tax on intercompany purchases into an expense. FUSE Financing is the lending subsidiary, and a switch dated April 2025 was already in the Q3 2025 figures, so it cannot explain Q3's growth; it explains only the early-2026 comparison, when first-half growth was 40.7% (P4,238.9 million against P3,012.1 million). This is the post's inference, since the filing gives no split of the growth, and it leaves Q3's 20.3% without a stated cause.

Operating Cash Flow Swung to a P13.2 Billion Outflow as the Loan Book Grew, and Short-Term Bank Borrowing Filled Part of the Gap

Net cash from operating activities was an outflow of P13,239.6 million over nine months against an inflow of P9,022.0 million a year earlier. The increase in net loan receivables took P33,095.2 million out of operating cash flow (against P14,036.6 million a year earlier), while interest received of P28,878.4 million put part of it back. The gap was met by net bank borrowing of P9,650.0 million (P21,750.0 million drawn, P12,100.0 million repaid) and a P9,911.3 million fall in cash and cash equivalents, with P5,001.3 million of dividends and P1,075.2 million of investing outflows to fund as well. Notes payable were P28,750.0 million, of which P27,700.0 million is due within twelve months; the filing says P4.0 billion borrowed in 2024 and P4.0 billion borrowed in 2025 were "rolled over" in 2026 under arrangements that renew them automatically, and that the available short-term facilities are "uncommitted", at P47.4 billion. With P46,821.3 million of corporate cash, and a filing that does not anticipate cash flow or liquidity problems in the next twelve months, this is a question of how the pace of lending is funded, not of near-term liquidity as the company reads it: the lending business is growing faster than it generates cash. The P9,423.8 million of net IPO proceeds equals about 2.6 months of that loan-book line at the nine-month pace (33,095.2 divided by nine months).

The Bad-Loan Ratio Fell From 7.5% to 4.8%, but the Bad-Loan Balance Barely Moved Because P9.2 Billion Was Written Off

The non-performing loan ratio was 4.8% at 30 September against 7.5% at 31 December, and loan loss coverage (the allowance as a percentage of bad loans) rose to 285.0% from 188.4%. Dividing the allowance (P10,024.4 million against P6,741.2 million) by those coverage ratios gives bad loans of about P3,517 million against about P3,578 million, a 1.7% fall, while gross on-book loans grew 51.1% (P48,005.5 million to P72,555.0 million). Over the nine months P9,193.7 million of loans were written off (9,073.4 + 120.3), or 19.2% of the opening book, against provisions of P12,477.0 million; so the ratio fell mostly because the denominator grew and old bad loans left the book, not because far fewer loans are overdue. This is the post's inference from the filing's own ratios, which do not state the bad-loan balance. It is not a criticism of the ratio, which is on the company's stated definition (more than 90 days past due), but it means 4.8% is largely a measure of the older book. [The earlier post](/analysis/gcash/2026-06/#the-reported-bad-loan-ratio-fell-from-75-to-49-in-six-months) reported the ratio at 4.9% at 30 June; it fell only 0.1 point further in Q3, while net loan receivables grew P8.4 billion in the quarter (from P54,088.0 million to P62,530.6 million).

Interest on Customers' Money and Loan Recoveries Supplied Most of the Rise Below the Operating Line, and the Tax Rate Fell

Income below the operating line rose P1,818.7 million over nine months (to P5,094.9 million). Interest income from deposits rose P1,177.5 million (41.5%) to P4,017.8 million, and P2,651.8 million of it (66.0%) was interest on cash held in trust for customers, up 74.9% from P1,516.4 million, on a float that depends on peso interest rates and customer balances; the filing credits user growth, higher average cash balances and a better investment mix, and customer-linked liabilities fell 12.7% since December. Other income, net rose P727.5 million to P1,177.7 million, of which P795.6 million (up 149.3%) was recoveries of loans already written off. Tax also helped: the effective rate was 25.0% against 28.3%, which the company attributes to higher non-deductible expenses in the 2025 period; at last year's rate the nine-month tax charge would have been P719.2 million higher, and net profit growth would be about 12% instead of 17.4%.

Key Management Pay Rose 54.7% Against Net Profit Up 17.4%

Compensation of key management (salaries, share-based pay, retirement and other short-term benefits) was P1,910.3 million over nine months against P1,235.1 million (up 54.7%), and P576.4 million in Q3 against P433.4 million (up 33.0%), while the whole salaries and wages line rose 12.3% (to P9,492.3 million). Key management is now 20.1% of that line, against 14.6%. Share-based compensation was P1,202.1 million (up 30.5%, 7.3% of nine-month net profit); 965,548,441 shares were issued under the long-term incentive plan in 2026 and a further 898,373,183 granted shares are outstanding, 1.4% of the 65,290.4 million shares in issue, which accounts for the 1.4% gap between basic earnings per share of P0.25393 and diluted P0.25046. The filing does not split the increase between salaries and share awards.

The Pre-IPO Dividend Was Paid in Full by 30 September

The P5,001.2 million dividend declared on 17 June 2026 (P0.0766 a share) was fully paid by 30 September, and the cash flow statement shows P5,001.3 million of dividends paid in the nine months, which is 30.4% of nine-month net profit. It answers the payment-timing question the earlier post raised on the dividend: nothing remained payable at quarter-end.

Affiliates Pay GCash P1.45 Billion in Merchant Fees, and GCash Pays an Affiliate P1.18 Billion for the Platform

Over nine months GCash earned P1,453.2 million of merchant discount fees from an affiliate through the Alipay Connect platform (up 18.8% from P1,223.2 million), and paid P1,181.4 million of maintenance and platform service fees to an affiliate the filing does not name (up 25.7% from P939.8 million). Two shareholder-linked flows run alongside: a load service fee earned from Globe of P2,843.1 million (up 8.8%, 4.2% of reported revenue) and API fees (charges for use of the GCash system) of P401.7 million (up 24.4%). The filing's related-party policy requires approval of material transactions on arm's-length terms.

A P495.6 Million "Others" Cost Line Sat Inside Q3 Operating Profit

The cost-note line "Others" was P495.6 million in Q3 against P92.5 million a year earlier (5.4 times), and P1,400.1 million over nine months against P1,996.8 million. The filing says it mainly pertains to "non-recurring charges, provisions and adjustments related to the resolution of various long outstanding accounts", so Q3's 31.4% operating profit growth was reached after it; the filing does not break the amount down, and it does not say whether the line recurs.

A Development-Bank Loan Carries Five Covenants, Including a Floor on Return on Assets

Part of FUSE's 2026 bank borrowing is a loan agreement with the Asian Development Bank (ADB) that requires FUSE to keep five ratios (the same note lists a P1,750.0 million three-year FUSE term loan, 6.38% fixed, repayable in equal half-yearly instalments from March 2027 to March 2029, without saying it is the ADB loan): tangible common equity to average tangible managed assets of at least 20.0%, loan loss coverage of at least 100.0%, bad loans (30 or more days past due) to equity and loan-loss reserves of at most 36.0%, liquid assets to short-term liabilities of at least 80.0%, and return on average total assets of at least 5.0%. A breach is an event of default unless the bank grants a waiver, and FUSE says it complied at 30 September; the filing gives FUSE's own ratios nowhere, only the group's loan loss coverage of 285.0%.

Past-Due Receivables From Partners Are 24.2% of the Balance, and P612.8 Million Is Over 120 Days Late

The ageing exhibit shows P6,817.6 million of receivables from partners at 30 September, of which P5,168.4 million is current and P1,649.2 million past due; P612.8 million (9.0%) is more than 120 days past due. The allowance for all trade and other receivables is P173.3 million, equal to 28.3% of the over-120-day amount alone, and a separate P122.5 million allowance covers other receivables from one counterparty the company considers non-recoverable while it continues to chase it. Receivables from wallets (P9,506.0 million) and advances to partners (P6,201.0 million) are all current.

New Lending-Platform Rules Took Effect on 1 August With Small Stated Costs

The Securities and Exchange Commission's circular of 7 July 2026, effective 1 August, requires an existing financing company with one online lending platform to hold at least P20 million of paid-up capital, raises the annual SEC fee to about P300,000 from fiscal 2027 and adds market-conduct and disclosure duties under the Truth in Lending Act. The stated costs are small against a P72.6 billion loan book; management says it is "continuously assessing the impact" of the capital, fee and operating changes and gives no figure for the conduct rules.

Target Valuation Range

GCash priced its IPO at P6.60 a share, and that price is the basis here because the 30 September 2026 period end is before the shares began trading on 20 October 2026, so there is no market close to use. The earlier post used the same price. This post changes how enterprise value is built (see the footnote under the table), so the price-to-earnings change from the earlier post comes only from trailing profit, and the revenue and EBITDA changes are shown on both bases below.

Verdict: at the P6.60 IPO price GCash costs 22.4 times trailing-twelve-month profit, above Nu (17.9x) and below SoFi (27.6x) and Robinhood (51.1x), and cheaper than the 24.6x of the earlier post only because trailing profit rose 9.5% at an unchanged price.

EV/Revenue is enterprise value divided by a year of revenue, EV/EBITDA the same against a company-defined EBITDA, and P/E the share price against a year of earnings per share; P/E is the cleanest comparison here because enterprise value is built differently for each peer.

*The earlier post netted all cash and cash equivalents (P68,625.2 million at 30 June) and added no debt. That basis is dropped here for two reasons: P22.6 billion of the 30 September cash and cash equivalents is customer-related (P69,400.0 million less P46,821.3 million of corporate cash) and is matched by liabilities to partners and users, and the P28,750.0 million of notes payable is real borrowing that funds the loan book. Enterprise value is therefore market capitalisation less corporate cash plus notes payable; the P79,962.2 million of cash held in trust for customers is excluded on both bases. On the earlier basis (market capitalisation less all P69,400.0 million of cash) enterprise value would be P372,113.0 million, or 4.3x revenue and 17.5x EBITDA. Net primary proceeds from the IPO (P9,423.8 million) arrived after the period end and are not netted; netting them would lower enterprise value by 2.2%.

Trailing-twelve-month (TTM) figures are the full year 2025 plus nine months of 2026 less nine months of 2025:

The restated June column uses the same P441,513.0 million market capitalisation, 30 June corporate cash of P41,859.1 million and notes payable of P23,250.0 million (enterprise value P422,903.9 million), on the earlier post's TTM revenue of P83,924.6 million and EBITDA of P19,905.8 million. On a like-for-like basis the revenue and EBITDA multiples fell over the quarter (5.0x to 4.8x and 21.2x to 19.9x), as revenue and EBITDA grew at an unchanged price; the earlier post's 4.4x and 18.7x are not comparable with the stricter figures.

Price to book^» is 5.5x on reported equity of P80,219.6 million and 4.9x including the P9,423.8 million of net primary proceeds (P89,643.4 million), against a 27.3% return on average equity.

Peer-multiples comparison. Each peer cell below is taken from that peer's own latest post, on that post's stated basis and period. Enterprise value is not defined the same way across the three: Robinhood nets cash only, SoFi's counts deposits and Nu's is on its own basis, so the revenue multiples are not like for like and the earnings multiple is the cleaner comparison. Robinhood's own valuation table prints an annualised-quarter P/E of 54.2x; the 51.1x in the table is the trailing-twelve-month figure from the same post, which is the basis of this column.

Share count basis: 66,895,913,057 post-offer shares (the count on the 17-Q cover and equal to the 65,290,431,157 in issue at 30 September plus the 1,605,481,900 primary shares sold in the IPO), not the 64,792.9 million weighted average used for earnings per share. Revenue basis: reported revenue, P87,331.6 million on a trailing-twelve-month basis, not Adjusted Revenues. Price basis: the P6.60 offer price, not a market close.