Banks bulk up on consumer loans in Q1

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) reported yesterday a 27 percent jump in the consumer loans portfolio of universal, commercial and thrift banks in the first quarter of the year on the back of the country’s stable economy.

Data released by the central bank showed consumer loans amounted to P932.78 billion from January to March this year or P197.68 billion higher compared to the P735.1 billion recorded in the same period last year.

The amount was also P30.3 billion or 3.4 percent higher compared to the P902.47 billion booked in the fourth quarter of 2014.

“This sustains the quarter-on-quarter growth in commercial loans that began in 2008,” the BSP said.

Commercial lending by universal and commercial banks surged 22.3 percent to P589.6 billion in the first quarter of the year from P482.25 billion in the same period last year, while loans extended by thrift banks jumped 35.7 percent to P343.18 billion from P252.85 billion.

The central bank explained consumer lending during the first quarter was lifted by an increase in residential real estate loans and continued growth in auto loans.

Real estate loans went up 25.8 percent to P411.44 billion in the first quarter from P326.92 billion in the same period last year while auto loans increased 25.8 percent to P244.61 billion from P194.37 billion.

Consumer loans also include credit card receivables as well as salary loans.

The BSP reported a 4.2 percent rise in credit card receivables to P159.84 billion from P153.4 billion.

While consumer lending expanded, the bank regulator said major banks in the Philippines kept the level of their non-performing commercial loans manageable.

At end March, the BSP said non-performing commercial loans of universal, commercial, and rural banks stood unchanged at 4.9 percent of their total commercial loans.

Likewise, the BSP said banks set aside provisions for 62.2 percent of their non-performing commercial loans as a cushion for potential credit losses.

Moreover, the banks’ consumer credit exposure of 16.7 percent of total loan portfolio remained lower than other countries in Southeast Asia.

Malaysia led with 53.8 percent, followed by Indonesia with 28.6 percent, Thailand with 27.7 percent and Singapore with 25.8 percent.

The BSP said it would continue to closely monitor the quality of all types of bank lending to ensure the banks’ adherence to high credit standards.

“This is essential to fostering financial stability, which is a key policy objective of the BSP,” it said.

The country’s gross domestic product (GDP) growth accelerated to 5.6 percent in the second quarter from the revised five percent in the first quarter on the back of improved government spending.

However, the 5.3 percent GDP expansion booked in the first half of the year was still slower compared to 6.4 percent in the same period last year amid weak global demand and lack of government spending.


By Lawrence Agcaoili

(The Philippine Star) | September 2, 2015