Consumer loans surge 27%

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Q1 data shows more people borrowing money to buy homes, cars

CONSUMER lending by universal commercial and thrift banks in the Philippines grew 26.89 percent in the first quarter of 2015 from a year earlier, with more people borrowing money to acquire homes and cars, data released by the central bank on Tuesday showed.

The Bangko Sentral ng Pilipinas (BSP) regards the banks’ exposure to consumer lending as still low compared with the levels seen in peers in Southeast Asia, while pointing also to a positive drop in the local banks’ non-performing loans ratio.

A private bank analyst said the first-quarter rise in the figures may be a sign that more consumers are now aware of their access to credit as a benefit of economic growth over the last 10 years.


Loans granted to consumers in the first three months of the year rose to P932.78 billion from P735.10 billion in the year-earlier period, and were 3.36 percent higher than the P902.47 billion recorded in the fourth quarter of 2014.

The BSP pointed to an increase in real estate loans taken by households and continued growth in auto loans.

Consumer lending during the period also included credit card receivables, salary loans, and other type of loans.

NPLs drop
Non-performing consumer loans accounted for 4.9 percent of the banks’ total consumer loans. The ratio has shrunk from 5.2 percent recorded for January to March 2014.
Banks have set aside provisions equivalent to 62.2 percent of those non-performing consumer loans.

As a percentage of total lending, consumer lending by the banks stood at 16.7 percent, viewed by BSP as still low compared with ratios in neighboring countries in Southeast Asia.

In Malaysia, consumer credit exposure by the banks stood at 53.8 percent as of end-March 2015; in Indonesia it was at 28.6 percent; 27.7 percent in Thailand; and 25.8 percent in Singapore.

Economic growth indicator
An analyst said the increase in consumer loans may be an indication of economic growth over the course of the last decade and Filipinos are only now becoming aware of the benefits of such growth, as well as the pitfalls, of access to credit.

“On one hand it is now allowing them to purchase goods and services through financing and its recent strong growth rates show how Filipinos are now better utilizing the available credit,” Nicholas Antonio Mapa, associate economist at the Bank of the Philippine Islands (BPI), said.

The analyst added, however, that vigilance must be maintained to ensure that Filipinos learn how to use credit effectively, which some other countries have failed to do.

“As a result, some countries feature a consuming public saddled with a substantial amount of consumer debt, which may provide a short-term boost to consumption and growth, but may be restrictive in the medium term as consumers scale back on purchases in response to escalating debt levels,” he said.

Mapa predicts that in the near term, the Philippines will continue to see strong economic growth as Filipinos utilize credit to finance purchases of goods and services.

“In the medium term, hopefully, Filipinos become more savvy in utilizing the said available facilities and veer away from more cumbersome and unregulated facilities in the informal sector,” he added.

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