Q2 consumer loans up 18% on-yr


Lending increases 9.3% from Q1

consumer-loadConsumer lending by universal commercial and thrift banks expanded at a robust pace of 18.1 percent in the second quarter from a year earlier, data released by the Bangko Sentral ng Pilipinas (BSP) on Tuesday showed.

Lending in the second quarter reached P803.3 billion compared to the P680.4 billion posted in the same period a year earlier, and was 9.3 percent higher than the P735.1 billion recorded in the first quarter of 2014.

However, analysts agreed with the central bank that despite its rapid growth consumer lending poses no significant risk to the economy, and instead is a sign of continuing strong consumer demand.

The central bank said consumer loans rose on account of continued increases in investments of households in residential real estate and auto loans.

Credit card loans also rose, although at a slower pace during the period, it added.

Meanwhile, the ratio of the banks’ non-performing consumer loans to total consumer loans slightly eased to 5 percent from 5.2 percent a quarter earlier despite an increase in the consumer finance portfolio, the BSP said.

The central bank also recognized the banks’ efforts to maintain their stability, by setting aside the equivalent of 67 percent of their non-performing consumer loans as a safety net against consumer credit risks.

As a percentage of total lending, the Philippine banks’ exposure to consumer lending stood at 16.5 percent and remained low compared to its peers in Southeast Asia, the BSP stated.

It said as of end-June this year, the consumer credit exposure in Malaysia stood at 62.2 percent; Indonesia at 28.4 percent; Thailand at 27.5 percent; and Singapore at 25.5 percent.

“As part of efforts to promote high credit standards, the BSP monitors the quality of consumer and other types of bank lending. This is essential to fostering financial stability, which is a key policy objective of the BSP,” it said.

Earlier, the central bank said its sees no sign of any risk on consumer lending in the Philippines as loans to that sector remain quite small in proportion to the banking industry’s total loan portfolio.

Justino Calaycay, analyst at the Accord Capital Equities Corp. said the latest consumer lending figures suggest that consumers in the Philippines are still active, even as they buy on credit.

“That is good for business as well as for banks. One thing I noted is the slower growth in credit card loans. But as the BSP has said, this nothing to worry about. We are still in a good position and yes, I agree that we are far from being in a heightened risk in consumer lending,” he said.

Calaycay said the BSP remains on top of things as it continues to monitor credit conditions, adding that one recent proof is the “tightening” of banks’ real estate exposures.

The analyst is referring to the BSP’s stress test requirements for banks that have real estate exposure. Under the new measure, banks will undergo stress tests to determine whether their capital levels are sufficient to absorb the risk from their real estate lending.

“We are a by-and-large consumer driven economy, albeit we have likewise depended heavily on foreign investments and trade, and for as long as interest rates remain manageable and the over-all confidence, both from the end of the consumers and businessmen/industry remains high, I don’t see any immediate risks. Of course, for as long as banks, with the BSP’s supervision, continue to comply with prudential measures,” Calaycay concluded.



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