‘No signs of risk on consumer lending’

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

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“Right now we don’t see any risks on consumer loans, together with credit card receivables and auto loans. To sum it up and relate that to the total portfolio of the banking system it still is a very small amount,” Diwa Guinigundo, deputy governor at the Bangko Sentral ng Pilipinas (BSP), said during the Philippines Investment Conference held in Makati City on Wednesday.

Guinigundo said there may be some concern over accelerating growth in consumer debt in the form of credit card receivables and auto loans.

“It’s been rising, but relative to the portfolio [of banks], it remains a small portion,” he said.

The latest data from the BSP showed that consumer loans by universal, commercial, and thrift banks were up at P735 billion as of the end of the first quarter this year. The loans stood 13.6 percent higher as of end-March than the P647 billion posted a year earlier.

Consumer lending also sustained the quarter-on-quarter trend that began in 2008, with the end-March 2014 figure reflecting a 2-percent increase from the P721.54 billion recorded from end-December 2013.

With this, the central bank remains cautious and said it is ready to address problems that may arise through its macroprudential measures.

“This is something that we are monitoring very carefully because in other countries the issue of credit card receivables is a very big issue and almost to the extent of posing a virtually systemic impact on the economy. That is why we are monitoring and our ears are on the ground to make sure consumer loans do not get out of hand,” he said.

Despite this, Guinigundo said that rising growth rates in consumer loans should be expected because of the growing Philippine economy.

“The economy is expanding, job opportunities are also expanding, thus providing jobs to our young people—our young people who consume. Therefore, this is something that one should expect in an expanding economy,” he said.

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