Banks’ Consumer Loans Sustain Increase

Manila—(PHStocks)—Bangko Sentral ng Pilipinas (BSP)—Consumer loans (CLs) by universal, commercial (U/KBs) and thrift banks (TBs) reached PhP803.3 billion at the end of second quarter this year,  an increase of 18.1 percent from the PhP680.4 billion in CLs during the same period last year.

Consumer lending also sustained its quarter-on quarter growth as the latest figure reflects an increase of 9.3 percent from the PhP735.1 billion posted in the previous quarter.

CLs rose on account of continued increase in investments of households in residential real estate and auto loans. Credit card loans also rose, although at a slower pace during the period.

While the consumer lending expanded, the ratio of the banks’ non-performing CLs to total CLs slightly decreased to 5.0 percent at end-June from 5.2 percent a quarter earlier. U/KBs and TBs also set aside loan loss reserves of 67 percent of their non-performing CLs as a safety net against consumer credit risks.

As a percentage of total lending, the 16.5 percent CL exposure of Philippine banks remained low compared to its peers in Southeast Asia. In end-June this year, the consumer credit exposure in Malaysia stood at 62.2 percent; Indonesia, 28.4 percent; Thailand, 27.5 percent; and Singapore, 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.