Banks’ Consumer Loans Sustain Rise

Manila—(PHStocks)—Bangko Sentral ng Pilipinas (BSP)—Consumer loans (CLs) by universal, commercial (U/KBs) and thrift banks (TBs)  reached PhP702.6 billion at the end of third quarter of 2013, an increase of 16.9 percent from the PhP601.03 billion posted during the same period a year earlier.

The latest figure reflects an increase of 3.3 percent from the prior quarter. This sustains the trend of quarter-on-quarter growth since the time the current reportorial template was introduced in 2008.

Consumer lending was mainly lifted by an increase in residential real estate loans (RRELs) amid continued household investments in residential properties and a slow rise in the cost of construction materials. Auto and credit card loans, on the other hand, rose at a slower pace due to the lean season.

While the consumer finance portfolio expanded, banks managed the rise in soured CLs. The non-performing CLs of U/KBs and TBs represented 6.13 percent of their total CLs in September 2013, a slight increase from the 6.09 percent registered in June 2013.

U/KBs and TBs also set aside loan loss reserves of 67.8 percent of their non-performing CLs as a safety net against consumer credit risks. Non-performing CLs represent only one percent of the banks’ total loan portfolio.

Furthermore, the consumer credit exposure of the banks remained low compared to their regional peers. At end-September 2013, the CL exposure in Malaysia stood at 57.1 percent; Indonesia, 28.8 percent; Thailand, 26.8 percent; and Singapore, 26.4 percent.

The Bangko Sentral ng Pilipinas (BSP) monitors the quality of all types of bank loans as part of efforts to promote high credit standards. This is essential to fostering financial stability, which is a key policy objective of the BSP.