Consumer loans up nearly 15%

MANILA, Philippines - Consumer loans expanded by a double-digit rate in the first quarter on the back of a growing economy that continued to attract large inflow of dollars, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Housing, auto and credit card loans amounted to P647.062 billion in the first three months of the year, 14.8 percent higher than the previous year’s P563.839 billion.

The latest growth represented a slowdown from the 17 percent expansion posted in the same period a year ago, but was nevertheless remained way faster than economic growth of 7.8 percent as of March.

“The increase in consumer lending to auto, residential real estate and other consumer loans in March this year can be attributed to favorable macroeconomic condition and continued inflow of dollar remittances,” the BSP said.

The economy is broadly driven by consumption, owing to large inflows of dollars from overseas Filipinos that help give purchasing power to many. A faster rise in consumer loans, in effect, indicates more push to growth from this segment.

At the same time, the BSP said consumer loans cornered only a small percentage of the banks’ total loan portfolio at 16.5 percent in the first quarter, shrugging off risks that may be brought by excessive lending.

In comparison, the central bank said consumer loan ratios are much higher in Malaysia (54.1 percent), Indonesia (30.1 percent) and Singapore (26.7 percent).

Broken down, the bulk of consumer loans were in the form of residential real estate credit, which is used to finance small house and land purchases. A total of P279.311 billion were granted, up by a fifth from a year ago level.

It was followed by auto loans, which rose 15.43 percent to P167.193 billion from January to March, central bank data showed.

Credit card receivables, meanwhile, hit P143.684 billion, up 8.6 percent from last year’s P131.870 billion. Other consumer loans- mainly used for household needs and appliances- increased 4.24 percent to P56.874 billion.

The uptrend in consumer loans helped push down the non-performing loan (NPL) ratio or the proportion of soured credit versus total loan portfolio.

A total of P40.276 billion in NPLs- unpaid loans 30 days from due date- were recorded from January to March, accounting to 6.2 percent of total consumer loans. The ratio was down from last year’s 6.8 percent.

“Moreover, industry figures indicate that (universal and commercial banks) and (thrift banks) have adequate safety nets against credit risks arising from consumer lending,” the BSP pointed out.

Loan loss reserves- funds segregated to finance possible losses from NPLs- accounted for 68.7 percent of bad consumer loans, data showed.