BPI sees further rise in bank lending

MANILA, Philippines — Ayala-led Bank of the Philippine Islands (BPI) expects a further expansion in lending activity amid the growth in the economy even with the impact of the continued rise in interest rates.

In a recent briefing, BPI said loan growth prospects remain good for the industry as a whole with expectation of continued increase in the country’s gross domestic product (GDP).

BPI chief finance officer Eric Luchangco said the bank saw aggressive loan growth last year despite the rise in interest rates here and abroad.

“What we are looking for in 2023, is that we will continue to see loans grow as the economy grows. And that will help drive our income moving forward,” Luchangco said.

BPI executive vice president John-C Syquia is also banking on the Marcos administration’s infrastructure push to fuel lending and trickle down to more economic activities.

Jojo Ocampo, BPI Mass Retail Segment head, said that 2022 was a good year for unsecured lending with card loans rising by 30 percent amid economic reopening and aggressive marketing efforts.

Personal loans also jumped by 50 percent while microfinance loans increased by 12 percent. Auto loans likewise picked up by 40 percent while housing loan releases remained strong with a 33 percent improvement.

“We see a continued expansion especially in the credit card business as travel is slowly coming back, both domestic and international, as well as dining and other service and entertainment related spending,” Ocampo said.

Luchango still warned of potential risks to growth this year such as the additional interest rate hikes of the Bangko Sentral ng Pilipinas (BSP) albeit at a much moderated basis.

“It’s the potential slowdown from the effects of the rate increases that happened last year. And that could still potentially come within the course of this year and that slows down the economy significantly,” Luchangco said.

“Then we will see reduced loan growth rates that could also put some stress on our borrowers,” he said.

Nonetheless, BPI executive vice president Ginbee Go is banking on the easing of monetary policy by the second half to ensure that loans will remain affordable to clients.

Meanwhile, BPI president and CEO Jose Teodoro “TG” Limcaoco welcomed the plan of the BSP to resume the reduction of the reserves banks are required to keep with the central bank within the first half.

Earlier, BSP Governor Felipe Medalla said the Monetary Board is looking at lowering the reserve requirement ratio (RRR) to replace temporary measures implemented at the height of the pandemic.

An RRR cut will allow BPI and other banks to have more loanable funds for its various segments available to customers.

Meanwhile, BPI shareholders on Tuesday also approved the proposed merger with Gokongwei Group’s Robinsons Bank Corp. with BPI as the surviving entity, subject to regulatory approvals.

“The proposed merger will unlock various synergies across several products and service platforms and expand the customer and deposit base of both banks,” Limcaoco said.

With RBC’s consumer loans posting a 30 percent compounded annual growth rate over the past five years, its consumer loans account for 42 percent of its loan mix, significantly higher than BPI’s 20 percent.