Banks go easy on individual borrowers
Consumers had an easier time getting loans for purchases of new homes and cars, or getting new credit cards in the third quarter of this year as competition in the retail banking segment continued to heat up.
Results of the latest Senior Loan Officers Survey (SLOS) by the Bangko Sentral ng Pilipinas (BSP) showed banks became more stringent in lending to businesses. But when lending to consumers, banks were friendlier.
“There’s increased tolerance for risk. They’re also seeing an improved profile of borrowers,” said Dennis Lapid, deputy director for economic research at the BSP.
At a press conference, Lapid said banks became less strict on collateral and they increased credit lines in July to September this year. This reverses a net tightening of lending standards every quarter since the start of last year.
Of the banks that responded to the BSP survey, 88 percent said lending standards for households were unchanged, eight percent said standards were eased, while 4 percent said standards were tightened. This shows a “net easing” of standards for lending to households, the BSP said.
Philippine banks have become more aggressive in lending to consumers amid declining earnings from treasury operations and thin margins in financing for big corporations.
In August, loans for household consumption extended by major universal and commercial banks grew by 14 percent from 14.3 percent in July due to sustained growth in credit card loans, auto loans and salary loans, the BSP reported.
This excludes data from thrift banks, which corner a significant portion of the consumer lending segment. Latest data for commercial and thrift banks’ consumer lending activity showed household loans rising faster than the rest of the industry’s portfolio.
At the end of March, consumer loans reached P932.8 billion, up 3.36 percent quarter-on-quarter and 26 percent year-on-year. Consumer loans have been rising every quarter since 2008, the BSP said.
Local banks’ consumer credit exposure of 16.7 percent of total loan portfolio remained lower than those of the banks in other major Southeast Asian economies. At end-March 2015, consumer loan exposure in Malaysia was at 53.8 percent; Indonesia at 28.6 percent; Thailand, 27.7 percent, and Singapore, 25.8 percent.
