Banks seen to hike lending by 10%-15% in 2008
By Ma. Salve Duplito
INQUIRER.net
First Posted 16:30:00 05/15/2008
MANILA, Philippines -- Local banks are likely to increase lending this year by 10-15 percent to boost income as market turbulence continues to squeeze earnings from treasury operations, Bank of the Philippine Islands president Aurelio Montinola said in an interview.
As of February, bank lending had risen by 9.4 percent annually from 5.4 percent a year ago.
BPI, the country’s third largest lender by assets, wants to grow its loan portfolio by 12 percent this year, but has already reached its target in the first quarter.
Competition in home, auto and consumer loans is expected to heat up, especially with overseas Filipino workers sending more than $1 billion every month to their families.
Philippine Savings Bank, a subsidiary of Metropolitan Bank and Trust Corp., already reported that 22-23 percent of new auto loans are traded to contracts with OFWs and their families.
“Our lending to small and medium-scale enterprises and the consumer sector should grow from 15 percent to 20 percent this year. Overall, our target is 12 percent,” BPI’s Montinola said.
Montinola also noted that banks have been aggressively unloading non-performing loans in recent years and are enjoying levels lower than five percent. This would further encourage banks to lend more, he said.
It will be a difficult year for banks in 2008 because of the uncertainties in global markets and the difficulties of having to deal with both an oil and food crisis, Montinola said. “Before, it was either oil or food. Now it’s both …. We need to get back to basics and be a little bit more patient,” he said.
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