Consumer loans rose in Sept. ’14

MANILA, Philippines–Local banks’ loans to consumers grew by more than a fifth year on year as of September last year, latest data showed, as low interest rates and rising incomes made buying new cars and homes more affordable.

Bangko Sentral ng Pilipinas (BSP) data on Tuesday showed a significant increase in consumer loans (CLs) in September 2014.

Consumer loans have been increasing every quarter since 2008, the BSP said.

But even with the increase, consumer loans still make up a relatively small portion of the banking system’s total loan portfolio. Reserves for potential losses also remained robust, albeit at a lower level than other types of loans.

“The rise in consumer lending is mainly due to a quarter-on-quarter increase in residential real estate and auto loans,” the BSP said in a statement accompanying industry data on Tuesday. “Credit card loans also rose at a slower pace during the period,” it added.

Consumer loans by universal, commercial, and thrift banks reached P849.6 billion at the end of September 2014, up 5.7 percent quarter on quarter and 20.9 percent year on year.

The growth was driven by lending to the real estate sector, which was up 24.7 percent from year-ago levels. Residential real estate loans made up the largest part of the total, at P382.25 billion.

Car loans were up 20 percent from the year before to reach P217.35 billion at the end of September. The third-largest component—credit card loans—was up by a more modest 3.05 percent to a total of P156.54 billion.

While the consumer finance portfolio expanded, banks kept the level of their nonperforming CLs manageable. —Paolo G. Montecillo