Consumer loans rose 25% in 2014

Home, car and credit card loans rose by more than 25 percent at the end of 2014, outpacing the growth of total financing from banks despite the recent tightening of liquidity conditions.

Data from the Bangko Sentral ng Pilipinas (BSP) showed a significant rise in consumer loans last year, reflecting rising household incomes, as well as the industry’s shift to grow their retail books aggressively in search of better yields.

Household indebtedness in the Philippines remained one of the lowest in the region despite the increase in consumer loans.

“The BSP monitors consumer and other types of bank lending to ensure the banks’ adherence to high credit standards,” the BSP said in a statement on Thursday.

Consumer loans extended by universal, commercial and thrift banks stood at P902.6 billion as of the end of 2014, a 25.1- percent increase from the P721.5 billion recorded a year earlier.

The end-2014 figure is also 6.2 percent higher than the P849.6 billion posted a quarter earlier. “This sustains the quarter-on-quarter growth in consumer loans that began in 2008,” the BSP said.

Consumer loans are composed of residential real estate loans, auto loans, credit card receivables, salary loans and other personal loans. The BSP keeps a close watch on consumer loans because these are viewed as riskier than other types of financing such as lending to big corporations.

While consumer lending expanded, the ratio of the banks’ non-performing consumer loans relative to the total decreased to 4.8 percent as of the end of 2014 from 5.3 percent a year earlier.–Paolo G. Montecillo