Loans to consumers surged 19% in H1

GROWTH in loans by banks to consumers for increased credit card use, as well as the purchase of new homes and cars, rose by a fifth at the end of June, outpacing the expansion the industry’s total portfolio.

This reflected local banks’ eagerness to get more cash in consumers’ hands—an area of the business promising fat yields despite heightened competition.

Data from the Bangko Sentral ng Pilipinas (BSP) showed consumer loans rose by 19.29 percent at the end of the first half to a record high of P959.18 billion. Consumer loans were up 2.83 percent from March, sustaining the quarter-on-quarter growth since 2008.

In contrast, outstanding loans of the country’s major banks rose by 14.5 percent at the end of June.

“BSP monitors the level and quality of consumer and other bank loans to ensure banks’ adherence to high credit standards,” the regulator said.

“Consumer loans increased in June due to an increase in auto loans, credit card receivables and salary loans,” BSP said in a statement. Loans for new home purchases were down slightly quarter on quarter, but were still up significantly from year-ago levels.

Residential real estate loans took the lion’s share of banks’ consumer portfolio, accounting for P409.17 billion or about 42 percent of the total. At the end of June, real estate loans were up 17.34 percent, but down 0.55 percent year-on-year.

The three-month dip reflects more prudent lending by banks amid increased oversight by regulators. A central bank survey of senior loan officers showed banks that tightened loan standards in the second quarter of 2015 outnumbered those that eased.

Regulators keep a close watch on real estate lending due to fears of easy credit inflating price “bubbles.” The Philippine economy’s last major crisis was a result of a collapse of previously over-inflated home and office space prices in the late 1990s.

Meanwhile, the BSP said salary loans—which are disbursed in small amounts—rose the fastest in the second quarter, growing 89.61 percent to reach P84.57 billion. Quarter-on-quarter, salary loans were up 11.11 percent.

Auto loans grew 25.27 percent to P259.36 billion, while credit card loans rose by a modest 4.14 percent to P166.45 billion.

As a percentage of total loan portfolio, the 16.7 percent consumer credit exposure of Philippine banks remained the lowest among the Southeast Asia’s five largest economies. At end-June 2015, the consumer loan exposure in Malaysia was at 57.1 percent, followed by Indonesia at 28.3 percent, Thailand at 27.9 percent and Singapore at 25.9 percent.