BPI: Loans rising, delinquencies hitting plateau this year

Ayala-led Bank of the Philippine Islands (BPI) expects its loan book to grow and loan delinquencies to plateau this year with the reopening of the domestic economy and the increased COVID-19 vaccination of residents.

In a recent presentation, BPI executive vice president and consumer banking head Ma. Cristina Go said consumer spending in the country would likely increase this year following the uptrend in the country’s mobility, which began rising toward prepandemic levels in the last quarter of 2021.

“While Omicron (COVID-19 variant) has set us back early this year, we see consumer spending really moving up in the coming months,” she said.

Go heads the consolidated consumer banking business of the financial institution as the merger of BPI and its consumer banking arm, BPI Family Savings Bank, officially took effect on Jan. 1, 2022, with BPI as the surviving entity.

“In terms of loan growth, we are aligned with the [Bangko Sentral ng Pilipinas or BSP’s] outlook of about 5–7 percent this year. By our own estimates, we will see consumer loan growth while corporate loans will continue to be muted. Nevertheless, we are looking at this same growth in our loan books,” said Go. She noted that the central bank had been an early mover in responding to the pandemic, by aggressively lowering the reserve requirement on banks and slashing local interest rates.

BSP’s signal

“We have seen also BSP signal that they are very much aware that we are still in the recovery phase,” she said.

“The central bank has expressed willingness to stay patient while making the necessary adjustment in policy rates if the growth trajectory shows enough traction and inflationary expectations are no longer within boundaries,” said Go, adding any adjustment would likely occur toward the latter part of the year.

But Go said the current policy rate—at a record-low 2 percent—was supportive of Filipino consumers.

She added that the availability of credit would not likely be affected by subdued rate hikes. With the banks continually assessing and managing asset quality, the industry is seen to sustain lending to creditworthy clients.

“And in terms of those who are already with loans and having some difficulties, banks continue to restructure loans or repackage them for better affordability to existing loan clients,” Go pointed out.

But nonperforming loans (NPLs) will plateau as the economy opens up, and as more jobs are created and business picks up.

“Generally, we see NPLs to be moderate and better managed, plateauing in 2022,” said Go, adding that NPL formation would probably be modest as some sectors in the industry would have a late recovery.

Consumer activity

As consumer spending and consumer loans are seen to pick up pace this year, Go said BPI would be able to provide its clients a more seamless digital and physical experience.

“Our online transactions have been growing at 62 percent the past year, and our usage continues to move up as we build the functionalities in our digital platform, and we see this as the case moving forward,” she said.

About 56 percent of BPI’s clients are enrolled in its online banking platform. Even as the branches had been opened most of the year in 2021, the percentage of its banking transactions done digitally remained at 90 percent.

She added that the enlarged bank was in a position to optimize its presence while taking the opportunities to consolidate its branch footprint.

“As we consolidate our branches, it allows us to optimize our resources and make the branches more accessible to more clients,” said Go.