Bank loans seen to sustain rise in ’12

Commercial banks in the country expect demand for loans to continue to grow throughout the rest of the year as most of their corporate clients have expressed plans to expand and will require heavy financing.

According to the Bankers Association of the Philippines (BAP), business sentiment continues to be upbeat, especially with the strong performance of the economy in the first quarter.

As a result, more and more corporate institutions are now looking at venturing into big-ticket investments, the group said.

“We have seen a very healthy demand for loans,” said BAP president Alberto Villarosa, citing data culled in the first few months of the year.

He said the trend could continue until the end of 2012.

“Large corporate entities have funding requirements in the infrastructure, power, and real estate sectors,” added Villarosa, who is also president of Security Bank.

In the first quarter, the Philippine economy, measured in terms of gross domestic product, grew by 6.4 percent from a year ago. This was the second fastest growth rate in Asia during the period after China’s 8.1 percent.

Villarosa said the economy’s robust growth encouraged large corporate entities, as well as medium-sized companies, to invest some more.

“The middle market loan demand is likewise very healthy coming from the impact of the supply chain reaction as well as expansion projects,” Villarosa explained.

Also, consumer loans is expected to drive overall demand for credit, Villarosa said.

As incomes rise, he explained, most households tend to consider acquiring residential properties and vehicles, with the help of bank loans.

Data from the BSP showed that outstanding loans from the country’s large banks amounted to P2.89 trillion by the end of April, rising by 19.2 percent from P2.42 trillion reported in the same period last year.

Businesses involved in the wholesale and retail trade, manufacturing, real estate, financial intermediation, utilities, construction, transportation and communications took out the most loans from banks in the first four months of the year, data from the BSP showed.

Villarosa said growth in outstanding loans could remain in the double-digit territory throughout the year.

The government is currently pushing the construction of vital infrastructure through its Public-Private Partnership (PPP) program.

Under the program, private companies are invited to invest in public infrastructure projects, such as roads, airports and power facilities.

According to Bankers Association of the Philippines, some banks have expressed interest to lend to corporate entities that will invest in PPP projects.