BPI Family projects 15% growth in auto lending business

MANILA, Philippines—BPI Family Savings Bank, the country’s largest thrift bank, is expecting a banner year for its auto lending business, with the growing economy seen boosting demand for vehicles.

BPI Family aims to grow its auto loan portfolio by 15 percent this year, faster than last year’s 10 percent rise, BPI Family president Teodoro Limcauco said in an interview during last week’s rollout of the first “online auto madness,” a monthlong activity that allows borrowers to get a loan online 24/7 with sweeteners such as lower loan rate and free insurance with acts of nature coverage.

Consumers currently pay 10-14 percent for auto loans but with the “online” promo, Limcauco said they could avail themselves of lower rates. The perks under this year’s “auto madness,” which BPI has been doing every year since 1998, will be available for clients who would avail themselves of car loans online until March 31.

“BPI Family is supportive to the evolving needs of the market. We understand that almost everything is now available online and we wish to bring this convenience to our clients. We would also like to take advantage of the positive performance of our economy and ensure that our clients get more out of the optimism of the banking sector. The online auto madness is a ground-breaking tool that will help our clients access our special offers and make it more possible for them to acquire their brand new dream cars,” Limcauco said.

Auto lending accounts for about 30 percent of BPI Family’s loan book. Limcauco said there was increasing demand for affordable “starter plans” for those buying for the first time.

BPI Family estimates its market share in the auto lending business at about percent.

“Auto loan is actually an easy business to get started. You work with dealers, pay the dealers incentives then they drive the loans to you. The question is going forward—on the post-loan collection, loan servicing, chasing people. That’s where banks that are not ready with infrastructure and processes will fall,” he said.

It is a business, though, where the value of collateral depreciates rather than appreciates like in-house mortgage lending and selling repossessed cars. In this regard, Limcauco said BPI Family was very good in managing asset quality, with the ratio of non-performing auto loans kept at levels much lower than the industry average.

“We do sell (repossessed cars) but we’re not aggressive,” he said, adding that the bank would open soon a new lot for these second-hand cars.

The inaugural online auto madness is done through the website www.bpiautomadness.com, through which prospective borrowers can choose a car from a comprehensive listing of car brands and models available in the Philippines. Then, the client can compute for the most suitable downpayment and monthly amortization. To complete the process, one has to fill out and submit a simple application form. Prospective borrowers will be able to get a loan decision in three to eight hours.

“We believe that this is the best time for Filipinos to take advantage of our offerings and acquire their brand-new cars. We made car ownership unbelievably easier and more accessible to Filipinos, wherever they are, through the first and only online auto madness,” said David Sarmiento Jr., senior vice president and head of auto loans division at BPI Family.