BSP: Consumer loans rise 14.4% to P472.6B in 2010

Loans extended by universal, commercial, and thrift banks to Filipino consumers posted a double digit growth of 14.4 percent last year in the wake of the country's strongest economic growth in 34 years, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday. The BSP said consumer loans reached P472.63 billion last year or P59.51 billion higher than the P413.12 billion disbursed in 2009 due to the steady rise in real estate, auto, credit card, and other consumer loans. Data released by the BSP showed that the banking industry's total loan portfolio went up by 8.8 percent to P2.96 trillion last year from P2.72 trillion in 2009. As a result the share of consumer loans to the industry's total loan portfolio also expanded to 15.9 percent from 15.2 percent. As to loan quality, the ratio of non-performing consumer loans of universal, commercial, and thrift banks rose by 10.43 percent to P41.14 billion last year from a year-ago level of P37.25 billion resulting to a higher non-performing commercial loan to total loan portfolio ratio to 1.39 percent from 1.37 percent. Likewise, the banking industry's loan loss reserves increased by 17.35 percent to P27.54 billion last year from P23.47 billion. The central bank data showed that universal and commercial banks controlled the lion’s share of 60.2 percent of the total commercial loan exposure of the banking system while thrift banks accounted for the remaining 39.8 percent. Consumer loans of universal and commercial banks posted a double-digit increase of 14.2 percent to P284.54 billion last year from P249.21 billion 2009 while their total loan portfolio expanded by 8.58 percent to P2.61 trillion from P2.4 trillion. On the other hand, total consumer loans of thrift banks grew 14.7 percent to P188.1 billion from P163.9 billion while the industry’s total loan portfolio climbed by 10.75 percent to P352.5 billion from P318.2 billion. Data showed that the industry's non-performing consumer loans went up by 11.12 percent to P41.12 billion from P37 billion while loan loss reserves increased by 12.48 percent to P25.78 billion from P22.92 billion. The BSP said real estate loans jumped by 15.8 percent to P188.35 billion last year from a year-ago level of P162.6 billion while credit card receivables inched up by 4.15 percent to P120.3 billion from P115.5 billion. On the other hand, auto loans surged 24.5 percent to P117.6 billion from P94.5 billion while other consumer loans rose 14.4 percent to P46.6 billion from P40.5 billion. The country posted its strongest economic growth in 34 years after its gross domestic product (GDP) posted a surprising growth of 7.3 percent last year. The Philippines was on the verge of a recession when its GDP growth slackened to 1.1 percent in 2009 from 3.8 percent in 2008 due to the full impact of the global financial crisis. A BSP survey showed an increasing demand for loans by corporate and individual borrowers due to a stronger than expected growth in the economy for the first half of this year. Results of the third quarter Senior Bank Loan Officers’ survey showed a stronger overall increase in net demand for loans from enterprises and households consistent with the improving growth in bank lending. Net demand refers to the percentage difference between banks reporting an increase in loan demand and banks reporting a decrease. The BSP survey showed that the overall demand for loans or credit by enterprises increased to 25 percent in the third quarter of the year from 13.6 percent in the second quarter. Top corporations posted the biggest increase in demand for loans to 30 percent from 21.7 percent. Bank respondents said demand for loans by large middle market enterprises as well as small and medium-sized enterprises continued to increase although at a slower pace of 15.8 percent in the third quarter from 22.7 percent for large middle market and 6.7 percent from 21.1 percent for SMEs. Demand for loans by microenterprises went down by 16.7 percent in the third quarter from a growth of 14.3 percent in the second quarter. “Demand increased across all firm sizes, except for micro enterprises," the survey stated. Key reasons cited by respondent banks for the net increase in demand for loans by enterprises were firms’ upbeat outlook for the domestic economy, lower interest rates, improved terms of financing by banks, and lack of other sources of financing. The survey also showed that most banks had generally unchanged credit standards for the sixth consecutive quarter starting second quarter of 2009 based on the proportion of banks indicating whether they tightened, loosened, or maintained credit standards. Using the diffusion index approach, the survey results indicated an increase in net tightening in credit standards for loans extended to enterprises but no net tightening for loans to households in the third quarter of the year relative to second quarter. The survey consists of questions related to the general credit standards of commercial banks in the Philippines as well as factors affecting the credit supply of and demand for loans by both enterprises and households. A total of 25 commercial banks of the 35 banks surveyed responded to the survey for a response rate of 71 percent. — TJD, GMA News