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Consumer Lending Rises as Soured Consumer Loans Drop


Consumer loans (CLs) by universal, commercial (U/KBs) and thrift banks (TBs) reached Php647.1 billion in March 2013, 14.8 percent higher than Php563.8 billion recorded a year earlier. In addition, the quarter-on-quarter growth of the total CLs of U/KBs and TBs stood at 2.8 percent in end-March which is consistent with the longer term trend of a general increase in consumer lending.

The rise in CLs was matched by a marginal decline in the ratio of soured CLs to total CLs. As of March 2013, the non-performing CLs ratio has decreased to 6.2 percent from 6.8 percent posted during the same month last year.

These figures sustain the general rise in CLs vis-à-vis the gradual decline in non-performing CLs since 2009 which contributes to the improvement of the CL quality of U/KBs and TBs.

The increase in consumer lending to auto, residential real estate and other CLs in March this year can be attributed to favorable macroeconomic condition and continued inflow of dollar remittances. 

Moreover, industry figures indicate that U/KBs and TBs have adequate safety nets against credit risks arising from consumer lending as they set aside 68.7 percent of loan loss reserves to non-performing CLs in end-March. Non-performing CLs account for just one percent of the banks’ total loan portfolio (TLP).

Meanwhile, the percentage of bank CLs to TLP in the Philippines is lower compared to the country’s Southeast Asian peers. The Philippines’ 16.5 percent CL exposure is less than Malaysia’s 54.1 percent; Indonesia’s 30.1 percent; and Singapore’s 26.7 percent.

The Bangko Sentral ng Pilipinas keenly monitors banks’ CL portfolio in line with efforts to keep credit standards at high levels amid a low interest rate environment. Maintaining high credit standards is key to mitigating systemic risks and to maintaining financial stability.

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