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Banks' Consumer Loans Continue to Grow

07.22.2014

Consumer loans (CLs) by universal, commercial (U/KBs) and thrift banks (TBs) stood at Php 735.1 billion at the end of the first quarter of the year. The figure is 13.6 percent higher than the Php 647 billion in CLs recorded during the same period in 2013.

The end-March figure also reflects a two percent growth from the Php 721.54 billion posted at end-2013. This sustains the quarter-on-quarter growth trend since 2008.

CLs rose amid the strong demand for vehicles during the period leading to the holy week and the summer season. At end-March 2014, ALs reached Php194.3 billion,
16.3 percent higher than the figure recorded a year earlier.

Residential real estate loans and credit card loans, on the other hand, rose at a slower pace during the period.

While the consumer finance portfolio increased, the ratio of the banks’ non-performing CLs to total CLs slightly decreased to 5.2 percent at end-March from 5.3 percent a quarter earlier. U/KBs and TBs also set aside loan loss reserves of 70.5 percent of their non-performing CLs as a safety net against consumer credit risks.

Moreover, the consumer loan exposure of the banks also remained low relative to their peers in the region. At end-March 2014, the consumer credit exposure in Malaysia stood at 58.1 percent; Indonesia, 28.4 percent; Thailand, 27 percent; and Singapore, 25.7 percent.

The Bangko Sentral ng Pilipinas (BSP) looks into consumer financing by U/KBs and TBs as part of broader efforts to monitor the quality of the banking industry’s total loan portfolio. The maintenance of high loan quality is essential to achieving the BSP’s objective of fostering financial stability.

View Table 1 | Table 2

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