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Consumer Loans Continue to Rise

02.17.2015

Consumer loans (CLs) by universal, commercial (U/KBs) and thrift banks (TBs) reached Php 849.6 billion at the end-September 2014, 5.7 percent higher than the Php 804 billion posted a quarter earlier. This sustains a quarter on quarter growth in CLs since 2008.

The rise in consumer lending is mainly due to a quarter-on-quarter increase in residential real estate and auto loans. Credit card loans also rose at a slower pace during the period.

While the consumer finance portfolio expanded, U/KBs and TBs kept the level of their non-performing CLs manageable. At the end of the third quarter last year, the banks’ non-performing CLs represented 4.9 percent of their total CLs, a slight decrease from the 5 percent recorded a quarter earlier.

The banks likewise set aside loan loss reserves of 64 percent of their non-performing CLs as a safety net against consumer credit risks.

Moreover, the banks’ consumer credit exposure relative to total loan portfolio of 16.7 percent remained low compared to their regional peers. At end-September 2014, the CL exposure in Malaysia was at 54.1 percent followed by Indonesia at 28.2 percent; Thailand, 27.7 percent; and Singapore, 25.7 percent.

The Bangko Sentral ng Pilipinas monitors the quality of all types of bank loans as part of efforts to promote high credit standards. This is essential to the BSP’s policy objective of fostering financial stability.

View Table 1 | Table 2

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