Bangko Sentral keeps eyes and ears on consumer loans as growth spikes

While consumer loans are small compared with the total loan portfolio of banks, Bangko Sentral ng Pilipinas (BSP) sees the need for circumspect in monitoring personal credit noting a brisk activity amid a growing economy, a central bank official said Wednesday.

 

There are no foreseen risks in consumer loans, credit card receivables and auto loans as part of the total loan portfolio, BSP Deputy Governor Diwa Guinigundo said during a panel discussion at the Philippine Investment Forum in Makati City.

 

"The point that concerns us is the growth rate of consumer loans, credit card receivables, and auto loans. It's really rising. But relative to the total portfolio, it's still a very small chunk," he explained.

 

"This is something we are monitoring very carefully... Our ears are on the ground to make sure consumer loans do not get out of hand," Guinigundo added.

 

Latest data from the BSP show the amount of consumer loans held by universal, commercial, and thrift banks grew by 13.6 percent to P735.1 billion at the end of the first quarter compared with P647 billion a year earlier.

 

However, this is expected as the Philippine economy grows, Guinigundo noted.

 

"The economy is expanding, job opportunities are also more available, BPOs are providing jobs to young people, who consume a lot," he said.

 

In addressing this development, the central bank has put in place measures to preempt risks.

 

"In housing, there are maximum ceilings, loan to value, collateral valuation etc.," Guinigundo said.

 

Last week, Bangko Central announced more relaxed rules on bank lending, noting that the ability of the borrower to pay, and not collateral, will be the basis of loan approvals.

 

The central bank also intends to cap the value of real estate mortgage as collateral at 60 percent in securing loans.

 

“By focusing primarily on cash flow and ability to pay, the BSP is signaling that collateral should play only a supporting role in creditworthiness," the central bank said. – VS, GMA News