Philippine consumer lending soars to solid growth

Consumer loans rose by 16.3% qoq largely due to 21.1% expansion in residential site loans.

According to Maybank Kim Eng, loans extended by banks for personal consumption rose 17.2% YoY and 3.3% QoQ to PHP564b in 1Q12. Consumer loans as a percentage of total loans also went up to 16.3% from 15.7% last quarter but slightly lower than the 16.4% level a year ago.

Here's more from Maybank Kim Eng:

This growth was largely driven by the 21.1% expansion in residential real estate loans to PHP233b, representing 41.2% of total borrowings. Auto loans (25.7% of total) also increased 16.6% to PHP145b while credit card receivables (23.4% of total) jumped 11% to PHP132b.

Other consumer loans also climbed 18.4% to PHP55b. In terms of loan quality, the ratio of non-performing consumer loans (NPL) to total consumer lending slightly improved to 6.8% from 6.9% in the previous quarter. In absolute amount, however, NPL went up 2.3% to PHP38b. Loan loss reserves increased to 73.1% from 69% in 1Q11.

The solid growth in consumer lending is expected to continue, supported by a strong domestic economy, low interest rates, low inflation, improving consumer sentiment and rising disposable income. Most Philippine banks, likewise, aim to increase the proportion of consumer loans to their total loan portfolios. Meanwhile, total resources of the banking system rose 5% YoY to PHP9.4t as of 1Q12, but lower than the PHP9.6t recorded in December 2011.