Unpaid consumer bank loans on the rise

THE amount of unpaid bank loans issued to consumers is on the rise, based on Bangko Sentral ng Pilipinas (BSP) data.

The BSP on Monday said non-performing consumer loans climbed to nine percent of banks’ total lending portfolio in March, from 8.6 percent in December and 8.1 percent in March last year.

The central bank’s announcement came on the heels of prodding from the International Monetary Fund (IMF) for stress tests on local banks, similar to what US monetary authorities did on American lenders.

The IMF had warned that the credit quality of Philippine banks would weaken due to a slowing economy, which would halt the decline in their bad loans and put pressure on their capital. The Washington-based institute singled out consumer loans as potential risks to the Philippine banking sector amid an economic slowdown.

The US Fed had stress-tested American banks following huge write-downs as a result of their exposure to the sub prime housing market, the epicenter of the current global financial turmoil.

At the Philippine Stock Exchange, the property and financials indices on Monday fell 1.6 percent and 2.3 percent to 885.02 and 575.82. Shares of leading real estate developers Ayala Land Inc., Megaworld Corp. and Filinvest Land Inc., as well as of top-tier banks such as Metropolitan Bank and Trust Co. and Bank of the Philippine Islands ended Monday in the red.

In a statement, the BSP said the amount of non-performing consumer loans increased by 7.1 percent to P34.9 billion in March this year from December last year. Total consumer loans rose at a slower pace of 1.5 percent to P383.8 billion this March from P380 billion in December.

“The quarter-on-quarter increase in the ratio occurred as the growth in non-performing consumer loans outmatched the 1.5 percent [increae] of consumer loans,” the BSP said.

Residential real estate loans represented 41.6 percent of the total consumer-lending portfolio of banks.

Total residential real estate loans increased by 4.2 percent to P160.4 billion in the first quarter from P153.9 billion in December. Loans for the construction of real estate properties for commercial purposes—largely extended by commercial bank—reached P197.4 billion in March.

The non-performing residential loans to banks’ total bad loan ratio increased to 9 percent in March from 8.3 percent in December last year.

Also, the non-performing real estate loans rose to 0.5 percent of banks’ total loan portfolio in March from 0.4 percent in December.

Thrift banks held 53.3 percent, or P85.5 billion of the total residential loan exposure. Universal and commercial banks accounted for the remaining 46.7 percent, or P74.9 billion.

Auto loans grew by 4 percent to P81.8 billion in March from P78.6 billion in December last year.

Non-performing auto loans went up to 5.2 percent in March from 4.9 percent in December.

Credit card receivables declined by 3.9 percent to P125.7 billion in March from P115.5 billion in December and P130.7 billion in March last year.

Non-performing credit card receivables declined to 11.2 percent of banks’ total loan portfolio in March from 11.6 percent in December, but went up from 8.9 percent in March last year.

Universal and commercial banks accounted for 81.1 percent, or P101.9 billion of the total credit card receivables. Credit card subsidiaries held 15 percent, or P18.8 billion while thrift banks accounted for 3.9 percent, or P4.9 billion. –Maricel E. Burgonio, Senior Reporter, Manila Times