Local banks keep zeroing in on consumer lending to spur growth.
Banking on the consumer remains top priority for Philippine banks as it goes up by 16% YoY at the end of 3Q17, DBS Equity Research reports.
These loans were driven by auto loans that grew 24% YoY. There was some deceleration in auto loans, cognisant of the fact that consumers could have pre-purchased autos in 2016 in anticipation of the higher excise tax on automobiles that was initially thought to be passed in 2017. The excise tax changes are expected to be implemented in 2018.
Here’s more from DBS Equity Research:
We saw moderation in residential lending given fewer residential launches by major property developers. Even with slight deceleration, expansion of retail banking remains a key strategy among Philippine banks, especially given still low penetration rate, i.e. 43.1% of population remains unbanked and the existence of high-yield consumer loans (2-4ppts above working capital).
As Philippine banks remain focused on increasing the share of consumer lending to total loan portfolio, we estimate consumer lending to still grow at mid to-high teens, in line with overall lending growth.
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