Consumer Loans Climb by Most in a Decade in Philippines
(Bloomberg) -- Consumer loans in the Philippines rose in January by the most in more than a decade, eclipsing credit growth among businesses and suggesting that households can help support an economy facing fallout from the coronavirus outbreak.
Consumer lending grew 40.1% in January from a year ago, data from the central bank showed. That’s the fastest pace since at least January 2009, according to data compiled by Bloomberg.
Credit-card debt and motor-vehicle loans rose 57% and 31.7%, respectively, according to the central bank’s data, while company loans grew by just 8.8% in the same period. Overall, bank loans grew 11.6% in January from a year ago, the fastest pace in eight months.
Filipino households may be “more rate-sensitive, jumping at the chance to secure a loan to help fund purchases,” said Nicholas Mapa, senior economist at ING Groep NV in Manila. This could “play a part in 2020’s recovery, coronavirus notwithstanding.”
Household consumption accounts for about 70% of the Philippine economy, according to the World Bank. Gross domestic product growth slowed to an eight-year low of 5.9% last year. Consumers scrimped on spending after taking a hit from rising prices and interest rates in 2018.
The share of household debt to total loans increased to 10.1% in January, from 8% a year ago.
Bangko Sentral ng Pilipinas cut its key interest rate by 75 basis points last year and lowered the ratio of deposits banks are required to hold in reserve by 4 percentage points. It delivered another quarter-point rate cut last month, with Governor Benjamin Diokno signaling that the rate could be lowered more if needed.
“Perhaps with further rate cuts in the offing, private corporate investment can finally kick in,” Mapa said.
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