BPI Family eyes 14% growth in lending

MANILA, Philippines - The BPI Family Savings Bank (BPI Family Bank) is confident that its loan portfolio will grow by 12 to 14 percent this year, as consumer and business confidence remains high.

BPI Family Bank president Jose Teodoro K. Limcaoco said that ending should continue to be fairly robust in the second half of the year, driven by continued confidence in the local economy and steady growth in the remittances of overseas Filipinos.

Loans generated by BPI Family Bank accounts for roughly 25 percent of combined lending of the Bank of the Philippine Islands (BPI) group. The former concentrates on consumer lending while BPI focuses on the middle market and corporate lending, aside from offering other banking services.

Consumer lending include mortgage or housing loans, auto loans and SME (small and medium enterprise) loans. Mortgage and auto loans account for 70 percent of total portfolio while SME lending account for roughly 30 percent. BPI Family Bank operates 140 branches nationwide.

Of the three major categories, mortgage loans remain the strongest.

“Retail mortgage will lead (among the three major categories) and will continue to be strong,” Limcaoco said, adding that at one point the bank was experiencing bookings of between P1.4 to P1.7 billion a month.

He said that there was good demand from first time homebuyers, which has been helped by sustained low rates, and by the fierce competition among the top developers providing an array of choice for buyers.

Auto lending is slower than last year, clearly affected by the lower sales figures of the auto industry. Supply issues from Japan was the main culprit for weaker demand, although sales are expected to pick up in the second half of the year.

“Mortgage remains our largest segment, both in absolute loan book size and in releases,” the BPI Family Bank chief executive added.

SME lending has been experiencing increased activity, especially with its recent launch of its Ka-Negosyo Franchising Loan.

“Our franchising loan package is off the ground. We have made quite a number of loans on them, but the total portfolio is not yet of any significant size relative to our total loan portfolio,” Limcaoco explained.

Nonetheless, the thrift bank arm of the Ayala Group was encouraged by the response from franchisors. 

“Many have worked with us so we can put their franchises on our list of ‘Approved’ franchise packages that we are willing to lend to potential franchisees. Some examples of our franchisors are Phoenix Petroleum, V-Cargo, Bibingkinitan, Minute Burger, and Lay Bare,” he outlined.

However, the bank official expressed concern over the dangers of the global economies slowing down.

If the global economy slows down further, Philippine exports might suffer or remittances from overseas Filipinos will recede either due to job losses or reduced payments. Such a condition may lead to inflationary pressures.

In the first semester, remittances from overseas Filipinos rose by 6.3 percent to $9.6 billion. For the month of June alone, it reached a record level of $1.7 billion, or seven percent better than the same month in 2010.

Families of overseas Filipinos are said to be among the major first time homeowners, and a number are preparing for retirement.

“This worries me because with current low rates, more cash will move towards real estate. Investors in real estate are clearly different from end-user buyers, as they tend to force property prices upwards,” Limcaoco added.

First-year interest rates for mortgage loans are as low as 5.25 percent although there is a built-up from the second year onwards to over eight percent per annum.