STRONG loan demand in the first half was seen
persisting the rest of the year, making it possible for the Philippine
Savings Bank to post loan growth of 20 percent or even higher.
PS
Bank president Pascual M. Garcia III said consumer loan growth was
particularly rewarding for most banks in the first half and more so for
PS Bank executives as consumer loans grew more than 14 percent during
the period.
As a result, Garcia said bank lending in the second half was likely to accelerate further and could possibly grow 20 percent.
“From
our perspective, we’re experiencing improved demand for our loans. This
is a very good sign. We will surpass our target for the year as far as
loan growth is concerned,” Garcia said.
He
earlier drew up a more modest loan growth target of just 15 percent
this year but more recent developments compelled him to recalibrate the
loan growth path to include more vigorous activities down the line.
“I
am a bit more positive, especially after the Bangko Sentral ng
Pilipinas cut the policy rates. This will help in accelerating loan
demand further,” Garcia said of the recent BSP decision reducing the
rate at which it lends to or borrows from the banks by 25 basis points.
The
policy rate cuts effectively lowered the cost of money so that
businesses and households are encouraged to expand their productive
horizons and accelerate spending down the line.
“Things
are looking up for the economy in spite of the global economic
slowdown. Fortunately, we’re very insignificantly exposed to Europe as
far as the industry is concerned,” he said.
In
addition to significantly improved conditions of local banks, Garcia
also said dramatic improvements in the fiscal sector, greater public
spending and low inflation in a low-interest rate environment were to
convince the global credit rating agencies as Standard & Poor’s to
give the Philippines the credit upgrade it deserves.
“I
think a credit upgrade is forthcoming over the next six months because
all the indicators are there for everyone to see, including the rating
agencies,” he said.
Garcia
particularly warmed over the bank’s 50.6 percent net income report in
the first half to P1.38 billion versus original income guidance of P2.2
billion for the full year.
He
acknowledged colleagues in the industry have reported compressed
margins because of tougher competition and the low interest rate
environment.
But on balance, Garcia said there had been greater loan demand than there had been in many years.
“We’ve
seen higher loan demand across all loan products, whether auto,
mortgage, personal loans, corporate or business loans. The higher loan
demand is not just on one area,” Garcia said.
(Jun Vallecera)
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