THE Philippines may already be approaching the tail end of its revenge spending phase and facing considerable headwinds brought by rising interest rates, but the growth of consumer loans is still expected to be robust, according to an executive of the Metropolitan Bank & Trust Co. (PSE: MBT).
MBT’s Consumer Business Head Ramon Jaime L.V. del Rosario recently told reporters that the growth in their consumer business is still expected to post double-digits. However, this will not be as high as the growth posted in 2022 and 2023, as it will most likely be in the “mid-teens.”
This growth may be driven by auto loans and the possible comeback of condominiums. Del Rosario said that while work-from-home arrangements are in place, the more common for businesses right now is adopting a hybrid set up where employees are still going to places of work.
“The trend has been high double-digits, it will still (be in double digits) but I think now it will be more mid-teens, something like that. Hopefully in the mortgage space, hopefully they open up more projects because the supply of new projects [has not yet really gone up],” Del Rosario said.
Del Rosario said consumer spending is expected to be robust in the fourth quarter of the year owing to holiday spending. However, this is not expected to continue next year.
In terms of spending for travel, Del Rosario said, the prices of airfare have been prohibitive. Only when prices undergo some “correction” will more people be encouraged to travel.
The impact of high interest rates, meanwhile, does not have a significant impact on MBT’s consumer business. He said while their products have seen some price adjustments, these did not prevent the take up of loans, especially for automobiles.
“Our pricing for auto loans and home loans rose slightly, but we try our best to compensate,” Del Rosario said, partly in Filipino. “(But) even when there’s a rate hike, we can compensate because it’s self-funded, it comes from our depositors.”
Earlier, Filipino consumers expected higher inflation and job losses in the last two quarters of the year and the next 12 months, according to the Bangko Sentral ng Pilipinas (BSP).
Based on the results of the BSP’s Consumer Expectations Survey (CES), consumer sentiment for the third quarter of 2023 improved marginally as the overall confidence index (CI) turned slightly less negative at 9.6 percent from 10.5 percent in the second quarter of 2023.
However, consumers expect inflation to average 6.6 percent in the next 12 months. This is significantly higher than the 2 to 4 percent inflation target of the central bank.
The central bank also said consumers expected higher interest rates and a weaker peso in the third and fourth quarters of 2023 as well as in the next 12 months.
Meanwhile, BSP data showed the percentage of households with loans and savings increased in the third quarter of 2023.
The data showed 26.6 percent of consumers availed themselves of a loan in the last 12 months. This is higher than the 24.8 percent recorded in the second quarter of 2023.
BSP also said the percentage of households with savings rose to 32.8 percent from 30.2 percent in the second quarter of 2023.