Banks, credit-card firms earn big from consumer lending

Commercial banks, as well as their credit-card affiliates, report very high consumer lending, showing an increasing number of Filipinos spending more as a result of a robust economy.

Consumer lending includes home and auto loans, as well as personal loans extended to people who use the funds for individual or family-related purposes, and lately including mobile phones and computers.

“Gadgets are becoming a main fare under that lending umbrella,” said Simon Calasanz, president and chief executive officer of Bankard, the credit-card arm of the Rizal Commercial Banking Corp. (RCBC)

A look at Bankard’s loan portfolio showed that at least 65 percent of their billions in loans spread out to almost half a million clients consist of such items with a 3 percent-plus effective interest rate for all loans.

Calasanz said there is a silver lining when consumers avail themselves of those items, especially when using Bankard.

“These are usually purchased via 0-percent installment, usually payable over six, 12 and sometimes 24 months, so customers are able to enjoy these interest free,” the official said.

Calasanz said the concept of using credit cards in the Philippines has changed in the last 20 years, from mainly to mainstream use like paying grocery items or emergency payment for utility bills.

Next to gadgets are travel-related spending, such as hotel, adventure and even group check-ins in popular destinations, like Hong Kong, Boracay, Palawan and now Batanes.

The Bankard chief said credit cards, specifically the 15 members of the Credit Card Association of the Philippines, are not having second thoughts about extending freebies for those who always use credit cards for consumer products, because the probability that those who are in this sector are capable of paying.

“They are the salaried sector,” he added. His statement about the capacity to pay of most clients was backed by a former top official of the sister thrift bank of RCBC, Rizal Microbank.

“Consumer loans are really aimed at the salaried sector, and this comprise a big chunk of the population,” said Lourdes Jocelyn-Pineda, former president of Rizal Microbank. JERRY MAGLUNOG