Banks engage in stiff battle for basic loans

By Jerry Maglunog

Banks are busy expanding their consumer-loan program, targeting the salaried sector with mostly thrift banks going head-to-head in this regard.

Many bankers have said the salaried sector is their best target, because most of them have the capacity to pay mostly salary loans.

“There is really a stiff competition for this sector as the cash flow of any creditor is looking for those seeking loans are present most of them,” Rizal Commercial Banking Corp. First Vice President Lourdes Jocelyn-Pineda said.

A salary loan falls under the consumer-loans category. This type of loan has one of the best margins among all other loans, as the debtors here have a clean bill capable of paying any amount borrowed from any bank.

Other types of consumer loans are housing and car loans.

Pineda said the default payment among debtors is very low at 1.2 percent as of December 2015, compared with the other two consumer-loan types.

Even the Bangko Sentral ng Pilipinas (BSP) said those who have a regular monthly salary are the best clients a bank can have due to their capability to pay.

“They don’t need to have collaterals, because the documents asked by the bank are difficult to tamper. If banks ask a tax-compliance paper or payslip, the legitimate worker can easily provide because they really have jobs,” BSP Deputy Governor for the Supervision and Examination Sector Nestor Espenila Jr explained.

He said that having a collateral is actually an option, so that any bank that will not be able to get back the amount loaned by any client will have a fallback.

“Collaterals are actually optional, especially if the bank has a strict KYC (know-your-client) policy,” Espenilla.

Under the global banking policy, most banks in the Philippines offer loans starting at 4 percent per month, which is the rate approved by the BSP.