Despite rising interest rates, return of consumer confidence driving loan growth: BPI

Jessica Fenol, ABS-CBN News

Posted at Aug 01 2022 06:56 PM

Bank of the Philippine Islands n Makati on January 19, 2021. Jonathan Cellona, ABS-CBN News
Bank of the Philippine Islands n Makati on January 19, 2021. Jonathan Cellona, ABS-CBN News

MANILA - The reopening of the economy has fueled the return of consumer confidence as evidenced in loan growth and credit card spending, officials of the Bank of the Philippine Islands said Monday.

BPI Head of Consumer Banking Ginbee Go the rise in interest rates is unlikely to drastically change the demand.

The Bangko Sentral ng Pilipinas has raised the country's policy rate by a cumulative 125 basis points this year to temper inflation.

Despite this, home loans have grown by 48 percent and auto loans by 29 percent, Go told reporters during the BPI briefing to celebrate its 171st anniversary. 

"This is really a very good sign that the consumer spending or consumer confidence is back. These allow us to provide greater traction in the ensuing months as we continue to monitor the impact of interest rates in our loan books," Go said. 

Economists have said the recent surge in revenge spending is proof of the recovery in consumer confidence. 

Go said Filipinos have also begun spending beyond essentials, which was the trend during the pandemic.

Filipinos are “using their cards to purchase not just essential goods but also luxury items and other consumer items,” Go said. 

New cardholder acquisition has doubled compared to last year with credit card loans and microfinance loans also growing this year, BPI's Head of the Mass Retail Segment Jojo Ocampo said.

In the first half, the bank said its net income reached P20.4 billion or 73.4 percent higher compared to the same period last year. 


Meanwhile, BPI Jose Teodoro (TG) Limcaoco said the bank's heavy investments in digitalization "has put us in a position to tackle the challenges that we face today."

He said the bank made "tremendous progress" in terms of digitalization. It set to launch more products to make banking services more accessible to Filipinos. 

"Last year, we began our journey of reinvention. Last year, we resolved that if we are to remain relevant and to stay ahead in the next 170 years we have got to reinvent BPI as well as the banking industry," Limcaoco said. 

"This 2022, there are many signs that we are moving in the right direction," he added.

The bank is also spending around 10 percent of its technology budget in cyber security, BPI COO Ramon Jocson said.

"We’re spending a lot on cybersecurity because it’s a growing concern for us given the increase in malware introductions in the system. The second reason is because of technology adoption we see more clients who can potentially be victims," Jocson said. 

"For us, spending on cyber security is essential because it also protects our clients not only ourselves," he added.

Despite the strong performance, Limcaoco said inflation, which quickened to 6.1 percent in June, remains a risk.

"For me, we need to watch inflation and how it might dampen consumer interest going forward, we have to watch where interest rates might go to tackle inflation whether interest rates go too high," he said. 

BPI is also working on its goal to bring down coal exposure to zero by 2023 guided by its sustainability formula or the Environment Social Governance plus economic benefits (ESG+E), Limcaoco said.

He said the bank is likely to shift towards more renewables as it aims to cut down its coal exposure, which is currently at 40 percent of the total power loan portfolio.

When asked if the bank is open to supporting nuclear power, he said "I think nuclear power is a viable source of power globally, I think we need to do further studies on whether it's viable in the Philippines."


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