RCBC charges lowest rate for short-term loans in PH

By Jun Vallecera, BusinessMirror

Posted at Aug 13 2012 10:12 AM | Updated as of Aug 13 2012 06:12 PM

MANILA, Philippines - Some of the country’s best-known lenders offer some of the most attractive loan rates, with prevailing prices averaging in the low-single digit.

Data from the Bangko Sentral ng Pilipinas (BSP) show no one tops the Yuchengco-family owned Rizal Commercial Banking Corp. which charges only 1.18 percent for the use of its money on the short-term.

Its nearest rival is Banco de Oro Universal Bank, owned by Henry Sy Sr., which charges short-term borrowers at only 1.85 percent.

Also aggressive in this lending space is the Metropolitan Bank and Trust Co. whose short-term loans costs only 2.43 percent.

These are rates applicable to loans maturing in a year and charged on customers the banks classify as preferred borrowers, those with unblemished loan track record and have been known to pay their past obligations promptly and in full.

Borrowers with less than sterling loan histories, however, need not despair as these same lenders open their loan books to the rest of us borrowers requiring financial assistance.

Banco de Oro is unique in this short-term lending space by charging prospective borrowers as high as 41.7 percent for its one-year money if one’s credit history is deemed riskier than the bulk of the borrowing population.

No other lender charges interest this high as of Aug. 8 this year.

BPI, with a reputation for conservatism in all aspects of lending, charges a high of no more than 9.5 percent. A borrower with an approved loan from the bank is presumed to have been vetted early on and likely to have done business with it beforehand.

Metrobank charges a high of 14.5 percent for its one-year money but lower than RCBC’s 15.79 percent.

Only one other bank, the soon-to-be merged Allied Banking Corp. owned by Lucio Tan, charges a high single digit for its loans, averaging 9.9 percent.

Even such government-owned lenders as the Development Bank of the Philippines and Land Bank of the Philippines charge a high of 11 percent and 15 percent, respectively.

Their preferred clients are charged only 2.56 percent and 2.641 percent, respectively, as well.

Of the 14 foreign-owned banks that regularly report their interest charges on borrowers, the most attractive short-term loan rate is offered by the Manila unit of Citibank, which likes to be called Citi, as preferred clients pay only 1.584 percent and a high of only 6.98 percent.

ANZ Bank offers a low of 1.819 percent and high of 6 percent.

HSBC’s lowest interest charge stands at 3.137 percent and high of 26 percent, the highest among peers.

All banks are mandated by regulation to disclose on a weekly basis the rate at which they charge borrowers for the use of their money.

It is part of the BSP’s larger goal of cultivating a culture of informed borrowers better able to decide who among the universe of lenders in the Philippines are able to provide the most cost-advantageous loan product out there.