44% of Pinoys worry over loan, bill obligations — TransUnion survey
More Filipinos worried about not being able to pay their bills and loans in full despite a bump in their income in the second quarter, prompting many of them to cut back on non-essential spending, global insights firm TransUnion said on Wednesday.
Results of a May 1 to 10 TransUnion survey of 944 adult Filipinos showed 44 percent of respondents feared they might not afford to settle the full amount of one of their bills and debts, higher than the 41 percent who gave the same response a year ago.
This was despite 42 percent of respondents reporting an increase in income during the three months through June, slightly up from 41 percent recorded in the same period last year.
TransUnion said “financial pressures” have influenced household spending behaviors.
In the second quarter, survey data showed that 47 percent of Filipino consumers had cut back on discretionary spending like dining out and traveling. But consumers were nevertheless “cautiously optimistic”, with 78 percent of polled respondents expecting bigger income over the next 12 months.
Overall, TransUnion highlighted the importance of credit to consumers. Survey data revealed that the intention of households to apply for a new loan or refinance existing credit had risen to 54 percent in the second quarter, from 45 percent a year ago.
“Risky lending”
Indeed, Philippine banks are out to meet the growing demand for consumer loans.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that outstanding consumer credit of big banks had amounted to P1.4 trillion in June, accounting for 11.6 percent of their total loan book. Notably, their household loan portfolio doubled from prepandemic level despite high interest rate and elevated inflation in the past months.
Ivan Tan, director and lead analyst at S&P Global Ratings, pointed to a “risk-on” sentiment among Philippine banks that must be monitored “very closely” considering the high level of soured consumer loans.
“We have been observing a risk-on behavior where the Philippine banks are maintaining the large corporate loans, but growing almost twice as fast in the higher-yielding and higher-risk consumer segment,” Tan said during a webinar on Wednesday.
“Philippine banks are growing the consumer loans (portfolio) faster to improve the yield. It’s for yield enhancement purposes. But they are taking on incremental risk in the process also,” he added.
