PNB expects improved consumer loan demand and repayments as borrowing costs go down

PHILIPPINE NATIONAL Bank (PNB) expects repayments for consumer loans to improve by 20% this year amid lower borrowing costs, an official said.

“I would say it should be about a 20% improvement. That’s our target for the year, and I think we can do it for the consumer products,” PNB Consumer Finance Head Celeste Marie V. Lim said on the sidelines of an event last week.

The bank has seen an improvement in consumer loan repayments, with soured debt going down despite higher disbursements, she said.

“We’re actually doing very well. In terms of PNB’s past due rates or nonperforming loans, it’s gone down. For the consumer side, it’s going down and our customers have been paying back very well. So, we’ve seen an uptick in the take-up of our consumer products,” Ms. Lim added.

PNB’s overall nonperforming loan (NPL) ratio went down to 2.1% at end-June from 2.7% in the same period last year.

The official said the start of the Bangko Sentral ng Pilipinas’ (BSP) easing cycle is expected to boost demand for consumer loans and also make it easier for borrowers to pay their debt as interest rates begin to go down.

“Last month was the first rate cut. The expectation is [for rates] to gradually go down again, so in which case, the cost of borrowing is going to go down. So, consumers will probably pick up more in terms of borrowing for consumer products,” she said.

The Monetary Board on Aug. 15 cut its policy rate by 25 basis points (bps) to 6.25%, marking its first easing move in nearly four years.

BSP Governor Eli M. Remolona, Jr. previously said they could cut rates by another 25 bps within the year. The Monetary Board’s last two policy-setting meetings this year are on Oct. 17 and Dec. 19.

Ms. Lim added that PNB targets double-digit growth in its consumer portfolio starting next year as the bank wants to increase the share of this type of credit in its loan book.

“2024 is the year that we build our foundation for consumers, so you won’t see double-digit growth this year. However, for next year, we are looking to at least grow by about 25%,” she said.

PNB wants to tap its current client base and new-to-bank customers for its consumer product offerings and promotions, Ms. Lim said.

“I think we have products like the World Elite Mastercard that will entice our existing customers to actually organically grow with PNB. We are going to come out with strategic products and promotions that really push our depositor base to organically grow as well,” she said.

“We’re also pushing to get new-to-bank customers. We partner with a lot of developers or dealers and direct sales to bring them on board,” she added.

PNB’s attributable net income inched down by 0.07% to P4.95 billion in the second quarter as it set aside more loan loss provisions. This brought its net income for the first semester to P10.22 billion, up by 4.72% year on year. — A.M.C. Sy