Vol. XXII, No. 161 [ BusinessWorld Online ]
Wednesday, March 18, 2009 | MANILA, PHILIPPINES
BANKS’ housing loan business may slow this year, as Filipinos based abroad, wary of the impact of the crisis on their finances, become cautious on their spending, a top bank executive said.
Aurelio R. Montinola III, president of the Bank of the Philippine Islands (BPI), said that while there is a lot of room for growth for the real estate lending business of banks, given the huge backlog in housing in the country, this year may constitute a blip in that otherwise promising long-term outlook.
"There is always a housing shortage in the Philippines. But given the times, people will be more careful. I think overseas Filipino workers [OFWs] will think before they act, so there’s going to be a possibility that there’s going to be a slowdown [in housing loans]," Mr. Montinola said at the sidelines of the BPI-Department of Science and Technology Awards ceremony last Monday night.
He said the fact that OFW remittances — a key driver of the local real estate sector — may not grow this year, due to recession in the economies that host these workers, should not be considered bad at all, considering that the country is coming from a record year in 2008.
Remittances last year hit a record high of $16.43 billion, 13.7% more than the P14.4 billion in 2007.
Remittance inflows in January stood at $1.27 billion, growing by a five-year low rate of 0.1% from the same month a year ago.
But Mr. Montinola said banks will be alarmed only if remittances actually drop.
He said consumer loans account for about 25% of BPI’s total lending portfolio where housing loans make up the bulk.
"What we have learned in previous crises is to keep our lending windows open because people will appreciate it and remember [us] when the good times come again," said Mr. Montinola, who is also president of the Bankers Association of the Philippines.
BPI is the third largest lender in the country, with total resources amounting to P658.42 billion as of end-2008. — G. S. dela Peña
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