BPI sees stronger lending growth this year

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BANK of the Philippine Islands (BPI) is expecting its lending business to be stronger this year amid a robust economy and on expectations that the Bangko Sentral ng Pilipinas (BSP) will begin cutting rates this year.

“Overall, we are expecting this year to be stronger from a perspective of loan growth. The main driver of that, I think, is customer optimism. Generally, in our conversations with customers, they’re feeling that 2024 will be a better year from an overall GDP (gross domestic product) growth perspective, and that’s also our expectation,” BPI Chief Finance Officer and Chief Sustainability Officer Eric Roberto M. Luchangco said to reporters on Monday.

“We’re not the only ones who have a relatively optimistic view of the year. We’re optimistic that both consumers and corporate will start to come back to the market, and that will drive our growth,” he said.

BPI’s loans stood at P1.9 trillion as of end-2023, higher by 10.5% year on year.

Meanwhile, the government targets GDP growth of 6.5% to 7.5% this year. This would be faster than the actual 5.6% expansion in 2023 that was below the 6-7% goal.

Mr. Luchangco added that loan growth will be boosted by expected rate cuts from the US Federal Reserve, which could be mirrored by the BSP.

“It’s probably going to be data-dependent, but our view is that sometime in the second half of the year, we’ll start to see the rate cuts, and I think it’ll even spur lending more,” he said.

BSP Governor Eli M. Remolona, Jr. previously said the Monetary Board is unlikely to begin its easing cycle in the first half of the year amid upside risks to inflation.

The BSP raised borrowing costs by a cumulative 450 basis points (bps) from May 2022 to October 2023, bringing the policy rate to a 16-year high of 6.5%.

For its part, the Fed has hiked its target rate by 525 bps to the current 5.25% to 5.5% range since March 2022. It is expected to begin easing its policy stance later this year.

Meanwhile, BPI is aiming to disburse P19 billion to P20 billion in sustainable retail loans in three years, an official said, after the bank launched a green retail loan product on Monday.

The bank is aiming to disburse P5 billion in loans this year under its Green Solutions product, BPI Retail Lending and Bancassurance Group Head Dexter Lloyd C. Cuajator said.

Green Solutions aims to provide financing for eco-build, solar panel mortgage, and electric vehicles.

BPI shares declined by P1.10 or 0.95% to close at P115 each on Monday. — AMCS