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BPI expects recovery in demand for auto loans

BANK OF THE Philippine Islands (BPI) expects demand for auto loans to pick up this year amid a heightened need for mobility amidst the coronavirus pandemic.

“Our initial projection is a flat or same as 2020 levels to as much as…10%, which is in line with the industry’s [projection],” BPI Retail Loans Group Head Dennis T. Fronda said during the online launch of the bank’s new loan and auto insurance scheme on Friday.

BPI Family Savings Bank (BFSB) President Maria Cristina L. Go said the automobile industry’s sales dropped 40% to about 245,000 in 2020 from the year earlier. She said the bank financed close to 17,000 vehicles, declining 31% from the previous year.

Amid the pandemic, Ms. Go said BFSB’s auto loan portfolio decreased 4%, lower than the 7.9% industry-wide contraction in 2020.

“This clearly tells you that the bigger concern is reduced demand rather than lower risk appetite,” Ms. Go said.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed household loans dropped 6.9% year on year in January, partly due to the 5.8% contraction in motor vehicle loans.

The central bank has said the decline in lending was due to both the risk aversion of lenders that have tightened their credit standards as well as a slump in demand as borrowers felt the economic impact of the pandemic.

The bank said it is bullish that 2021 will be a year of recovery and growth for both vehicle sales and financing as Filipinos see the benefits of owning a car, as they can travel securely and with reduced worries over catching the virus.

“We understand the aspiration of our clients to own a car has become even more critical during the pandemic given the lack of public transport and the need to safely traverse the Metro without the fear of being infected,” Ms. Go said.

During the same event, BPI launched its BPI Auto Loan Multiyear Protect which combines monthly installments for insurance with loan amortization payments. Mr. Fronda said the product gives customers flexibility to manage their cash flow into gradual and fixed payments per month while easing their worries about sudden car repair expenses due to accidents.

BPI’s net income fell 25.7% to P21.4 billion in 2020 as it allotted more loan loss provisions amid the crisis.
The Ayala-led lender expects to complete its merger with BFSB by 2022.

BPI’s shares closed at P84 apiece on Friday, down by P1.95 or 2.27%. — L.W.T. Noble

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