CIMB sees improvement in loan demand by next year


MORE CONSUMERS could return to the credit market by 2022 for their non-core needs after shutting down these activities for nearly two years due to the crisis, said Vijay Manoharan, CEO of CIMB Bank Philippines, Inc ..

“People want to start traveling, people want to start shopping, they want to start a new home improvement, buy a new car. So there is going to be a huge amount of new business that has been cut for so long, ”Manoharan said in an online interview.

CIMB, which only started operating in the country in 2019, has seen its credit portfolio increase by 300% so far in 2021 compared to the same period of 2020, Manoharan said.

He said people had tried to turn to CIMB for credit under more stringent underwriting processes seen at other financial service providers during the pandemic.

“In 2020 and 2021, people are trying to access credit because they are in a difficult position – they have lost their jobs or they have seen less income,” he said.

If the restrictive measures continue to be relaxed, Manoharan hopes people will borrow not because they are negatively affected by the pandemic but because they want to spend.

“By 2022, if things continue to improve, demand will change more to stimulate activity, instead of trying to recover,” he said.

Manoharan is optimistic that progress made by the government’s national identification initiative, alongside a more comprehensive credit bureau, will also be key to boosting credit growth by 2022.

Bank loans rose 2.7% in September to mark the second consecutive month of growth, according to preliminary data from Bangko Sentral ng Pilipinas (BSP).

The outstanding loans issued by major banks rose 2.7% to 9.25 trillion pesos in September after increasing 1.3% year-on-year in August. It had previously declined for eight consecutive months.

Growth in September was the fastest in 11 months, since expanding 1.8% in October 2020.

Including reverse repurchase agreements, outstanding loans increased 2.7 percent to 9.54 billion pesos year-on-year in September.

Outstanding loans increased by 0.6% over one month on a seasonally adjusted basis.

Meanwhile, Manoharan said they welcome the policy of Bangko Sentral ng Pilipinas (BSP) to limit digital banking licenses to six, saying it is prudent to regulate the industry.

The central bank also asked lenders with a different type of license to avoid branding themselves as “digital banks” and instead say that they offer online banking products and services.

Mr Manoharan said they assessed whether to apply for a license conversion but ultimately did not proceed.

“What we have (commercial banking license) is more than enough. Not only can we operate fully digitally, but we can also do other segments that have broader services and solutions in the future with our current license, ”he said.

Commercial banks have a higher minimum capitalization requirement of P2 billion for those with only one head office, compared to the P1 billion for digital banks, which are not required to have physical branches.

Mr Manoharan said they are set to launch new products related to investments and insurance soon.

“We have two other partners that we have signed. We have been very successful with GCash, so we hope to replicate the model, ”he said.

BSP data showed that CIMB’s total assets stood at 17.843 billion pesos at the end of June. – Luz Wendy T. Noble

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