Households with savings down, debts rise – BSP

Published September 9, 2018, 12:00 AM

by manilabulletin_admin

By Lee C. Chipongian

Amid skyrocketing prices of basic goods and prime commodities as inflation surged to a nine-year high at 6.4 percent in August, the number of Filipino households with savings also dropped while those with loans or debts went up in the third quarter, based on a quarterly survey by the Bangko Sentral ng Pilipinas (BSP), while those with debts have risen.



MB file photo.
MB file photo.

The Consumer Expectations Survey (CES) which asked 5,580 households across the country, showed that the percentage of households with savings was lower at 32.5 percent compared to the second quarter results of 37.4 percent.

There was also a decline in the percentage of households who said that if they wanted to, that they could keep some extra cash as savings. In the latest CES, respondents who could save money decreased to 37.3 percent from 43.3 percent in the second quarter. In the meantime, the proportion of households that could set aside 10 percent or more of their monthly gross family income was steady at 31.6 percent.

The CES – recently including a debt-to-income ratio segment – said the number of Filipinos with debt or loans have increased to 43.4 percent during the quarter versus the previous quarter’s 27 percent. “Almost one-third (or 31.7 percent) of the respondents declared that he/she and/or his/her spouse have an outstanding loan at present,” noted the BSP.

Of the total surveyed, 709 households in the National Capital Region (NCR) have a “debt situation” while a higher 1,005 households in areas outside of the NCR have loans. From these numbers, about 40.6 percent belong in the low-income group, 45.6 percent from the medium-income group and 13.8 percent from the high-income group.

Based on the survey, the total principal debt was lower at P120.16 million from the second quarter’s total of P167.06 million. The average amount of principal loan of respondents and/or spouse dropped to P59,901 compared to P69,063 in the previous quarter. “Majority (75.7 percent) of the loans were paid on schedule, while 10 percent were ahead and 14.3 percent were behind,” said the BSP.

Relatives or friends were the two main providers of loans at 21.4 percent followed by lending firms with 21.1 percent, and individual money lenders with 15.7 percent. Banks and government institutions accounted for 10.5 percent and 10 percent, respectively.

Cash loans were the preferred type of loan followed by salary loans and loan in kind such as food items. Most of these loans have no collateral and a lot of consumers surveyed use the “Sangla ATM” as most common collateral. Other collaterals used were real property, land, motor vehicle and harvest.

Paying for household debts could become easier in the next 12 months, the survey said. Still, there were reasons cited as well by those having difficulty in their loan payments such as: not enough income/budget or they have a deficit/they have no capacity to pay; prioritized other household expenses; business is down; unstable job; and more debts to pay.

As for savings, the CES said Filipinos set aside money for emergencies, health and hospitalization, education, and retirement. Savings are also intended for the purchase of real estate, for business capital as well as investment.

About 66.2 percent of households participating in the survey have bank deposit accounts. This was higher than the previous survey’s 61 percent. Around 46.5 percent said their savings are kept at home, while 32.7 percent have placed their money in cooperatives, paluwagan, other credit/loan associations, and as investment such as insurance.

OFW households

The CES has a segment focusing on households with an overseas Filipino or overseas Filipino worker (OFW) as member. In the third quarter survey, OFW households that channels remittances as savings and investment have declined.

Of the total 5,558 surveyed households, 449 have OFWs as main income provider. About 94.4 percent used the remittances that they receive to purchase food and other household needs, said the BSP.

The report also said that remittances used by households for medical expenses, to pay for loans, or to buy cars have increased while those using it for education and savings have declined.

About 47.4 percent of remittances are set aside for medical expenses, 24.6 percent for debt payments, 11.8 percent for purchase of house and 9.4 percent to buy a motor vehicle. About 63 percent said they are using remittances for education, 32.7 percent said it is for savings, 19.2 percent for purchase of appliances/consumer durables, 4.2 percent for investment and 3.5 percent spent for other miscellaneous expenses.