20 - 26 June , 2001

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Consumer borrowing on the rise

By Miriam Dunn

The ‘buy now, pay later’ philosophy looks to have taken off on the Maltese Islands, with many consumers now opting to buy goods on credit.

Both the Bank of Valletta and HSBC confirmed that statistics show a growing number of people in the personal sector are borrowing money from banks to buy goods, ranging from homes to holidays.

BoV alone show a rise in personal sector lending of some 30 per cent in just one year, with the amount lent shooting up from Lm117 million at end September 1999 to Lm153 million at end December 2000.

HSBC also report "very healthy increases" both in the number of accounts and the amounts lent in general, when comparing the first four months of the year 2000 with the corresponding period in 2001.

The most common type of loan that customers take out is for the home, with consumer goods, such as household appliances and home entertainment systems also high up on the list.

Consumers are also borrowing money for home furnishings, the purchase of cars and boats, the payment of a wedding reception or a holiday and, perhaps somewhat surprisingly, antiques.

HSBC’s marketing manager pointed out that interestingly, where take-up patterns of its Flexicredit scheme are concerned, which covers most of the short-term loans, an element of seasonality is surprisingly evident.

"The first two months of the year tend to be quite weak," George Camenzuli said. "This may be explained by the fact that during this period customers are usually recuperating from expenses incurred during the preceding festive season."

He added that steady and healthy increases usually start being registered from March onwards, peaking in July.

"This peak coincides with the International Trade Fair of Malta," he said. "Business tends to slow down again in August, when many customers would be on holidays/vacation leave and their last concern is with taking out a credit facility.

"Business usually starts gearing up again once this holiday season is over, experiencing another peak as Christmas approaches, even though not in as strong a manner as that experienced in the June/July period."

The Business Times, Network House, Vjal ir-Rihan San Gwann SGN 07
Tel: (356) 382741-3, 382745-6 | Fax: (356) 385075 | e-mail: editorial@networkpublications.com.mt