Demand from overseas Filipino workers (OFWs) is driving up the growth of bank loans for vehicle purchases, opening up a new niche especially for dealers of vans, Asian utility vehicles and sports utility vehicles, a bank president said.

About 22-23 percent of new auto loans now being released by Philippine Savings Bank, the country’s second-largest thrift bank in assets, can be traced to contracts with OFWs and their families, bank president Pascual Garcia III said.

“That started about two years ago,” Garcia said, noting that OFWs were not only spending for housing and household appliances but also for vehicles.

He said this also reflected the changing profile of OFWs, with more getting employed in higher value-added, higher income jobs.

Garcia said OFW borrowers would take up an average loan of about P700,000 with a tenor of three years. These clients would usually pay 20 percent in upfront equity and amortize the rest, he said.

He said some OFWs preferred vehicles with more passenger and cargo space, like vans and Asian utility vehicles, so they could be used for both business and personal purposes.

Garcia said the looming recession in the United States and the resulting slowdown in big western markets had not resulted in delinquency among OFW borrowers. He, however, said this might dampen demand compared to last year.

In the first two months of this year, PSBank has reported a 19-percent rise in vehicle loans, tracking the growth seen in the previous year. Across the industry, car loans had grown by about 20 percent in 2007.

Money sent home by OFWs through banks hit a new high of $14.4 billion in 2007, 13.2 percent higher than year-ago level. It also exceeded the central bank’s target of $14.3 billion for the period and accounted for about 10 percent of the domestic economy.

Monthly remittances have been surpassing the $1-billion mark since May 2006. Bulk of remittance flows came from the US, Saudi Arabia, United Kingdom, Italy, the United Arab Emirates, Canada, Japan, Singapore and Hong Kong.

From a stop-gap measure initiated by the government to curb unemployment in the 1970s, overseas employment has developed into a vital industry generating foreign exchange exceeding foreign investment inflows for the Philippines.