The standards for bank lending were broadly unchanged in the first quarter of 2023, results of the latest Senior Bank Loan Officers’ Survey conducted by the Bangko Sentral ng Pilipinas showed.
A larger percentage of bank respondents maintained their overall credit standards for business and household loans based on the modal approach. Meanwhile, the diffusion index method showed a net tightening of lending standards to firms and a net easing of lending standards for households.
Modal-based results showed that a higher number of respondent banks (73.3 percent) had unchanged credit standards for enterprises in the first quarter. The diffusion index approach showed a net tightening of overall credit standards across all borrower firm sizes with several reasons cited by the surveyed banks.
These are the deterioration in the profitability and liquidity of banks’ portfolios, less desirable borrowers’ profiles, uncertain economic outlook and a lower risk tolerance.
Both modal and diffusion index approaches indicated that banks anticipate generally steady loan standards for the next quarter because of stable economic outlook, broadly steady risk tolerance and stable profile of borrowers.