Lending standards for corporate and household borrowers remained unchanged in the first quarter of 2024, according to the Bangko Sentral ng Pilipinas (BSP).
The results of the BSP’s Q1 2024 Senior Bank Loan Officers’ Survey (SLOS) showed that majority of the participating banks, or 86.3 percent, maintained their credit standards for loans to businesses and consumers as shown by the modal approach.
Meanwhile, the diffusion index (DI) method reflected a net tightening of lending standards for loans to businesses and unchanged credit standards for loans to households.
For the next quarter, the modal approach showed participant banks’ anticipation of steady lending standards for enterprises.
Meanwhile, the DI method pointed to expectations of tightening loan standards, given the deterioration in the profitability and liquidity of banks’ portfolios and borrowers’ profiles.
The survey also showed a higher number of respondents (88.9 percent) that maintained overall credit standards for commercial real estate loans (CRELs).
Meanwhile, the DI results indicated net tightening credit standards for CRELs largely due to banks’ reduced tolerance for risk and a deterioration in borrowers’ profiles and profitability of banks’ portfolios.
Over the following quarter, a larger percentage of bank participants anticipate to retain their lending standards for CRELs based on the modal approach, while the DI-based method pointed to expectations of net tightening loan standards.
Surveyed banks maintained lending standards to household loans due to banks’ unchanged risk tolerance, steady profitability of banks’ asset portfolios as well as stable economic outlook and profile of borrowers.
It said that in the next quarter, modal results showed a higher number of bank respondents anticipating maintained loan standards for households.
The BSP said that in terms of housing loans, most of the respondent banks (75 percent) maintained credit standards in the first quarter of 2024.
The DI method indicated unchanged housing loans standards due to banks’ steady risk tolerance and stable economic outlook. Over the following quarter, respondent banks continue to anticipate unchanged lending standards for housing loans in terms of both modal and DI methods.
The BSP also said that the majority of the surveyed banks (70.6 percent) pointed to a steady overall demand for business loans based on the modal method.
Meanwhile, the DI approach showed a net increase in loan demand from across all firm classifications driven by banks’ more attractive financing terms, bank customers’ lack of alternative sources of funds, and improvement in clients’ economic expectations, among others.