The various banks have neither tightened nor loosened their lending standards on loans to households or businesses in the first three months of the year.
According to the Bangko Sentral ng Pilipinas (BSP), while the modal approach to the inquiry on lending show the banks keeping to the standard, the diffusion method showed a net tightening.
According to the BSP, senior bank loan officers surveyed under the diffusion index (DI) approach cited the deteriorating profitability and liquidity of bank portfolios, deteriorating borrower profiles, the uncertain economic outlook and their collective lower tolerance for risk as basis for the tightening of loan thresholds.
On looking ahead to the next quarter, the DI approach show the banks anticipating a generally unchanged outlook on the lending standards on the basis of their stable outlook on the economy, broadly steady tolerance for loan risks and stable borrower profiles.
On lending to households, for instance, 51.5 percent of the banks kept their lending standard steady in 1Q. But under the DI method, the banks eased their lending levers for the period citing higher profitability of the banks’ loans, sanguine views on the economy, increased tolerance for loan risks and improved borrower profiles during the period.
The easing of loan thresholds was most noticeable in credit card and auto loans, the BSP said.
For the next quarter, lending standards were seen steady for consumer loans and a net easing was indicated by the DI approach as banks remain profitable and had appetite for loan risks.
A little over 58 percent of banks in 1Q reported unchanged credit standards in their housing loans although the DI approach indicated a net tightening.
On bank loan to businesses, the DI approach indicated a lower net increase from across all business classifications on the back of increased customer inventory and accounts receivable financing along with improvement in customer economic prospects, the BSP said.
On looking a quarter ahead, the bank officers in the survey anticipate steady loan demand although under the DI approach the banks expect a net increase due to higher financing requirements and improved economic outlook.
Demand for commercial real estate loans were unchanged in 1Q on both modal and DI methods.
Loan demand from households in 1Q were broadly unchanged on 60.6 percent of their number based on the modal approach.
DI-based results showed a slower increase in overall household loan demand across all consumer loan categories during Q1 2023 compared to Q4 2022. Respondents attributed the general rise in consumer loan demand to higher household consumption and housing investment along with banks’ more attractive financing terms, the BSP said.
Looking ahead to the second quarter, the bank officers anticipate a generally unchanged loan demand from households although in the DI approach the banks anticipate a net increase in consumer loan demand as household spending rise, the BSP said.
