The outcome of the Q2 2024 Senior Bank Loan Officers’ Survey (SLOS) show most banks keeping their credit standards unchanged for loans to businesses and consumers based on the modal approach. But the diffusion index (DI) method indicated a net tightening of credit standards for business loans and unchanged lending standards for household loans.
Results for Q2 2024 revealed that most survey participants (87.0 percent) kept credit standards for businesses based on the modal approach. The share of banks that reported unchanged credit standards in Q2 2024 was slightly higher than in Q1 2024 (86.3 percent).
Meanwhile, the DI approach showed a sustained net tightening of credit standards in Q2 2024 from the previous quarter due to the deterioration of borrowers’ profiles and profitability of banks’ portfolios.
Over the next quarter, the modal approach showed participant banks’ expectations of generally unchanged lending standards for businesses (85.2 percent). However, DI results showed banks’ anticipation of a net tightening in credit standards given the deterioration in borrowers’ profiles and in the profitability and liquidity of banks’ portfolios.
Modal results showed that a higher proportion of banks have maintained their credit standards for household loans in Q2 2024 (84.2 percent) compared to Q1 2024 (77.1 percent).
The DI method also reflected unchanged credit standards in Q2 2024, similar to the previous quarter, due to stable profiles of borrowers and banks’ unchanged tolerance for risk.
For the following quarter, the modal-based approach indicated a majority of respondent banks (81.6 percent) expecting unchanged household loan standards.
Meanwhile, the DI method revealed banks’ expectations of a net easing of lending standards due to banks’ higher risk tolerance and improvement in the profitability of banks’ loan portfolios as well as a less uncertain economic outlook.
Modal results showed a lower proportion of banks indicating unchanged household loan demand in Q2 2024 (57.9 percent) compared to Q1 2024 (68.6 percent).
Meanwhile, the DI approach showed a higher net increase in household loan demand during the quarter compared to the previous quarter, driven by banks’ more attractive financing terms as well as higher household consumption and housing investment.[5]
For the next quarter, modal results indicated that most respondent banks (60.5 percent) anticipate steady demand for loans to households. On one hand, DI results showed an expected net increase in household loan demand driven by rising household consumption and banks’ more attractive lending terms.
