The various banks are maintaining a cautious stance toward lending, though signs of easing in their risk aversion emerged in the latest 2Q 2025 Senior Bank Loan Officers’ Survey (SLOS) released by the Bangko Sentral ng Pilipinas (BSP).
According to the BSP, the net tightening of lending standards—a measure of banks’ credit conservatism—eased notably in the third quarter outlook. For loans to businesses, net tightening dropped to 5.4 percent, down from 14.3 percent in the second quarter. For household loans, it moderated to 5 percent, compared to 12.5 percent previously.
While the lending community remains cautious, the slower pace of tightening suggests a less restrictive credit environment, which could be supportive of business expansion and consumer spending if sustained.
The BSP attributed this shift to most banks preferring to keep lending conditions stable: 91.1 percent of banks said they would maintain current credit standards for businesses in 3Q, up from 82.1 percent in 2Q. For households, 85 percent will do the same, slightly higher than the 82.5 percent recorded last quarter. Credit standards cover requirements such as borrower income, collateral, loan sizes, and interest rates.
The shift is macroeconomically significant, as credit conditions heavily influence the pace of economic activity. Softer tightening can encourage capital formation, hiring, and consumer confidence, even as banks remain vigilant.
In terms of demand, banks observed a relatively stable appetite for credit in the second quarter, with 75 percent reporting no change in business loan demand and 77.5 percent seeing steady household demand. Looking ahead, more banks are optimistic: 26.8 percent expect increased demand from businesses, and 27.5 percent anticipate stronger household borrowing in 3Q.
The BSP uses the survey to monitor trends in bank lending behavior, which serves as a forward-looking gauge of potential shifts in credit supply and economic momentum.
