BW FILE PHOTO
MOST BANKS kept their lending criteria little changed in the second quarter, results of a central bank survey showed.
Lenders broadly maintained their credit standards for loans to both enterprises and households during the April-June period, according to the results of the Bangko Sentral ng Pilipinas’ (BSP) latest Senior Bank Loan Officers’ Survey.
This marks the 41st straight quarter that borrowing standards were kept “broadly unchanged.”
The central bank uses the quarterly survey to understand the lending decisions made by banks and monitor bank credit. The BSP said 45 of 66 banks — 42 universal and commercial banks and 24 thrift lenders — responded to the poll.
Most banks, or 82.1% of those surveyed, said they used the same standards for granting loans to businesses, higher than the 72.9% that said so in the first quarter of the year, based on the modal approach.
Under the diffusion index (DI) approach, more banks tightened their standards in assessing loans for corporate borrowers across all firm sizes, namely top corporations, large middle-market enterprises, small and medium firms and micro-enterprises.
A positive DI for credit standards means that more banks have tightened lending rules compared with those that eased. A negative DI indicates the opposite.
Meanwhile, 88% of the banks surveyed reported they used the same standards for deciding on personal loans in the second quarter, up from 73.3% in the previous period.
However, using the DI approach, banks said they were stricter in lending to individuals, particularly for auto and personal or salary loans.
The BSP attributed the overall net tightening for household credit to “stricter collateral requirements and loan covenants, shortened loan maturities and increased use of interest rate floors.”
Overall, most banks continued to see stable demand from both households and businesses, the survey results showed, a net increase in business and retail loan demand was recorded using the DI approach.
“The overall net increase in loan demand from firms was attributed by banks largely to their customers’ higher working capital requirements,” the BSP said. “Meanwhile, respondent banks attributed the overall net increase in household loan demand to higher household consumption, lower interest rates and banks’ more attractive financing terms.”
The central bank added that for the next quarter, majority of respondent banks anticipated maintaining their overall credit standards for business and household loans, based on the modal approach, while more respondent banks expect overall credit standard for business and household loans to tighten over the next three months, according to DI approach.
About 86.7% of banks also said that they kept borrowing requirements steady for commercial real estate loans during the said quarter, higher than the 82.6% booked in the January-March period of this year. DI-based results meanwhile suggested tighter credit standards for commercial real estate loans attributed largely to “favorable economic outlook and a perceived deterioration in the profile of borrowers.”.
“For housing loans extended to households, results based on the modal approach pointed to unchanged credit standards while DI-based results indicated a net tightening of credit standards for housing loans,” the BSP added. — Karl Angelo N. Vidal