Banks’ lending standards for businesses are expected to tighten in the third quarter of 2023, according to the latest quarterly Senior Bank Loan Officers’ Survey conducted by the Bangko Sentral ng Pilipinas (BSP). The survey included data collected from 48 universal and commercial banks as well as thrift banks between June 5 and July 12. The survey results indicated that banks anticipate a net tightening of overall loan standards for businesses due to weakening profitability and liquidity of loan portfolios, deterioration of borrowers’ profiles, and reduced tolerance for risk.
On the other hand, lending standards for households or consumer borrowers are expected to ease, as financial institutions see increased tolerance for risk in that segment. The survey showed that banks were anticipating a net easing in loan standards for households, mainly due to increased risk tolerance and improving profitability of banks’ portfolios in this market segment, as well as more desirable borrowers’ profiles.
The BSP also noted that respondent banks expect a net increase in overall credit demand from enterprises, driven by firms’ increasing inventory and accounts receivables financing requirements, as well as an improvement in customers’ economic outlook. Similarly, banks anticipate a net rise in overall demand for consumer loans, largely due to expectations of higher household consumption and investment in housing.
Overall, these survey results provide insights into the lending standards and credit demand expectations of banks in the Philippines for the coming months.
