PH banks maintained loan standards in Q1

An estimated 3 in 4 banks maintained credit standards for housing loans.

Banks in the Philippines are likely to maintain or tighten their loan standards to businesses and consumers, according to a survey by the central bank.

Over 8 in 10 (86.3%) of banks and lending institutions surveyed retained loan standards for firms, based on the modal approach, according to a report by the Bangko Sentral ng Pilipinas (BSP). 

In contrast, the DI approach indicated a net tightening of lending standards across borrower firm sizes. BSP cited the deterioration of borrowers’ profiles, profitability of bank portfolios, and banks’ lower risk tolerance. 

However, the tightening of standards was at a lower rate than in Q4 2023, based on BSP data.

Banks maintained lending standards to household loans due to banks’ unchanged risk tolerance, steady profitability of banks’ asset portfolios, as well as stable economic outlook and profile of borrowers. 

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For real estate loans, 3 in 4 (75%) of respondents reportedly indicated that they maintained credit standards for housing loans in Q1. Respondent banks also anticipate unchanged lending standards for housing loans for Q2.

Over 8 in 10 (88%) of banks, meanwhile, indicated that they maintained overall credit standards for commercial real estate loans (CRELs), according to a modal approach, and a net tightening of credit standards based on the DI approach.

For Q2, a larger percentage of bank participants anticipate retaining their lending standards for CRELs if not tightening loan standards.