Credit standards for companies still the same – BSP survey

MANILA, Philippines - Local banks’ credit standards for households and enterprises were kept steady during the fourth quarter of last year, according to a Bangko Sentral ng Pilipinas survey.

In its Senior Bank Loan Officers’ Survey, the central bank said 87 percent of the surveyed banks indicated that credit standards for loans to enterprises were mostly unchanged during the fourth quarter.

The survey is intended to understand banks’ lending behavior, which is an important indicator of the strength of credit activity.

“The unchanged overall credit standards was attributed by banks to their steady outlook on the domestic economy as well as specific industries, including manufacturing and real estate, unchanged tolerance for risk, and unchanged view on profile of borrowers,” the BSP said.

“In particular, banks’ responses indicated unchanged collateral requirements and loan covenants on the whole,” the central bank continued.

At the same time, most of the respondent banks still foresee credit standards for loans to companies to remain unchanged in the first quarter of this year, the BSP survey showed.

“A more favorable economic outlook along with expectations of more aggressive competition from banks and non-bank lenders were cited by respondent banks as key reasons behind the expected net easing of credit standards,” the central bank said.

Banks’ credit standards for households were also unchanged in the fourth quarter as indicated by 85.7 percent of the respondents.

“Over the next quarter, credit standards for households are expected to hold steady, on the whole,” the BSP said.

“Expectations of unchanged tolerance for risk and steady economic outlook were among the factors cited for said result,” the BSP added.

The annual survey is conducted by the central bank to assess credit standards, demand conditions for loans, and potential risks in the asset markets.