Bank lending standards unchanged in Q4 – BSP survey

MANILA, Philippines - Banks eased the overall credit standards for loans to both enterprises and households amid higher loan demand in the fourth quarter, a survey conducted by the Bangko Sentral ng Pilipinas (BSP) showed.

Ruby Anne Lemence, bank officer at the BSP’s Department of Economic Research, said the central bank’s latest Senior Loan Officers Survey showed a slight easing of overall credit standards for the last quarter of 2015 using the diffusion index approach.

Lemence said out respondent banks reporting more accommodative credit standards outnumbered those reporting tighter credit standards for the fourth quarter.

In the third quarter, she explained the survey showed that credit standards for corporate lending were unchanged,while standards for household loans eased slightly using the diffusion index approach.

Results of the latest survey using the diffusion index approach showed 14 percent of the respondents noted easing of credit standards in the fourth quarter, compared to eight percent in the third quarter, while the number of banks that tightened their credit standards increased slightly to five percent from four percent.

“Based on the diffusion index approach, there was a slight net easing of overall credit standards for enterprises and households,” Lemence said.

She said the survey showed unchanged credit standards for commercial real estate loans and a slight easing for housing loans.

Likewise, she added there was a net increase in overall demand from both enterprises and households in the fourth quarter of last year.

“The net increase in loan demand of firms was attributed by banks to increased accounts receivable financing needs of borrower firms and clients’ improved economic outlook,” she said.

According to Lamence, the net increase in overall demand for household loans reflected higher household consumption and banks’ more attractive financing terms.

Using the modal approach based on the highest share of responses, the credit standards for loans to both enterprises and households have remained unchanged in the fourth quarter.

This was the 27th consecutive quarter since the second quarter of 2009 that majority of banks reported broadly unchanged credit standards.