MANILA – Lending standards of banks stayed put for the 36th consecutive quarter in the January-March period, highlighting the financial institutions’ steady outlook on the domestic economy.
Banks attributed the steady credit standards for business loans primarily on the economy’s stable outlook overall, results of the Bangko Sentral ng Pilipinas’ First Quarter 2018 Senior Loan Officers’ Survey showed.
Another factor is the “banks’ unchanging tolerance for risks and stable profile of borrowers,” the report said.
These results were based on the modal approach, which analyzes results by looking at options with the highest share of responses.
“Net tightening of standards in terms of stricter loan covenants and increased use of interest rate floors [were] also observed,” said the report.
Banks indicated “unchanged maturities of loans to enterprises, reflecting the unchanged overall credit standards for corporate loans,” it added.
For household loans, the banks also had steady standards based on the modal approach but net tightening based on DI mode.
“In particular, credit standards for household loans and personal/salary loans tightened due mainly to respondent banks’ reduced tolerance for risk,” the report added.
Stricter loan covenants for housing loans and shorter loan maturities for personal or salary loans were also noted for the quarter.
In terms of loan demand, the bank officers continue to see robust loan demand for both the business and household segment.
“The net increase in loan demand for firms was attributed by banks to their customers’ higher working capital requirements and banks’ attractive financing terms,” the report said.
“Meanwhile, respondent banks attributed the net increase in loan demand from households to low interest rates, more attractive financing terms offered by banks, and increased household consumption,” it added. (PNA)
