PHILIPPINE banks kept their lending criteria little changed in the second quarter, although some lenders said they grew stricter in granting business loans due to more stringent regulations, according to the results of a central bank survey.
Loan officers from universal and commercial banks said they maintained their credit standards for both individuals and firms, the Bangko Sentral ng Pilipinas Senior Loan Officers’ Survey found.
This marks the 37th consecutive quarter that the majority of respondent banks reported broadly unchanged credit standards since the second quarter of 2009.
The central bank uses the quarterly survey to understand the lending decisions made by banks and monitor bank credit. A total of 35 out of 43 universal and commercial banks partcipated in the poll.
Most banks, or 82.1% of those surveyed, said they used the same standards for granting loans to businesses, lower than the 92.6% that said so during the first quarter of the year.
Under the diffusion index (DI) approach, more banks actually tightened their standards in assessing loans for corporate borrowers against those who said that they relaxed rules. The central bank said this was due to the lenders’ perception of stricter financial system regulations as well as deterioration in the credit profile of their corporate clients.
This was reflected in the use of more stringent collateral requirements, shorter loan maturities and increased use of interest rate floors.
A positive DI for credit standards means that more banks have tightened lending rules compared with those that eased. A negative DI indicates the opposite.
Some 94.1% of banks meanwhile reported that they used the same standards for deciding on personal loans, up from 78.9% in the previous quarter.
However, using the DI approach, banks said they continued to grow stricter in lending to individuals. In particular, big banks implemented tighter rules on credit cards and salary loans due to reduced tolerance for risk.
For the third quarter, some lenders are looking into a slight net easing of lending rules as they anticipate an improvement in the profitability and liquidity of their portfolios among others, according to the report’s DI-based findings.
Overall, most banks continued to see stable loan demand from both households and businesses. There was even a net increase in loan demand across all types and sizes of household loans, except for salary and personal financing, using the DI approach.
About 90.5% of banks also said that they kept borrowing requirements steady for commercial real estate loans during the said quarter, higher than the 78.9% booked in the January-March period of this year.
However, the DI approach showed some lenders actually grew stricter for the 10th straight quarter.
This reflected the lenders’ wider loan margins, reduced credit line sizes, stricter collateral requirements and covenants as well as increased use of interest rate floors. — Karl Angelo N. Vidal