PH banks now more willing to lend to consumers

Banks remained cautious when lending to businesses in the second quarter amid a “deterioration” in the profitability of some companies, all while consumers are poised to see more relaxed lending rules on the back of their stable income.

Results of a quarterly survey of senior loan officers from 60 banks showed a “net tightening” of credit standards to businesses last quarter due to “deterioration of borrowers’ profiles and profitability of banks’ portfolios,” the Bangko Sentral ng Pilipinas (BSP) reported.

A net tightening means the proportion of banks that turned more conservative during the period exceeded those that relaxed their credit standards.

Demand for business loans up

The survey results for businesses were different for consumers, who dealt with unchanged credit standards set by banks in the second quarter due to “stable profiles of [household] borrowers and banks’ unchanged tolerance for risk.”

In turn, the BSP said lenders were expecting a “net easing” of loan standards for consumers in the next quarter, and an increase in household loan demand mainly due to robust consumption and “more attractive lending terms” being offered by banks.

The central bank survey consists of questions on loan officers’ perceptions relating to the overall credit standards of their respective banks, as well as to factors affecting the supply of and demand for loans to both enterprises and households.

Cautious stance

The BSP said 87 percent of banks polled maintained their tight lending standards to enterprises in the three months through June, a tad higher than the 86.3 percent that gave the same response back in the first quarter round of the survey.

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And banks would likely stay cautious when granting loans to businesses in the next quarter. Results showed 85.2 percent of senior loan officers polled said their respective banks expect “generally unchanged lending standards” for firms given the “deterioration in borrowers’ profiles and in the profitability and liquidity of banks’ portfolios.”

Notwithstanding, the BSP said 72.2 percent of respondent banks reported steady demand for business loans in the second quarter, up from 70.6 percent in the preceding three months.

For the third quarter, banks anticipate a “net rise” in credit demand from companies because of “higher inventory and accounts receivable financing needs.”