PH banks seen keeping lending standards steady in Q4
Philippine banks are expected to keep their lending standards largely unchanged in the final quarter of 2025, even as demand for credit held firm amid lower interest rates.
Any future adjustments, however, are more likely to reflect tighter rather than looser credit rules, as lenders may be looking to guard against potential risks, according to a Bangko Sentral ng Pilipinas (BSP) survey of 58 banks.
The BSP poll found that 86 percent of banks expect credit standards for business loans to remain steady in the fourth quarter, up from 78.9 percent in the previous period.
Similarly, 87.5 percent of respondents anticipate no change in lending rules for households, compared with 77.5 percent in the third quarter.
Lending standards refer to the criteria banks use in extending loans—such as interest rates, loan size, collateral requirements and repayment terms.
Among the banks expecting to make adjustments, a net 7 percent foresee tighter standards for business loans, while a net 7.5 percent expect stricter rules for household borrowing.
The BSP explained that such results suggest that any shifts ahead are more likely to point toward tightening rather than easing credit conditions.
Even with lending standards holding steady, banks are seeing signs that borrowers remain active. Lower interest rates amid the BSP’s ongoing easing cycle may have helped sustain loan demand, particularly among retail borrowers.
For the fourth quarter—when the so-called “ber” months typically boost household spending—65 percent of banks expect consumer loan demand to remain unchanged, albeit down from 75 percent in the preceding quarter.
About 10 percent anticipate a decline, up from 7.5 percent, while 25 percent expect an increase, compared with 17.5 percent in the third quarter.
On business loans, 73.7 percent of banks expect demand to stay steady, slightly down from 75.4 percent in the previous quarter. Meanwhile, 1.8 percent of banks anticipate a decline, compared with 5.3 percent in the third quarter, while about 24.6 percent expect corporate loan demand to rise, up from 19.3 percent previously.
The BSP last month cut the benchmark rate that banks use as a guide when pricing loans by another quarter point to 4.75 percent, with Governor Eli Remolona Jr. hinting at more easing actions in the next policy meetings.
As it is, outstanding loans from big banks, excluding their short-term placements with the central bank, grew by 11.2 percent from a year ago to P13.62 trillion in August, latest data from the BSP showed.
Business loans, which accounted for 84.6 percent of large banks’ total loan book, expanded by 9.9 percent to P11.51 trillion.
On the consumer side, loans remained robust after growing by 23.9 percent in August, a tad faster than the preceding month’s 23.6 percent. This was driven by credit cards, motor vehicle loans and salary-based borrowings.
That said, analysts believed that banks may be facing twin pressures: protecting margins in a low-rate environment while managing credit risks.
