MANILA, Philippines — Banks’ credit standards seemed to have eased especially for household loans in the last three months, based on the latest survey conducted by the Bangko Sentral ng Pilipinas (BSP).
In the BSP’s second quarter Senior Bank Loan Officers’ Survey, it indicated overall unchanged credit standards for loans given to businesses or enterprises but lending standards to household loans or consumer loans have eased slightly.
BSP Department of Economic Research Deputy Director Dennis Lapid noted that any slight easing is viewed as a positive. Household loans are housing loans, credit card loans, automotive loans and personal and/or salary loans.
The latest survey is a reversal of the previous one since during the first quarter, the BSP said that credit standards for business loans have been tightened slightly while household loans were unchanged and this trend was consistent for the past surveys.
“Banks have remained bullish on consumer loans while prudent on business loans,” Lapid said during Friday’s press briefing. “The demand (for loans) continues to be strong for households and enterprises based on the survey,” he added.
Credit standards for commercial real estate loans also appeared to have remained unchanged or steady. The BSP’s “special questions” on commercial real estate loans in the latest survey indicated unchanged overall credit standards for the fourth consecutive quarter.
“This can be attributed to their stable outlook on the economy and on certain industries or firms, unchanged tolerance for risk, and perceived stable asset portfolio of banks,” said the BSP report. “Similarly, respondent banks’ loan-to-value ratios were steady during the quarter.”
In terms of specific credit standards, the general consensus is that this too is unchanged specifically regarding standards on collateral requirements and credit line sizes for commercial real estate loans.
“Banks’ showed narrower loan margins, easing standards on loan covenants, longer loan maturities, and less use of interest rate floors for this type of loan,” said the BSP. Banks also reported increased demand for commercial real estate loans in the second quarter given clients’ increased working capital and accounts receivable financing needs and banks’ more attractive financing terms. “Moving forward, respondent banks’ expect a slight easing of credit standards for commercial real estate loans.”
As for lending to enterprises, the report said the credit standards have also remained unchanged for the most part but the results were mixed, which meant some banks tightened their standards while some opted for some easing to get more borrowers.
“This reflected banks’ generally steady outlook on the economy and on certain industries, their unchanged tolerance for risk, and perceived stable asset portfolio of banks,” said the BSP report.
In terms of borrower firm size, the results of the survey showed unchanged credit standards for top corporations and micro enterprises, consistent with the overall perception.
Collateral requirements except for loans to large middle-market enterprises, and loan covenants (not including loans to top corporations) were also the same during the period. There was also less use of interest rate floors which is the minimum rates for loans, and increased credit line sizes across all firm sizes. Loans with longer maturities were also provided to enterprises, except for micro enterprises, said the BSP.source: mb.com.ph