Banks maintain overall credit standards
A private sector economist on Saturday said that several banks maintained their overall credit standards for lending to enterprises and households due to the reopening of the local economy.
This is after the Fourth Quarter 2022 Senior Bank Loan Officers’ Survey conducted by the Bangko Sentral ng Pilipinas noted a “steady” credit standard for consumer loans.
“The reopening of the economy towards greater normalcy helped... improve the ability of borrowers to pay bank loans,” Rizal Commercial Banking Corp. chief economist Michael Ricafort told Daily Tribune in a Viber message.
BSP, for its part, said that credit standards for households remained steady at 71.4 percent due to a steady economic outlook, maintained risk tolerance, unchanged borrowers’ profiles, and profitability of banks’ asset portfolios.
Lending standards for business loans ‘tightened’
While 80.9 percent of the surveyed bank have broadly unchanged lending standards for business loans, BSP noted a net tightening of overall credit standards across all borrower firm sizes.
BSP attributed the overall tightening of credit standards for business loans due to the deterioration of borrowers’ profiles and banks’ portfolios, reduced risk tolerance, and a more uncertain economic outlook.
“Specific lending standards which reflected the net tightening of overall credit standards include the increased use of interest rate floors, tighter collateral requirements, and loan covenants, and reduced size of credit lines,” the Central Bank said.
Loan demand from business, households ‘steady’
Senior bank loan officers also mentioned in the survey that the loan demand from businesses (68.1 percent) and households (62.9 percent) remained unchanged during the fourth quarter of 2022.
However, BSP noted a net increase in overall loan demand across all firm classifications and categories of household loans.