MANILA, Philippines – Banks in the Philippines are expecting demand for loans from businesses and households to increase in the current quarter amid easing COVID restrictions and increased economic activity, according to data. results of a survey conducted by Bangko Sentral ng Pilipinas (BSP).
Based on the Senior Bank Loan Officers (SLOS) survey for the first quarter, the BSP said that there is a net increase in overall demand for credit from all types of businesses, especially large ones. enterprises, large mid-market companies, small and medium-sized businesses. enterprises (SMEs) and micro-enterprises using the diffusion index (DI) approach.
The central bank said the survey indicated expectations for a net increase in overall business credit demand, which was largely attributed to improving economic prospects for customers, as well as higher inventories and financing needs of borrowers’ accounts receivable.
In addition, the BSP said the survey results also showed a net increase in overall demand for all categories of household loans, including home loans, credit card loans, car loans. and personal or salary loans.
“Similarly, the ID-based results also indicated expectations of a net increase in consumer demand for loans, driven by higher household consumption, more attractive funding conditions from banks, interest rates lower interest and an increase in investment in housing,” the BSP said.
The majority of banks surveyed reported an increase in overall credit demand for businesses and households from January to March this year.
“Bank respondents said the net increase in demand for business loans was attributed to improving business economic growth prospects as well as higher business financing needs for inventory and accounts receivable. . Similarly, the net increase in consumer credit has been associated with higher household consumption, more attractive bank finance companies and increased investment in housing,” he said.
The BSP said banks expect a sharp tightening of lending standards in the second quarter given increased uncertainty in the outlook for economic growth, reduced risk tolerance and deteriorating lending profile. borrower and the bank’s portfolio.
In terms of specific credit standards, the net tightening of general lending standards has manifested itself in tighter collateral requirements and loan covenants, reduction in the size of credit lines and increased use of rate floors. of interest.
However, the central bank said the survey results indicated a marked easing in overall lending standards for households in the current quarter due to improved borrower profile, less uncertain economic outlook and increased risk tolerance.
The general net easing of lending conditions to households has resulted in a relaxation of collateral requirements, longer loan maturities and a reduction in the use of interest rate floors.
Survey responses for the first quarter SLOS were collected between March 1 and April 7. The BSP has been conducting the SLOS since 2009 to better understand the lending behavior of banks, which is an important indicator of the strength of credit activity in the country. .
The latest BSP data showed bank lending accelerated further for the seventh consecutive month, rising 8.8% in February to 9.72 trillion pesos, from 8.94 trillion pesos in the same month last month. last year as lending continues to pick up steam. improved mobility and market demand due to easing of COVID restrictions.