SMEs’ fund access improved in Q3

Small businesses’ access to finance was easier in the third quarter of the year, with banks confident that the country’s strong economic growth would translate into more profitable enterprises.

The results of the central bank’s quarterly senior loan officers survey showed that lenders were friendlier to small and medium enterprises, reflecting a higher tolerance for risk for lenders.

Big businesses as well as households, meanwhile, got the cold shoulder.

At the same time, banks also expected they would ease credit standards further in the fourth quarter for all types of businesses, the survey showed.

“A more variable outlook on the domestic economy, expected improvements in the profitability and liquidity of banks’ asset portfolios, (and) increased tolerance for risk” were among the reasons cited by local banks.

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The BSP conducts the quarterly survey to enhance its “understanding of banks’ lending behavior,” which the regulator said was an important indicator of the strength of credit activity in the country.”

Of the respondents in the survey, 9.1 percent said they “eased somewhat” their credit standards for small businesses.

The rest said credit standards would stay the same.

This compares to the 7.7 percent of banks that said credit standards for large middle-market firms would be eased.

The same number of banks said standards would be tightened for the same type of firm.

For big corporations, 10.3 percent of banks said they “tightened somewhat” their credit standards, while 3.4 percent said they “eased somewhat.”

The rest said credit standards were the same.

Collateral requirements, credit line sizes, and the length of loan maturities, among others, are indications of a bank’s credit standards.

In lending to households, the picture was the opposite.

For the fourth-consecutive quarter, lending to households tightened, survey results showed.

Of the banks surveyed, 4.8 percent said their credit standards for households “tightened considerably” and 9.5 percent said standards “tightened somewhat,” while the rest said their standards stayed the same.

This tightening was seen across all types of consumer loans, namely credit card, housing, and personal and salary loans.

Consumer loans in the third quarter were characterized by higher interest rates and reduced credit sizes, the BSP survey showed.