MANILA -Lending standards for businesses are expected to be steady throughout this second quarter of 2023 and at the same time ease for households largely as banks see improved profitability and better appetite for risk.
The BSP’s latest quarterly Senior Bank Loan Officers’ Survey (SLOS) showed that this was the scenario based on a “diffusion index” (DI) approach on the data collected from 47 universal and commercial banks as well as thrift banks. Data from respondents came in between March 2 and April 12.
In the DI approach, a positive DI for credit standards indicates that the proportion of respondent banks that have tightened their credit standards exceeds those that eased, representing a net tightening.
Meanwhile, a negative DI for credit standards indicates that more respondent banks have eased their credit standards compared to those that tightened, representing a net easing.
Findings show that banks expect generally steady loan standards for business due to a stable economic outlook, broadly steady risk tolerance, and stable profile of borrowers.
The BSP observed that increasing financing requirements along with an improved economic outlook are driving overall demand for loans from businesses.
For households or consumer borrowers, a more accommodative attitude of banks is expected, largely driven by improvements in the profitability of banks’ portfolios as well as higher tolerance for risk.
Most respondent banks anticipate a net increase in overall consumer loan demand, mainly due to expectations of a rise in household spending. INQ