Philippine banks are generally inclined to continue lending more to consumers and enterprises owing to their healthy level of risk tolerance to accommodate loan demand from the public, the Bangko Sentral ng Pilipinas says.
MANILA, Philippines—The Bangko Sentral ng Pilipinas said credit from banks that could spur increased consumption and investments will remain generally accessible.
According to the latest quarterly survey by the BSP on credit standards, local banks as a whole did not tighten their lending rules in the third quarter compared to the previous three months.
Banks likewise indicated a healthy level of risk tolerance to accommodate loan demand from the public.
The BSP said the fact that there was no tightening of credit standards proved that banks were generally inclined to continue lending more to consumers and enterprises.
The BSP based its conclusion on survey results that showed that the diffusion index for credit standards covering both corporate and individual borrowers stood at 0 in the third quarter.
Diffusion index is a measure of tightening or loosening of credit standards, which influence the ease or difficulty of securing bank loans.
It is computed as the difference between the percentage of respondent-banks that said they tightened their credit standards and those that said they loosened their lending rules.
“The latest diffusion index showed overall unchanged lending standards for loans to firms, with the number of banks that indicated a tightening of their credit standards equal to the number of banks that indicated an easing,” the BSP said in a report on the survey results.
“Survey results likewise pointed to unchanged overall credit standards for loans to households in the third quarter of 2012,” the central bank added.
Credit standards are composed of loan documentary requirements, maturities, interest rates, collateral requirements, and other factors affecting accessibility of bank loans.
The BSP said the healthy appetite of banks to continue lending to more to the public may be attributed to the generally positive outlook on the economy, which is seen to help augment incomes and ensure that borrowers are able to pay their debts.
“Results reflected the perceived stable asset portfolio of banks as well as banks’ generally steady outlook on the economy and on certain industries, unchanged financial system regulations, and banks’ unchanged tolerance for risk,” the BSP said.
The central bank reported Friday that outstanding loans from universal and commercial banks amounted to P3 trillion by the end of September, rising by 13.5 percent from the P2.64 trillion recorded as of the same period last year.
The BSP expressed confidence that the country’s banking sector, through its loans and other financial services, will help maintain a respectable growth for the economy.
In the first half, the Philippine economy grew by 6.1 percent from the same period last year, thus keeping the government’s official target of 5 to 6 percent for the full year within reach.