Results of the Q1 2024 Senior Bank Loan Officers’ Survey (SLOS) indicated that majority of the participating banks maintained their credit standards for loans to businesses and consumers as shown by the modal approach.
Meanwhile, the diffusion index (DI) method reflected a net tightening of lending standards for loans to businesses and an unchanged credit standards for loans to households.
For the next quarter, the modal approach showed participant banks’ anticipation of steady lending standards for enterprises.
Meanwhile, the DI method pointed to expectations of tightening loan standards given the deterioration in the profitability and liquidity of banks’ portfolios and borrowers’ profiles.
The SLOS results showed a higher number of respondents maintained overall credit standards for commercial real estate loans (CRELs).
The DI results indicated net tightening credit standards for CRELs largely due to banks’ reduced tolerance for risk, and a deterioration in borrowers’ profiles and profitability of banks’ portfolios.
Over the following quarter, a larger percentage of bank participants anticipate to retain their lending standards for CRELs based on the modal approach, while the DI-based method pointed to expectations of net tightening loan standards.
In Q1 2024, both the modal and DI methods revealed that surveyed banks maintained lending standards to household loans due to banks’ unchanged risk tolerance, steady profitability of banks’ asset portfolios, as well as stable economic outlook and profile of borrowers.
In the next quarter, modal results showed a higher number of bank respondents anticipating maintained loan standards for households. Meanwhile, the DI approach indicated a net tightening of credit standards largely due to banks’ expectations of a deterioration in the profitability of their portfolios and on borrowers’ profiles as well as banks’ reduced tolerance for risk.
Results of the modal approach for Q1 2024 indicated that most respondents maintained credit standards for housing loans. Similarly, the DI method indicated unchanged housing loans standards due to banks’ steady risk tolerance and stable economic outlook. Over the following quarter, respondent banks continue to anticipate unchanged lending standards for housing loans in terms of both modal and DI methods.
A majority of the surveyed banks pointed to a steady overall demand for business loans based on the modal method.
Meanwhile, the DI approach showed a net increase in loan demand from across all firm classifications driven by banks’ more attractive financing terms, bank customers’ lack of alternative sources of funds, and improvement in clients’ economic expectations, among others.
Over the following quarter, most of the participating banks anticipate broadly steady business loan demand.
The DI method indicated that participating banks expect a net increase in credit demand from businesses in Q2 2024 as firms finance their accounts receivable and operational requirements, such as increasing inventory levels to meet expected demand amid a more optimistic economic outlook.
Based on the modal approach, loan demand for CRELs was generally unchanged and is also expected to remain steady in Q2 2024.
However, the DI-based results showed a net increase in CREL demand for Q1 2024 and in the succeeding quarter which is associated with higher customer inventory and accounts receivable financing needs, improvement in customers’ economic outlook, among other factors.
A steady household loan demand was reflected by most surveyed banks. On the other hand, the DI method showed a net increase in demand from all key household loan categories driven by increasing household consumption and banks’ more attractive financing terms.
For Q2 2024, modal results indicated that most respondent banks expect basically unchanged credit demand from households. Meanwhile, the DI method showed an anticipated net increase in consumer loan demand due mainly to higher household consumption and banks’ favorable financing terms.
A higher proportion of survey participants noted unchanged loan demand for housing. The DI approach reflected a net increase in housing loan demand for the current quarter and the next quarter due mainly to banks’ attractive financing terms and higher household investment for housing.
