Results of the fourth quarter Senior Bank Loan Officers’ Survey (SLOS) showed that most of the respondent banks continued to maintain their overall credit standards for loans to both enterprises and households during the quarter based on the modal approach.
This is the 43rd consecutive quarter since Q2 2009 that the majority of respondent banks reported broadly unchanged credit standards.
The BSP has been conducting the SLOS since 2009 to gain a better understanding of banks’ lending behavior, which is an important indicator of the strength of credit activity in the country.
The survey also helps the BSP assess the robustness of credit demand, prevailing conditions in asset markets, and the overall strength of bank lending as a transmission channel of monetary policy.
The survey consists of questions on loan officers’ perceptions relating to the overall credit standards of their respective banks, as well as to factors affecting the supply of and demand for loans to both enterprises and households.
Most banks, or 84.8 percent of banks that responded to the question, indicated that they maintained their credit standards for loans to enterprises during the quarter using the modal approach.
Banks’ responses likewise pointed to a net tightening of credit standards across all borrower firm sizes, namely, top corporations, large middle-market enterprises, small and medium enterprises (SMEs) and micro enterprises based.
Over the next quarter, results based on the modal approach showed that most of the respondent banks expect credit standards to remain unchanged.
The results of the survey likewise showed that most respondent banks (89.7 percent) kept their overall credit standards unchanged for loans extended to households during the quarter based on the modal approach. However, results based on the DI approach reflected net tightening of credit standards for household loans.
The overall net tightening of credit standards for household loans was attributed by respondent banks largely to their more uncertain economic outlook, perceptions of stricter financial system regulations, and reduced tolerance for risk, along with a deterioration in borrowers’ profile.
In terms of respondent banks’ outlook for the next quarter, results based on both the modal and DI approaches indicated expectations of unchanged overall credit standards for household loans largely on account of respondent banks’ unchanged tolerance for risk and steady economic outlook, as well as expectations of unchanged profile of banks’ borrowers.
Responses to the survey question on loan demand indicated that the majority of respondent banks continued to see stable overall demand for loans from both enterprises and households during the quarter.