Results of the Third Quarter 2019 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 42nd consecutive quarter that the majority of respondent banks reported broadly unchanged credit standards.
Most banks indicated that they maintained their credit standards for loans to enterprises during the quarter using the modal approach.
Over the next quarter, results based on the modal approach showed that most of the respondent banks expect credit standards to remain unchanged.
Respondent banks attributed their anticipation of unchanged overall credit standards to their stable economic outlook and expectations of no changes in terms of tolerance for risk, among other factors.
The results of the survey likewise indicated that most respondent banks kept their overall credit standards unchanged for loans extended to households during the quarter based on the modal approach.
The overall unchanged credit standards for household loans was attributed by respondent banks largely to their steady tolerance for risk and unchanged profile of banks’ borrowers.
In terms of respondent banks’ outlook for the next quarter, results based on the modal approach showed that the majority of the respondent banks anticipate maintaining their overall credit standards.
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.
The overall net increase in loan demand from firms was attributed by banks largely to their customers’ higher working capital requirements.
Over the next quarter, most of respondent banks expect steady overall loan demand from firms and households.
For business loans, the expected net increase in demand was associated largely with corporate clients’ higher working capital requirements. Meanwhile, the anticipated net increase in loan demand from households was attributed to expectations of higher household consumption, lower interest rates, and more attractive financing terms offered by banks.
Most of the respondent banks reported that overall credit standards for commercial real estate loans were maintained in Q3 2019.
Demand for commercial real estate loans was also unchanged in Q3 2019 based on the modal approach.
Over the next quarter, although most of the respondent banks anticipated generally steady loan demand, more banks expected demand for commercial real estate loans to increase compared to those expecting the opposite.
For housing loans extended to households, most of the respondent banks reported maintaining their credit standards.
Over the next quarter, results based on the modal approach showed that respondent banks expect overall credit standards for housing loans to remain unchanged.
Most banks reported unchanged demand for housing loans in Q3 2019 based on the modal approach.
Banks’ responses indicated expectations of a net increase in demand for housing loans over the next quarter supported largely by higher household consumption, lower interest rates, and more attractive financing terms offered by banks.
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.
The analysis of the results of the SLOS focuses on the quarter-on-quarter changes in the perception of respondent banks. Starting with the Q3 2018 survey round, the BSP expanded the coverage of the survey to include new foreign commercial banks and large thrift banks. Prior to Q3 2018, the survey covered only universal and commercial banks. In the latest Q3 2019 survey round, survey questions were sent to a total of 66 banks (42 universal and commercial banks and 24 thrift banks), 50 of whom sent in their responses, representing a response rate of 75.8 percent.