Results of the Q4 2020 Senior Bank Loan Officers’ Survey (SLOS) showed that majority of respondent banks maintained their overall credit standards for loans to both enterprises and households during the quarter based on the modal approach.
The Bangko Sentral ng Pilipinas said the latest survey results reflected a slight improvement compared to the Q3 2020 survey where almost half of the respondent banks stated that they tightened credit standards amid the continued economic and business disruptions caused by the ongoing COVID-19 pandemic.
More than half of the respondent banks indicated unchanged overall credit standards for loans to enterprises during the quarter using the modal approach.
Most of the respondent banks, meanwhile, maintained their overall credit standards for loans extended to households during the quarter.
Over the next quarter, majority of respondent banks expect to retain their overall credit standards based on the modal approach.
Latest survey results also indicated that most of the respondent banks observed an unchanged overall loan demand from enterprises during the last quarter.
On the other hand, banks’ responses to household loan demand varied widely.
The overall net increase in loan demand from businesses was attributed by respondent banks to higher customers’ requirements for inventory financing as businesses reopen, as well as to higher accounts receivable financing needs amidst a decline in corporate clients’ internally-generated funds. Meanwhile, respondent banks cited lower household consumption and housing investment as the key factors that contributed to the observed decline in household loan demand.
Over the next quarter, most of the respondent banks anticipate broadly unchanged overall loan demand from both enterprises and households indicating an increase in confidence of firms and consumers amid the gradual rise of economic activities.
The Q4 2020 survey results also showed that most of the respondent banks reported broadly unchanged overall credit standards for commercial real estate loans (CRELs).
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 analysis of the results of the SLOS focuses on the quarter-on-quarter changes in the perception of respondent banks.
During the Q4 2020 survey round, survey questions were sent to a total of 64 banks, 45 of whom sent in their responses, representing a response rate of 70.3 percent.
It is important to note that the Q4 2020 survey was conducted within the government’s extension of general community quarantine (GCQ) measures in Metro Manila and various areas outside the National Capital Region (NCR).