Results of the Third Quarter Senior Bank Loan Officers’ Survey (SLOS) showed that most respondent banks, 80.4 percent, maintained their credit standards for loans to businesses and consumers based on the modal approach.
This is a decrease from second quarter, where 87.0 percent of banks reported unchanged credit standards.
Meanwhile, the DI approach showed a continued net tightening of credit standards in Q3 2024, attributed to the deterioration in borrowers’ profiles and the profitability of banks’ portfolios.
Over the next quarter, the modal approach suggests that 90.2 percent of respondent banks anticipate maintaining their loan standards for businesses. However, DI results showed a net tightening of credit standards for Q4 2024.
This expectation is due to the deterioration in borrowers’ profiles and in the profitability and liquidity of banks’ portfolios, perception of stricter financial system regulations, and reduced tolerance for risk.
Modal results indicated that a large proportion of banks have maintained their lending standards for household loans in Q3 2024 (80.0 percent), albeit this is a slightly lower than in Q2 2024 (84.2 percent).
On one hand, the DI method reflected a net tightening of overall credit standards in Q3 2024, following unchanged loan standards in the previous quarter.
This net tightening is mainly attributed to the deterioration in borrowers’ profiles and in the profitability of banks’ portfolios, as well as banks’ lower risk tolerance.
For the fourth quarter, the modal results showed that most of respondent banks (82.9 percent) are expecting unchanged household loan standards.
Similarly, the DI method indicated banks’ outlook of maintained lending standards amid expectations of unchanged tolerance for risk and stable profiles of borrowers.
The majority of surveyed banks (72.5 percent) indicated unchanged overall demand for business loans in Q3 2024 as revealed by the modal results.
The share of banks that reported steady demand for business loans during the quarter was marginally higher than in Q2 2024 (72.2 percent).
Meanwhile, the DI method showed a lower net increase in loan demand from businesses in Q3 2024 compared to the previous quarter.
Nonetheless, the net increase in business loan demand during the quarter is due to customers’ higher inventory and accounts receivable financing needs, as well as more optimistic economic outlook.
In the following quarter, most of the surveyed banks (56.9 percent) expect broadly steady loan demand from businesses.
Meanwhile, DI results showed that respondent banks anticipate a net increase in credit demand from enterprises in Q4 2024 driven mainly by businesses’ higher inventory and accounts receivable financing needs.
Results based on the modal approach showed a slight decrease in percentage of banks indicating unchanged household loan demand in Q2 2024 (57.1 percent) compared to Q2 2024 (57.9 percent).
Meanwhile, the DI approach showed a higher net increase in household loan demand in Q3 2024 compared to the previous quarter.
BSP said this is driven mainly by banks offering more attractive financing terms and higher household consumption.
Over the next quarter, modal results indicated that most respondent banks (60.0 percent) anticipate steady demand for household credit.
However, DI results showed banks’ expectations of a net increase in household loan demand due to higher household consumption and banks’ more favorable lending terms.
