Banks are expected to tighten their lending standards to corporate borrowers for the last quarter of the year amid concerns over the outlook for the economy in the ongoing pandemic as well as the ability of borrowers to repay their loans, according to the bank. central.
In a statement, the Bangko Sentral ng Pilipinas (BSP) said its latest survey of top bank loan officers conducted late in the previous quarter showed lenders expected to take a more conservative stance from October through December. .
“While the majority of banks surveyed generally anticipate unchanged overall credit standards for corporate lending, the results based on the Diffusion Index indicated sharper expectations of stricter standards given the following factors: an uncertain economic outlook , a deterioration in borrower profiles and the liquidity of the banks ‘portfolio and the decrease in banks’ tolerance for risk, ”the central bank said.
The opposite was true, however, when it came to lending to households which bankers said would likely see more relaxed standards this quarter.
“The results based on the diffusion index indicated that the banks surveyed were anticipating a further net easing of overall credit standards for household lending, influenced by expected improvements in borrower profiles and a positive economic outlook,” said the central bank.
The survey also helps the BSP assess the strength of credit demand, conditions in asset markets and the overall strength of bank lending as a transmission channel for monetary policy.
Stable loan application
In the last survey, questions were sent to 64 banks – 42 universal and commercial banks and 22 savings banks – of which 51 sent their responses, representing a response rate of 79.7%.
Data from the latest survey was collected between September 1 and October 4, or in the midst of the government’s reimposition of quarantine measures to combat the spread of COVID-19 infection rates.
In terms of loan demand, the central bank said the majority of banks surveyed anticipate generally stable loan demand from businesses and consumers, signaling improving market sentiment brought about by the continued rollout of COVID vaccines. -19 and the gradual relaxation of quarantine restrictions.
The results of the diffusion index method showed expectations of a net increase in aggregate demand for business loans, which was largely attributed to the higher inventory and accounts receivable financing needs of corporate clients as well as ” improving the economic prospects of customers.
Likewise, the latter approach highlighted the prospects of banks for a net increase in aggregate consumer demand for loans, driven by higher household consumption, lower income prospects and poor conditions. more attractive financing from banks.
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