Manila: Most Philippine banks expect to maintain their lending standards in the third quarter of 2026, indicating the banking system's stability and capacity to support the economy through credit despite persistent geopolitical uncertainty, results of a Bangko Sentral ng Pilipinas (BSP) survey showed.
According to Philippines News Agency, the results of the Senior Bank Loan Officers' Survey (SLOS) released Thursday showed 75.5 percent of respondents indicated no change in credit standards for enterprise loans and 8 percent expect stable standards for household loans. For those expecting credit standards to tighten, survey responses suggest a moderation in the tightening bias among banks for loans to both enterprises and households. A few banks anticipate lending standards to ease in the third quarter for loans to enterprises.
The BSP said the results are based on the modal method, which gauges the direction of banks' credit standards-whether banks will tighten, ease, or maintain their credit standards. Results based on the modal method indicate that 64.2 percent of respondent banks expect demand for enterprise loans to remain unchanged in the third quarter, while 30.2 percent expect it to increase and 5.7 percent expect it to decline. Compared with the second quarter of 2026, fewer banks expect demand to remain unchanged or decline, while more expect it to increase.
The central bank said the expected increase in enterprise loan demand may be attributed to higher customer inventory financing needs, higher accounts receivable financing needs, and an improved customer economic outlook. 'Overall, the results point to broadly stable credit conditions reflecting continued prudence in credit risk assessment amid an evolving economic environment,' the BSP said.
The BSP stated that the diffusion index is another method used in the survey. It is the difference between the percentage of respondents that expect to tighten (positive) and the percentage of those that expect to ease (negative). The BSP said the corresponding diffusion index for both businesses and households remained positive, indicating a net tightening bias. 'Respondents cited a less favorable or more uncertain economic outlook, reduced risk tolerance, and a deteriorating borrower profile as factors that could lead them to tighten credit standards,' the BSP said.
The SLOS consists of questions on loan officers' perceptions relating to the overall credit standards of their respective banks, as well as the factors affecting the supply of and demand for loans to enterprises and households. The BSP said a total of 56 banks responded to the survey.
