MANILA, Philippines - Banks operating in the Philippines slightly tightened their credit standards for loans to enterprises due to a survey conducted by the Bangko Sentral ng Pilipinas (BSP) showed.
The BSP said results of the Q1 2012 Senior Bank Loan Officers’ Survey showed an overall slight net tightening of credit standards for loans to enterprises in the first quarter of the year after being unchanged in the fourth quarter of last year.
“The overall net tightening of credit standards for loans to enterprises reflected banks’ cautious view on the outlook of the economy and of certain industries amid the still uncertain global economic prospects, perceived decreased access to market financing, and reduced tolerance for risk and stricter financial system regulations,” the BSP said.
The survey showed a slight net tightening of credit standards applied to top corporations, consistent with previous quarter’s survey results showing that banks expected a slight tightening of overall credit standards for enterprises.
On the other hand, the survey results showed unchanged credit standards for large middle-market, small and medium-sized, and micro enterprises in the first quarter of 2012.
Looking at specific credit standards, the overall slight net tightening is evident in the stricter loan covenants and greater use of interest rate floors by banks particularly for top corporations.
Furthermore, survey results for the first quarter continued to show larger credit lines provided to enterprises since the second quarter of 2010 and longer loan maturities especially for top corporations.
“Banks’ responses also indicated a net narrowing of loan margins for large middle-market and small or medium enterprises, while loan margins for top corporations were unchanged after narrowing for the past five consecutive quarters,” the BSP said.
Banks’ standards on collateral requirements, on the other hand, have remained unchanged since the third quarter of last year.
In terms of expectations, respondent banks see a further tightening of credit standards across all types of loans to enterprises over the next quarter.
On the other hand, the survey showed that overall credit standards for loans to households remained unchanged for the second consecutive quarter.
“The stable asset portfolio and steady economic outlook of banks, as well as unchanged financial system regulations and bank tolerance for risk, and stable profile of borrowers were cited by the respondents as being behind the unchanged overall credit standards for loans to households during the quarter,” the BSP said.
The survey results also pointed to unchanged overall demand for loans from enterprises, with the percentage of banks reporting an increase in demand for loans during the quarter offsetting the percentage indicating otherwise.