MANILA, Philippines - Local banks again employed stricter lending standards for real estate borrowings amid the country’s booming property market, a survey from the Bangko Sentral ng Pilipinas showed.
According to the results of the third quarter 2013 Senior Bank Loan Officers’ Survey, banks reported a net tightening of loan standards for commercial real estate loans for the fifth consecutive quarter in the third quarter of this year.
“The net tightening of overall credit standards for commercial real estate loans was attributed by respondent banks to stricter oversight of banks’ real estate exposure along with banks’ reduced tolerance for risk,†the central bank said.
“In particular, banks reported wider loan margins, reduced credit line sizes, stricter collateral requirements and loan covenants, shorter loan maturities, and lower loan-to-value ratios for commercial estate loans,†the BSP added.
The demand for commercial real estate loans remained the same in the third quarter, the survey showed.
“A number of banks, however, indicated increased demand for the said type of loans given clients’ economic outlook, lower interest rates, and increased working capital needs,†the central bank noted.
For the next quarter, the BSP said the number of banks expecting another tightening of standards for commercial real estate loans outnumber those who think otherwise.
With regard to the demand for this type of loan, the central bank survey found most banks expect continued increase in the next quarter.
The Senior Bank Loan Officers’ Survey is conducted by the central bank quarterly in order to assess banks’ credit standards and the factors that drive the supply and demand for loans.
The latest survey showed credit standards for loans to enterprises showed net tightening due to a decline in profitability and reduced liquidity in banks’ portfolio.
Lending standards for loans to households, meanwhile, eased in the third quarter amid increased competition from banks and non-bank lenders and improved profile of borrowers.