Banks see higher loan demand

Driven by stronger consumption in Q4

MANILA, Philippines —  Banks are anticipating higher loan demand from businesses and households during the last quarter of the year on the back of increased consumption.

Based on the latest Senior Loan Officers’ Survey (SLOS) of the Bangko Sentral ng Pilipinas (BSP), banks are seeing a net increase in credit demand from both enterprises and households using the diffusion index.

According to the BSP, surveyed banks forecast higher demand from enterprises from October to December, driven mainly by businesses’ higher inventory and accounts receivable financing needs.

The same goes for households where loan demand is seen stronger in the last quarter due to higher household consumption and banks’ more favorable lending terms.

In terms of credit standards, the BSP said there would be tightening for enterprises in the fourth quarter due to the deterioration in borrowers’ profiles and in the profitability and liquidity of banks’ portfolios.

This is also attributed to the perception of stricter financial system regulations and reduced tolerance for risk.

As for households, banks are expected to maintain lending standards amid assumption of unchanged tolerance for risk and stable profiles of borrowers.

The SLOS consists of questions on loan officers’ perceptions relating to the overall credit standards of their respective banks, as well as to factors affecting the supply of and demand for loans to both enterprises and households.

The analysis focuses on the quarter-on-quarter changes in the perception of respondent banks.

The responses for the latest SLOS were gathered from Sept. 10 to Oct. 15, with a total of 52 respondent banks out of 60 surveyed banks. This led to a higher response rate of 86.7 percent compared to the previous quarter.