Credit standards tightened


Banks are starting to lend more personal and salary loans while at the same time limiting the amount they lend for car financing during the fourth quarter of last year.

Data from the central bank showed that the shift in loan preference resulted from stricter financial system regulations and banks’ reduced tolerance for risk.

The Bangko Sentral ng Pilipinas said that the Fourth Quarter 2014 Senior Bank Loan Officers Survey (SLOS) showed that while banks tightened credit standards for household loans, they kept their overall lending standards for enterprises.

The survey measurements were based on the diffusion index (DI) approach. A positive DI for credit standards indicates that the proportion of banks that have tightened their credit standards is greater than those that eased (“net tightening”), whereas a negative DI indicates that more banks have eased their credit standards than those that tightened (“net easing”).

In household lending, the DI approach indicated a net tightening. The DI was recorded at 14.3 percent in the fourth quarter from 4.8 percent a year earlier.

Bank responses showed reduced credit line sizes for auto loans and wider loan margins for personal and salary loans, the survey explained.

In terms of lending to enterprises, the BSP survey said most banks indicated that credit standards for loans to enterprise were kept steady during the quarter.

“The unchanged (state of) overall credit standards was attributed by banks to their steady outlook on the domestic economy as well as specific industries, such as wholesale and retail trade, manufacturing and real estate, renting and business activities, among others,” it said.

For the next quarter, the survey said respondent banks still expect credit standards for loans to enterprises to remains unchanged, it said.


Please follow our commenting guidelines.

Comments are closed.