MOST banks maintained their credit standards in the fourth quarter of 2024, the Bangko Sentral ng Pilipinas (BSP) said.
Results of the Senior Bank Loan Officers’ Survey (SLOS) released on Friday, Jan. 31, showed most respondent banks kept their lending standards steady for loans to businesses and consumers based on the modal approach.
For the diffusion index (DI) method, the BSP said there was a net tightening of credit standards for business loans, while loans for households were unchanged.
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.
In the modal approach, the results of the survey are analyzed by looking at the option with the highest share of responses. The three options are tightening, easing, or unchanged credit standards for loans to enterprises and for loans to households.
In the DI approach, a positive DI for credit standards indicates that the proportion of respondent banks that have tightened their credit standards exceeds those that eased, whereas a negative DI for credit standards indicates that more respondent banks have eased their credit standards compared to those that tightened.
An unchanged credit standard in the DI approach indicates that the proportion of the respondent banks that have tightened their credit standards is equal to those that eased their credit standards.
The BSP said fourth quarter 2024 survey results showed that 83.3 percent of respondent banks maintained their credit standards for businesses using the modal approach, up from the 80.4 percent during the previous quarter.
The DI approach, on the other hand, showed a net tightening of credit standards due to the deterioration in borrowers’ profiles and the profitability of the bank’s portfolio. (PNA)
