Philippine banks see loan demand strengthening in fourth quarter
The share of lenders predicting higher household borrowing reached 37.1 per cent, while most banks expected no changes to their credit requirements.
Philippine lenders have become more optimistic about fourth-quarter borrowing demand, while the majority plan to keep loan requirements steady, a Bangko Sentral ng Pilipinas (BSP) survey showed. More banks forecast increased demand from both companies and households than in the preceding survey.
For business borrowing, 26.9 per cent anticipated an increase, against 19.2 per cent previously. The proportion predicting stable demand slipped from 75 per cent to 69.2 per cent. Among banks assessing household borrowing, 37.1 per cent expected growth, compared with 20 per cent earlier, while 60 per cent forecast no change, against 71.4 per cent.
The BSP said businesses were expected to need more financing for inventories and money owed by customers, with alternative funding options limited. Lenders forecasting increased household borrowing cited stronger consumer spending, more attractive financing terms from banks and increased investment in housing.
On credit requirements, the proportion planning no changes for business borrowers increased from 71.2 per cent to 80.8 per cent. For household borrowers, it rose from 77.1 per cent in the third quarter to 85.7 per cent.
Fewer lenders anticipated tightening their rules: 17.3 per cent for business loans, against 28.8 per cent previously, and 11.4 per cent for household loans, against 17.1 per cent. Banks nevertheless identified uncertainty about the economy, deteriorating borrower profiles and diminished willingness to take risks as potential reasons for stricter requirements.
Responses to the Senior Bank Loan Officers’ Survey came from 55 of 60 banks between September 2 and October 6. The quarterly exercise includes universal, commercial, thrift and rural banks, tracking lending policies and assessments of borrowing demand.
