Majority of Philippine banks maintain loan standards in Q1

Over 8 in 10 banks anticipate maintaining loan standards in Q2 2025.

Majority of Philippines banks reportedly maintained their credit standards for loans to businesses and consumers.

Using the modal approach, 81.8% of respondent banks retained their credit standards for businesses during Q1 2025. This is lower than the 83.3% who indicated the same in the previous quarter, the Bangko Sentral ng Pilipinas’ (BSP) found in its latest senior bank loan officers’ survey (SLOS).

The modal approach analysis data using the option with the highest share of respondents.

On the other hand, the diffusion index (DI) approach reflected fewer respondents reporting tighter credit standards in Q1 2025 compared to the previous survey.

Banks tightened their loan standards for enterprises due to the deterioration in borrowers’ profile and profitability of the bank's portfolio, the BSP said.

The DI approach measures tightening or easing by analysing whether the proportion of respondents banks who tightened their credit standards exceeded those that eased, and vice versa.

Despite the slight deterioration in the share of banks who retain their standards, more banks or 85.5% of respondents anticipate generally unchanged lending standards for enterprises for Q2 2025.

Households
Less banks maintained their credit standards for household loans in Q1 2025 at 86.8%, a drop from the 89.5% of respondents who said the same in Q4 2025, based on the modal approach.

Meanwhile, the DI method reflected a net tightening of credit standards in Q1 2025, the BSP found.

Banks tightened their loan standards for households due to the deterioration of borrowers' profile, reduced tolerance for risk, and deterioration in the profitability of bank's portfolios, according to the central bank.

About 82.1% of respondent banks anticipate unchanged consumer loan standards for Q2 2025.