The Central Bank of the Philippines published the results of its Q4 2024 Senior Bank Loan Officers’ Survey, showing that most banks kept lending standards broadly unchanged for both enterprise and household loans under the modal approach. The diffusion index method, however, pointed to net tightening for business loan standards in Q4 2024, while household loan standards were reported as generally unchanged. For enterprises, 83.3 percent of respondent banks reported unchanged standards, while the diffusion index signalled net tightening driven by deterioration in borrowers’ profiles and banks’ portfolio profitability. For households, 89.5 percent reported unchanged standards, attributed mainly to stable borrower profiles, risk tolerance and portfolio profitability. On loan demand, 74.1 percent of banks reported unchanged demand for enterprise loans under the modal approach, but the diffusion index indicated a net increase in demand linked to inventory financing needs, more optimistic economic expectations and higher short-term financing needs; for household loans, 73.7 percent reported unchanged demand, while the diffusion index showed a lower net rise than in the prior quarter, associated with more attractive financing terms and higher consumption. Looking to Q1 2025, the modal approach indicates that large majorities expect lending standards to remain unchanged for both enterprises (85.2 percent) and households (84.2 percent), while the diffusion index points to steady enterprise standards and net tightening for households, driven by expected weaker portfolio profitability and lower risk tolerance. On demand, the modal approach suggests mostly steady enterprise (61.1 percent) and household (60.5 percent) credit demand, whereas the diffusion index indicates net increases for both, supported by the same factors cited in Q4 2024.

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