The Central Bank of the Philippines published the Q1 2025 Senior Bank Loan Officers’ Survey, finding that most participating banks reported unchanged credit standards for both business and household lending under the modal approach, while the diffusion index indicated a net tightening of standards. Loan demand was largely reported as steady in the modal results, but the diffusion index pointed to a net increase in demand for both enterprise and household loans. For loans to enterprises, 81.8% of respondent banks reported unchanged credit standards (down from 83.3% in Q4 2024), with tightening attributed to deterioration in borrowers’ profile and the profitability of banks’ portfolios. For household loans, 86.8% reported unchanged standards (down from 89.5%), while the diffusion index showed net tightening driven by weaker borrower profiles, lower risk tolerance, and reduced portfolio profitability. On demand, 67.3% reported unchanged enterprise loan demand (down from 74.1%), while the diffusion index increase was linked to higher inventory financing needs and more optimistic client expectations; 71.8% reported unchanged household loan demand (down from 73.7%), while diffusion index results pointed to higher demand due to more attractive financing terms and higher consumption. Responses were gathered from 56 of 60 surveyed banks, a 93.3% response rate. Looking ahead to the next quarter, 85.5% of banks expect unchanged enterprise lending standards and 82.1% expect unchanged consumer loan standards under the modal approach, while the diffusion index signals unchanged standards for enterprises but net tightening for households. On demand, modal results indicate expectations of steady enterprise (61.8%) and household (66.7%) loan demand, while diffusion index results suggest a net rise in demand for both segments.
Central Bank of the Philippines 2025-04-25
Central Bank of the Philippines’ Q1 2025 loan officers survey indicates net tightening in credit standards alongside higher loan demand
The Central Bank of the Philippines' Q1 2025 Senior Bank Loan Officers’ Survey shows most banks reported unchanged credit standards for business and household lending, though the diffusion index indicated net tightening. Loan demand was steady according to modal results, but the diffusion index showed a net increase in demand for both enterprise and household loans. Looking ahead, banks expect largely unchanged lending standards and steady demand, with the diffusion index suggesting potential tightening for households and increased demand across both segments.