Banks turned strict on consumer loans in Q1 – Bangko Sentral survey

As loan demand continues to increase, Philippine banks started using stricter credit standards on household loans in the first quarter, according to a Bangko Sentral ng Pilipinas survey.

 

The net tightening of overall credit standards is because of the "bank's reduced tolerance for risk and stricter financial system regulations," Bangko Sentral noted.

 

The Senior Bank Loan Officers’ Survey showed that banks enforced stricter collateral requirements for housing loans and reduced credit line sizes for auto loans.

 

The net tightening covers "… all types of household loans and this includes housing loans, credit card loans, auto loans," Jasmin E. Dacio, Bangko Sentral Department of Economic Research officer said in a briefing Monday.

 

The stricter credit standards for household loans could be attributed to the continued rise in consumer lending, Assistant Governor Ma. Cyd Tuaño-Amador said in the same briefing.

 

"Net tightening for the household sector could be because consumer loans have been growing quite a bit over the past few quarters. As the level of lending to the household sector grows, the banks may have turned circumspect," she said.

 

"When you see the level of credit at a fast clip, then of course... you tend to reassess your credit standards... your tolerance for lending to the growing sector," she added.

 

In the first quarter, banks' “... tolerance for risks is relatively smaller because the year has just started," she added.

 

But this shows banks are turning quite rational in terms of lending, Amador noted.

 

"The banks are... more disciplined and circumspect given the brewing demand for loans. You expect the banking system to be more responsive not only to demands for credit but also the quality of lending," Amador said.

 

The survey is conducted quarterly to give the central bank an enhanced understanding of the lending activity of banks during a particular quarter. In the latest survey, 33 banks responded. – VS, GMA News