Loan demand expected to increase this quarter – BSP survey
Banks expect business and consumer lending to increase from April to June, supported by the economy’s gradual recovery as mobility restrictions are eased.
The latest survey of key bank lending officials released by the Bangko Sentral ng Pilipinas (BSP) on Thursday evening showed that half of the banks surveyed see growing demand for corporate lending, based on the modal approach.
“Banks’ expectations for increased demand for loans from businesses and households are consistent with optimistic business and consumer sentiment for the next quarter as the easing of restrictions related to the coronavirus disease 2019 (COVID- 19) stimulated the resumption of mobility and production activities,” the BSP said. mentioned.
Based on the diffusion index approach, lenders expect business lending to grow as Ifthe company’s economic outlook has improved, along with increased inventory and accounts receivable Iffinancing needs of borrowers.
Banks surveyed said there was a net increase in demand for credit from large corporates, large middle-market companies, as well as small businesses in the January-March period.
Meanwhile, the expected rise in personal borrowing in the second quarter is attributed to higher consumption, more attractive financing offers by banks, lower interest rates and higher real estate investments.
Higher household loan demand was also seen by banks in the January-March period, particularly for home loans, credit cards, car loans and payroll loans.
For commercial real estate loans, lenders expect demand to increase in the second quarter on the back of positive customer economic outlook, increased inventory Ifnancing requirements and declining funds generated internally by clients.
Meanwhile, responding banks expect to tighten their credit standards for commercial real estate loans from April to June.
In the previous quarter, credit standards for commercial real estate tightened significantly, based on the diffusion index. This has resulted in wider lending spreads, reduced credit line sizes, tighter collateral requirements and loan covenants, increased use of interest rate floors and shortened loan.
For the April-June period, bank respondents said they also anticipate an increase in demand for home loans. Banks expect demand to be fueled by rising housing investment and household consumption, as well as financial firms’ more attractive terms for borrowers.
Based on the diffusion index approach, banks expect a net easing of the criteria for granting housing loans. This will be supported by improving borrower profiles, more optimistic economic growth prospects and increased risk tolerance, lenders said.
In the previous quarter, banks reported a net easing of housing lending standards.
The latest central bank data showed bank lending grew 8.8% in February, faster than January’s 8.4% growth. This development was supported by the expansion of business and consumer credit. — Luz Wendy T. Noble