PH banks see steady lending standards in Q3

MANILA, Philippines — Most Philippine banks expect to maintain their lending standards in the third quarter of 2026, indicating the banking system’s stability and capacity to support the economy through credit despite lingering risks from the Middle East crisis.

A quarterly survey of senior bank loan officers found that lenders largely plan to apply the same criteria they have been using to assess loan applications from businesses and households.

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Lending standards refer to the terms and conditions banks set when extending credit, including interest rates, loan size, collateral requirements and repayment terms.

Using the “modal method,” which gauges the direction of credit standards based on the largest share of responses, most banks signaled no change ahead.

About 75.5 percent of respondents expect standards for business loans to remain unchanged in the third quarter, compared with 18.9 percent that anticipate tightening and 5.7 percent that see easing.

For household loans, 80 percent of banks expect standards to stay the same, outnumbering the

20 percent that foresee tighter

rules. “Overall, the results point to broadly stable credit conditions reflecting continued prudence in credit risk assessment amid an evolving economic environment,” the BSP said.

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A separate gauge, the diffusion index, continued to point to net tightening, although the bias weakened from the previous quarter.

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The second measure indicated a 13.2 percent net tightening for business loans, down from 28.3 percent three months earlier, while the net tightening bias for household loans eased to 20 percent from 22.9 percent.

Banks that expect to tighten lending cited a more uncertain economic outlook, lower tolerance for risk and concerns over borrowers’ credit profiles . INQ