Banks expect steady lending rules in Q2

Most Philippine banks expect to keep their lending standards unchanged in the second quarter of 2026, signaling that credit expansion may continue to support the economy despite global pressures linked to the Middle East conflict, according to the Bangko Sentral ng Pilipinas.

The BSP said results of its latest quarterly Senior Bank Loan Officers’ Survey showed that most banks are likely to apply the same standards in assessing loan applications for both businesses and households.

Lending standards refer to the rules banks use in granting loans, including interest rates, loan size, collateral, loan conditions, and repayment terms.

For business loans, 61.5% of respondent banks said they expect credit standards to remain unchanged in Q2 2026.

The share was higher than the 30.8% that expect to tighten standards and the 7.7% that expect to ease lending rules for enterprises.

In the previous quarterly survey, 71.2% of banks expected to maintain lending standards for enterprises in Q1 2026.

The same Q1 2026 survey showed that 26.9% expected to tighten standards for business loans, while 1.9% expected to ease.

For household loans, 65.7% of banks said they expect to keep credit standards unchanged in Q2 2026.

The figure was higher than the 28.6% that expect to tighten lending standards and the 5.7% that expect to ease for household borrowers.

In the previous survey, 77.8% expected household credit standards to remain unchanged in Q1 2026.

The same Q1 2026 survey showed that 16.7% expected tighter standards for household loans, while 5.6% expected easier standards.

The BSP said gauging the direction of credit standards based on the largest share of responses is called the modal method.

Another measure, the diffusion index, computes the difference between the percentage of banks expecting tighter standards and those expecting easier standards, while excluding those expecting standards to remain unchanged.

Using the diffusion index method, the BSP said the 30.8% of banks expecting tighter business loan standards against the 7.7% expecting easing resulted in a 23.1% net tightening for business loans.

For household loans, the 28.6% expecting tighter standards against the 5.7% expecting easing resulted in a 22.9% net tightening.

BSP data showed that for enterprises, the share of banks reporting eased standards was 0.0% in Q4 2025, 1.9% in Q1 2026, and 7.7% expected in Q2 2026.

The same chart showed that unchanged enterprise credit standards stood at 86.0% in Q4 2025, 71.2% in Q1 2026, and 61.5% expected in Q2 2026.

Banks reporting tightened enterprise standards were at 14.0% in Q4 2025, 26.9% in Q1 2026, and 30.8% expected in Q2 2026.

For households, eased credit standards were at 5.0% in Q4 2025, 5.6% in Q1 2026, and 5.7% expected in Q2 2026.

Unchanged household credit standards stood at 82.5% in Q4 2025, 77.8% in Q1 2026, and 65.7% expected in Q2 2026.

Tightened household standards were at 12.5% in Q4 2025, 16.7% in Q1 2026, and 28.6% expected in Q2 2026.

Under the diffusion index method, net tightening for enterprise credit standards was 14.0% in Q4 2025, 25.0% in Q1 2026, and 23.1% expected in Q2 2026.

For household credit standards, net tightening was 7.5% in Q4 2025, 11.1% in Q1 2026, and 22.9% expected in Q2 2026.

The BSP also asked banks about their expectations for loan demand from enterprises and households in Q2 2026.

Using the modal method, loan demand is expected to generally remain the same.

For businesses, 53.8% of banks said they expect loan demand to stay the same in Q2 2026.

This was higher than the 34.6% that expect business loan demand to increase and the 11.5% that expect it to decrease.

BSP data also showed that enterprise loan demand decreased for 5.3% of banks in Q4 2025, 15.4% in Q1 2026, and 11.5% expected in Q2 2026.

Enterprise loan demand was unchanged for 80.7% of banks in Q4 2025, 67.3% in Q1 2026, and 53.8% expected in Q2 2026.

Enterprise loan demand increased for 14.0% of banks in Q4 2025, 17.3% in Q1 2026, and 34.6% expected in Q2 2026.

Using the diffusion index method, banks reported an 8.8% net increase in enterprise loan demand in Q4 2025, 1.9% in Q1 2026, and a 23.1% net increase expected in Q2 2026.

For households, 52.9% of banks said they expect loan demand to stay the same in Q2 2026.

The figure was higher than the 23.5% that expect household loan demand to increase and the 23.5% that expect it to decrease.

Charts in the BSP release showed that household loan demand decreased for 15.4% of banks in Q4 2025, 17.1% in Q1 2026, and 23.5% expected in Q2 2026.

Household loan demand was unchanged for 74.4% of banks in Q4 2025, 62.9% in Q1 2026, and 52.9% expected in Q2 2026.

Household loan demand increased for 10.3% of banks in Q4 2025, 20.0% in Q1 2026, and 23.5% expected in Q2 2026.

Using the diffusion index method, banks reported a 5.1% net decrease in household loan demand in Q4 2025, a 2.9% net increase in Q1 2026, and 0.0% expected in Q2 2026.

The BSP noted that details in the charts may not add up to totals due to rounding.

The survey results suggest that while most lenders expect to hold lending rules steady, a larger share of banks sees some tightening ahead for both business and household borrowers.

The findings also point to stronger expected demand for enterprise loans, while household loan demand is seen as broadly balanced in the second quarter.