Philippine banks see steady lending rules in third quarter

MANILA — Most Philippine banks expect to keep their lending standards unchanged in the third quarter of 2026, signaling that credit should remain available to businesses and households despite geopolitical uncertainty and a cautious economic outlook.

The broadly stable lending environment could support business expansion, household spending, housing investment, and job creation.

However, banks still showed a net tightening bias, suggesting that borrowers with weaker financial profiles may continue to face stricter scrutiny, higher collateral requirements, or less favorable loan terms.

The findings came from the Bangko Sentral ng Pilipinas’ second-quarter Senior Bank Loan Officers’ Survey, which tracks changes in banks’ credit standards and loan demand.

The survey was conducted from June 3 to July 7, 2026.

A total of 56 of the 60 banks surveyed responded, equivalent to a 93.3% response rate.

The respondents included senior loan officers from universal and commercial banks, thrift banks, and rural banks.

For enterprise loans, 75.5% of respondents expect credit standards to remain unchanged in the third quarter.

Another 18.9% expect standards to tighten, while 5.7% anticipate an easing of lending requirements.

The share of banks expecting unchanged enterprise lending standards improved from 71.7% in the second quarter and 71.2% in the first quarter.

The share expecting tighter enterprise standards fell from 28.3% in the second quarter and 26.9% in the first quarter.

No respondent reported easing enterprise standards in the second quarter, compared with 1.9% in the first quarter.

Using the diffusion index method, the expected net tightening of enterprise credit standards eased to 13.2% for the third quarter.

The enterprise diffusion index stood at 28.3% in the second quarter and 25% in the first quarter.

A positive diffusion index means more banks expect to tighten standards than ease them.

Banks anticipating tighter enterprise lending conditions cited a less favorable or more uncertain economic outlook, lower risk tolerance, and a deterioration in borrower profiles.

A small number of banks expect enterprise lending standards to ease in the third quarter.

For household loans, 80% of banks expect lending standards to remain unchanged in the third quarter.

The remaining 20% expect household credit standards to tighten.

No respondent expects household lending standards to ease in the third quarter.

The share expecting unchanged household standards rose from 71.4% in the second quarter and 77.8% in the first quarter.

The share expecting tighter household standards declined from 25.7% in the second quarter but remained above the 16.7% recorded in the first quarter.

The share reporting easier household standards fell from 5.6% in the first quarter to 2.9% in the second quarter and zero for the third-quarter outlook.

The household credit standards diffusion index was 20% for the third-quarter outlook.

The index stood at 22.9% in the second quarter and 11.1% in the first quarter.

The BSP said the findings point to broadly stable credit conditions alongside continued prudence in banks’ assessment of repayment risks.

Under the modal method, the survey identifies whether most respondents expect standards to tighten, ease, or remain unchanged.

Under the diffusion index method, the percentage of banks expecting an easing is subtracted from the percentage anticipating a tightening.

Responses indicating no change are excluded from the diffusion index calculation.

Banks also expect enterprise loan demand to remain largely stable in the third quarter.

About 64.2% of respondents expect demand for enterprise credit to remain unchanged.

Another 30.2% expect enterprise loan demand to increase.

Only 5.7% anticipate a decline in enterprise borrowing.

The share expecting unchanged enterprise loan demand fell from 73.6% in the second quarter and 67.3% in the first quarter.

The share expecting stronger demand increased from 17% in the second quarter and 17.3% in the first quarter.

The proportion expecting lower enterprise demand declined from 9.4% in the second quarter and 15.4% in the first quarter.

The enterprise loan demand diffusion index rose to a net increase of 24.5% for the third-quarter outlook.

The index showed net increases of 7.5% in the second quarter and 1.9% in the first quarter.

Banks attributed the expected rise in enterprise borrowing to greater customer inventory financing needs, higher accounts receivable financing requirements, and an improved economic outlook among customers.

For household loans, 57.1% of respondents expect demand to remain unchanged in the third quarter.

Another 31.4% anticipate an increase in household loan demand.

About 11.4% expect household demand to decline.

In the second quarter, 74.3% of banks reported unchanged household loan demand, while 11.4% reported an increase and 14.3% reported a decline.

In the first quarter, 62.9% reported unchanged demand, 20% reported an increase, and 17.1% reported a decrease.

The diffusion index for household loan demand indicated a net increase of 20% for the third quarter.

The index showed a net decrease of 2.9% in the second quarter after recording a net increase of 2.9% in the first quarter.

Banks expecting stronger household borrowing cited higher consumption, limited access to other funding sources, increased housing investment, and more attractive bank financing terms.

The outlook suggests that banks remain capable of supporting economic activity through credit while guarding against risks arising from geopolitical uncertainty and possible deterioration in borrower finances.

The degree to which stable lending conditions benefit consumers and businesses will depend on actual borrowing costs, income conditions, repayment capacity, and banks’ willingness to approve loans beyond their most creditworthy clients.