Bank lending standards seen steady in Q4

MANILA, Philippines — Banks are keeping lending standards unchanged for both businesses and households this quarter, according to the Bangko Sentral ng Pilipinas (BSP).

In its third quarter 2025 Senior Bank Loan Officers’ Survey (SLOS), the BSP said 86 percent of banks expect to maintain their lending standards for business loans in the fourth quarter, up from 78.9 percent in the previous period. The rest of the respondents are divided between easing (3.5 percent) and tightening (10.5 percent).

For household loans, 87.5 percent of banks also foresee unchanged lending standards, compared to 77.5 percent in the third quarter. About 10 percent expect to tighten standards, while 2.5 percent plan to ease them.

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

The SLOS, conducted from Sept. 11 to Oct. 21 with 58 participating banks out of 60 surveyed, showed that most lenders remain cautious as credit activity continues to normalize. The response rate stood at 96.7 percent.

Among banks that anticipate changes in their standards, a net seven percent expect to tighten rather than ease business lending rules in the fourth quarter, while a net 7.5 percent plan to tighten household loan standards.

According to the BSP, this suggests “any future change in credit standards is more likely to reflect tightening than easing.”

In comparison, the net tightening recorded in the third quarter was higher at 17.5 percent for business loans and 7.5 percent for household loans.

On the demand side, 73.7 percent of banks expect loan demand from businesses to remain steady in the last quarter of the year, slightly down from 75.4 percent in the previous period.

Meanwhile, 1.8 percent of banks expect demand to decrease, compared with 5.3 percent earlier, while 24.6 percent anticipate stronger loan demand, up from 19.3 percent in the third quarter.

For households, 65 percent of banks see demand holding steady, down from 75 percent previously. Around 25 percent expect higher demand for loans, up from 17.5 percent in the third quarter, while 10 percent expect a decline.

The SLOS gathers banks’ assessments of credit standards and loan demand using two approaches: the modal approach, which tracks categorical responses such as “tighten,” “loosen,” or “unchanged,” and the diffusion index method, which measures the net tightening or easing in banks’ credit standards.