The country’s banks are expected to maintain a stable credit environment for both enterprises and households in the third quarter, even as some lenders anticipate marginal tightening, according to the Bangko Sentral ng Pilipinas’ (BSP) latest Senior Bank Loan Officers’ Survey (SLOS) for the second quarter of 2025.

A substantial majority — 91.1 percent of banks — plan to keep lending standards for business borrowers unchanged, up from 82.1 percent in the previous quarter. For household loans, 85 percent of banks indicated they would maintain current credit conditions, also a modest increase from 82.5 percent in Q2.

Credit standards encompass various criteria, including credit scores, collateral requirements, loan size, interest rates and repayment terms.

Although most banks foresee no major changes, a net tightening of 5.4 percent is projected for enterprise loans, while household credit is expected to see a net tightening of 5.0 percent, suggesting that any shifts in credit policy will lean more toward caution. This is a notable easing of tightness compared to the second quarter, where net tightening stood at 14.3 percent for firms and 12.5 percent for households.

Demand outlook upbeat

Despite the conservative stance on lending standards, demand for credit is showing signs of improvement. In the second quarter, 75 percent of banks reported stable demand for business loans, while 19.6 percent observed an increase. Looking ahead, 26.8 percent expect greater demand for business loans in the third quarter, while 71.4 percent foresee no change.

For households, the outlook is also positive: 27.5 percent of banks expect demand for consumer loans to rise, and none anticipate a decline, a signal of resilient consumer confidence despite ongoing economic headwinds.

Measured optimism

The BSP’s survey reflects a cautious yet steady lending environment that could support modest economic expansion. Analysts say the results suggest banks are balancing risk with opportunity amid lingering global uncertainties and domestic inflation pressures.

“The slight tightening in credit standards shows prudence, but the generally unchanged policies and expectations of increased loan demand point to confidence in both business and consumer activity,” said Alden, a senior associate for investments and business development.

The SLOS, which gathers expectations and experiences from senior loan officers across major Philippine banks, serves as a key barometer of credit trends and financial stability.