Most Philippine banks are expected to keep their lending standards unchanged in the second quarter of 2026, signaling continued support for credit expansion even as global uncertainties—particularly tensions in the Middle East—persist.
The latest Senior Bank Loan Officers’ Survey (SLOS) released by the Bangko Sentral ng Pilipinas shows that a majority of banks intend to maintain their current criteria when evaluating loan applications from both businesses and households.
For business lending, 61.5 percent of respondent banks said they would hold standards steady in Q2 2026. This outweighs the 30.8 percent that expect to tighten credit and the 7.7 percent that plan to ease. The figure, however, is slightly lower than in the previous quarter, when 71.2 percent of banks indicated no change in lending standards.
A similar trend is seen in consumer lending. Around 65.7 percent of banks expect to keep household lending standards unchanged, compared with 28.6 percent that anticipate tightening and 5.7 percent that may ease requirements. This marks a modest shift from Q1, when a higher 77.8 percent of banks signaled stable credit conditions.
The survey uses two key measures to assess credit sentiment. Under the modal method, the direction of lending standards is determined by the largest share of responses—pointing clearly to stability for the coming quarter.
Meanwhile, the diffusion index—which measures the net difference between banks expecting to tighten versus ease—indicates a cautious tilt. For business loans, the gap results in a 23.1-percent net tightening, while household loans show a similar 22.9-percent net tightening. This suggests that while most banks are holding steady, a significant minority remains wary of risks.
On the demand side, banks expect borrowing activity to largely plateau in Q2. Based on the modal method, 53.8 percent of banks foresee business loan demand staying the same, outpacing the 34.6 percent that anticipate an increase and the 11.5 percent that expect a decline.
Household demand paints a similarly balanced picture, with 52.9 percent of banks projecting no change. Equal shares of 23.5 percent expect demand to either rise or fall.
However, the diffusion index offers a slightly more optimistic outlook for enterprises, pointing to a 23.1-percent net increase in business loan demand. In contrast, household demand shows a flat net outlook, reflecting a more cautious stance among consumers.
Overall, the survey underscores a steady but watchful banking sector—one that continues to support economic activity through stable lending practices while remaining alert to evolving global and domestic risks.