Philippine Banks to Maintain Lending Standards in Q1 2026 Amid Rising Loan Demand
Banks across the Philippines are projected to keep their lending standards largely unchanged during the first quarter of 2026, even as loan demand shows promising signs of improvement, according to the latest survey from the Bangko Sentral ng Pilipinas (BSP). This development reflects a cautious yet stable approach by financial institutions in the country's banking sector.
Stable Credit Standards for Business and Household Loans
Results from the BSP's Senior Bank Loan Officers' Survey (SLOS) indicate that a significant majority of banks intend to maintain their current credit standards. Specifically, 87.7 percent of banks plan to keep credit standards for business loans unchanged in Q1 2026, which is slightly higher than the 86 percent recorded in the previous quarter. Only a small fraction, 1.8 percent, expect to ease lending standards, while 10.5 percent anticipate tightening.
For household loans, the trend shows a similar pattern of stability. 79.5 percent of banks said they would maintain credit standards for household loans, although this is lower than the 82.5 percent reported in the fourth quarter of 2025. About 12.8 percent expect tighter standards, while 7.7 percent foresee easing credit conditions.
Net Tightening Expectations Ease
Among the banks that plan to adjust their lending standards, the BSP noted that the overall sentiment still leans toward tightening rather than easing. However, this tightening is occurring at a slower pace compared to the previous quarter. Net tightening expectations have eased to 8.8 percent for business loans and 5.1 percent for household loans. This marks a decrease from 14 percent and 7.5 percent, respectively, in the fourth quarter of 2025, indicating a more moderate approach by financial institutions.
Improved Outlook for Loan Demand
In contrast to the stable lending standards, banks are reporting a more optimistic outlook for loan demand. About 28.1 percent of banks expect demand for business loans to increase in the first quarter of 2026, a notable rise from 14 percent in the previous quarter. Meanwhile, 70.2 percent see demand remaining steady, and only 1.8 percent anticipate a decline.
For household loans, the outlook is similarly positive. 30.8 percent of banks expect higher demand for household loans, while 61.5 percent foresee stable demand levels. The share of banks expecting weaker household loan demand has fallen to 7.7 percent, reflecting growing confidence in consumer borrowing.
Survey Methodology and Coverage
The BSP's survey provides a comprehensive view of the banking sector's lending outlook. It covered 58 universal, commercial, thrift, and rural banks, achieving a high response rate of 96.7 percent. The survey results reflect quarter-on-quarter changes in banks' lending practices and demand projections, offering valuable insights into the financial landscape of the Philippines.
This data underscores the resilience of the Philippine banking system, as institutions balance cautious lending standards with an increasingly positive demand environment, potentially supporting economic growth in the coming months.
