MANILA – Most Philippine banks expect to keep their lending standards unchanged in the third quarter of 2026, reflecting confidence in the banking sector’s ability to continue supporting economic activity despite ongoing geopolitical uncertainties.

Survey results showed that 75.5 percent of respondent banks expect no change in credit standards for enterprise loans, while 80 percent anticipate maintaining existing standards for household loans during the July to September period.

The figures represent an improvement from the second quarter of 2026, when a smaller share of banks expected lending standards to remain unchanged.

Among banks that foresee tighter lending conditions, responses indicated a weaker tightening bias for both business and household loans. A few banks also expect to ease lending standards for enterprise loans during the third quarter.

Overall, the survey results suggest that credit conditions will remain broadly stable, with banks continuing to exercise prudent credit risk assessment amid an evolving economic environment.

Using the modal method, which measures whether banks expect to tighten, ease, or maintain their lending standards, the survey found that most banks intend to keep their current credit policies.

Meanwhile, the diffusion index, which measures the difference between banks expecting tighter and easier lending standards, remained positive for both enterprise and household loans, indicating that banks still maintain a net tightening bias.

Respondent banks cited a less favorable or more uncertain economic outlook, lower risk tolerance, and a deteriorating borrower profile as the main reasons for potentially tightening credit standards.

The survey also showed improving expectations for credit demand among businesses.

Based on the modal method, 64.2 percent of respondent banks expect demand for enterprise loans to remain unchanged in the third quarter, while 30.2 percent expect demand to increase and 5.7 percent anticipate a decline.

Compared with the previous quarter, fewer banks expect enterprise loan demand to remain flat or decrease, while more banks anticipate stronger borrowing activity. Respondents attributed the expected increase to higher inventory financing requirements, greater accounts receivable financing needs, and an improved economic outlook among borrowers.

For household loans, banks expecting stronger demand pointed to increased consumer spending, limited alternative funding sources, higher housing investments, and more attractive financing terms offered by banks as the primary drivers.