Banks report worsening credit conditions, Central Bank survey says | Economy

The PTC collects banks’ evaluations of lending conditions across four segments: consumer credit for individuals; housing loans for individuals; large corporates; and micro, small, and medium-sized enterprises (MSMEs). Data for the latest survey were collected between July 14 and 25.

Results indicate that the most negative credit conditions in the housing segment stem from funding costs and availability, along with factors such as consumer debt burden, market defaults, and lower risk tolerance.

The survey also shows that credit demand strengthened for large corporates but weakened for housing in the second quarter of 2025. Looking ahead to Q3, banks expect demand from large corporates and consumer credit to increase compared with April–June, while demand from MSMEs should remain stable.

Delinquency risk rose across all segments, with the strongest increase in consumer lending, surpassing the previous survey’s expectations. For Q3, the survey anticipates continued deterioration, particularly for small businesses.

For large corporates, banks noted that overall supply factors tightened in Q2 relative to Q1, with heightened client risk perception and domestic economic conditions as the main drivers. Competition among banks, however, remained a mitigating factor.

For Q3, credit conditions are expected to remain tight, driven by domestic economic conditions and market delinquency, while interbank competition should continue to provide some flexibility.

In the case of small businesses, most factors affecting credit supply became more restrictive in Q2, notably funding costs, market defaults, and risk tolerance.

For consumer credit, most factors suggested slightly less restrictive conditions from April to June compared with the prior quarter, although delinquency concerns increased. In Q3, most factors are expected to remain less restrictive, with delinquency risk and funding costs as the only factors likely to tighten.