Friday, November 30, 2012

Thrift banks exceed 20% limit for loan activities–BSP data


THRIFT banks have exceeded the 20-percent ceiling recognized by the Bangko Sentral ng Pilipinas (BSP) on loan activities to the real-estate sector, it was learned on Thursday.
Data obtained from the BSP show that thrift banks have extended loans equal to 33.8 percent of portfolio and are in technical violation of the limit as of end-March 2012. These lenders, however, are not covered by the mandatory ceiling imposed on big banks.
The excess lending partly explains the central bank’s more recent efforts to become more vigilant over the sector to avoid the rapid appreciation of prices and the possible bursting of the property bubble.
The bursting of such a bubble in Thailand in 1997 led to the region-wide financial crisis, in which credit became scarce across countries and growth rates were stunted, among other negative effects.

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According to BSP data, thrift- bank lending to the real estate, renting and business sectors already aggregated a P136.39-billion equivalent—or just under 34 percent—of their collective loan portfolio.
This was larger than the loans extended to the so-called other sector, essentially consumer loans and loans to non-residents, of just a shade under 25 percent of portfolio or P100.5 billion.
Thrift bank real-estate sector loans were also bigger than the loans they extended to each other in the interbank market and with the BSP, totaling only P50.73 billion, or 12.6 percent, of portfolio.
But the banking universe that includes the commercial, universal, cooperative and thrift banks still comply with the 20-percent limit, their aggregate lending equal only to 16.7 percent or only P623.55 billion.
The BSP has been keeping an eye on real-estate lending in many months precisely because it wants to thwart any budding property bubble from building up.
BSP Deputy Governor Nestor A. Espenilla Jr. has, for example, made it known that the 20-percent ceiling could change, depending on the results of an ongoing evaluation.
He said exempt areas such as socialized housing and residential loans may be counted as part of the banks’ aggregate loan exposure should this be warranted later on.
“Prospectively, we will start counting [even the exempt areas], but we will not touch the 20-percent ceiling on real-estate loans” for now, Espenilla said.

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