H1 real-estate loans on the rise, up 6.8%

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Category: Top News

20 Nov 2013 

 

Written by Bianca Cuaresma

EXPOSURE of Philippine banks to the real-estate industry grew larger in the first half of the year, as banks offered more property loans, the Bangko Sentral ng Pilipinas (BSP) said on Wednesday. 

The real-estate exposure (REE) of universal, commercial and thrift banks hit P900.1 billion as of end-June this year. This was about 6.8 percent higher, compared with the March REE level. 

Total REE is about 21.7 percent of the entire banking system’s total loan portfolio, which amounted to P4.2 trillion during the period in review. 

Larger real-estate loans (RELs) mainly drove the expansion of the banks’ wider REE in the first six months of the year. 

Of the P900.1-billion total REE amount, about 84.7 percent was in the form of property loans; the remaining 15.3 percent were real-estate investments.

RELs grew to about P762.5 billion in the second quarter of the year. This was about 6.6 percent higher than the end-March level of P715.5 billion.

The BSP said RELs were used to finance the acquisition, construction and improvement of housing units.

Despite the growing exposure in this sector, the central bank gave assurance that level of residential real-estate loans remains manageable, as non-performing real-estate loans remained low, reported at 3.7 percent of the total residential RELs.

Investments in real-estate securities reached P127.7 billion at end-June this year. This was 8.3 percent higher compared with first-quarter level of P127.1 billion. 

The central bank expanded this year the reporting system for banks on their real-estate exposure, as part of a stricter monitoring of banks’ behavior to real-estate loans and securities. 

This new reporting system now includes loans to developers of socialized and low-cost housing, loans to individuals, loans supported by non-risk collaterals or Home Guarantee Corp. guarantees, as well as investments in securities to finance real-estate activities and the exposure of the banks’ trust departments to the property sector.

“In line with its financial stability objectives, the BSP is keeping an eye on measuring the whole landscape under the new coverage of bank’s exposure to the real-estate industry. The BSP is keen on monitoring the credit conditions that support the heightened activity in property development to prevent potential impairment of intermediation,” the central bank said in a statement.