No matter the frequent caveat on the property sector imminently bursting a supposed bubble, the various banks look at the real-estate industry with favor and extended loans totaling P1.22 trillion in the final three months of 2014.
This was 5.4 percent higher than the P1.159 trillion in the banks’ real-estate exposures (REEs) reported a quarter earlier.
The Bangko Sentral ng Pilipinas attributed the rise of the banks’ REE to sustained lending to the property sector. In particular, real-estate loans of the banks increased by 6.8 percent to P1.043 trillion at end-2014.
The loans represent 85.4 percent of the banks’ exposure to the real-estate sector. The other 14.6 percent of the banks’ REE, meanwhile, pertain to the banks’ investment in real-estate securities.
Sixty percent of the real-estate loans during the period were extended to land developers, construction firms and other corporate entities.
The remaining 40 percent went to individual households. The banks’ investments in real-estate securities, meanwhile, decreased by 2.1 percent to P178 billion at end-December 2014.
“The Bangko Sentral ng Pilipinas regularly assesses the quality of banks’ REEs as part of its mandate to foster the strength of individual banks, as well as the systemic stability of the Philippine banking industry,” the central bank said.
It also said the banks remain protected from risks in lending to the real-estate sector on the basis of the ratio of nonperforming real-estate loans of the universal, commercial and thrift banks actually following a downtrend last year.
At end-2014, the banks’ non-performing real-estate loans equal 2.47 percent of the total real-estate loans. This was lower than the 2.8 percent ratio at end-2013.
This was also the lowest nonperforming real-estate loan ratio since December 2012.
Bianca Cuaresma
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