Banks’ exposures to property sector up 15%

Published June 17, 2018, 12:00 AM

by manilabulletin_admin

By Lee C. Chipongian

Banks’ lending to the real estate sector went up by 14.67 percent year-on-year to P1.915 trillion as of end-March 2018 from P1.670 trillion in the same period in 2017, data from the central bank show.

Including the real estate exposures of banks’ trust units, the amount is 13.35 percent higher year-on-year to P2.114 trillion from P1.865 trillion same time in 2017.

Real estate exposures are both real estate loans (REL) and real estate investments (REI), which are debt and equity securities.

Based on Bangko Sentral ng Pilipinas (BSP) data, REL increased by 14.41 percent to P1.818 trillion end-March from P1.589 trillion, while REI was up 20.27 percent higher to P96.575 billion from the previous P80.297 billion.

With banks’ trust departments, the total REL rose by 14.35 percent to P1.824 trillion from P1.595 trillion while REI went up by 7.52 percent to R290.85 billion from P270.47 billion.

The banking system – these includes both banks and trusts’ exposures – reported total residential REL of P623.55 billion as of end-March, up from same period last year of P542.13 billion, while commercial REL reached P1.2 trillion this year versus P1.053 trillion in 2017.

In a report released last week, the BSP said the “sustained household investments in residential properties, the increase in the number of projects unveiled by real estate developers and the intensified promotional campaigns by banks, supported the growth in real estate purchases during the review period.”

The total residential RELs to total loan portfolio continue to be manageable, the BSP noted, and in terms of loan quality the non-performing residential RELs remained unchanged.

At present, regulatory measures governing real estate exposures of banks include a loan limit of 20 percent of total loan portfolio, net of interbank loans, as well as the real estate stress test limits which were adopted in pursuit of the BSP’s objective of fostering financial stability.