Bank’s real estate exposure (REE) remains manageable as it stood at P900.1 billion in June this year, up by 6.8 percent compared to the bank’s exposure a quarter ago, data from the Bangko Sentral ng Pilipinas (BSP) showed on Wednesday.
The REE of universal and commercial banks (U/KBs) and thrift banks (TBs) refers to the sum of real estate loans and investments in real estate securities.
Of the P900.1 billion exposure, 84.7 percent was in the form of real estate loans (RELs) while the remaining 15.3 percent was through real estate investments.
The BSP data noted that the increase in REE was driven mainly by the 6.6-percent increase in loans. RELs extended by banks in the second quarter grew to P763 billion from the P716 billion recorded in the first quarter of the year.
“Bulk of the property loans were used to bankroll the acquisition, construction and improvement of housing units,” the central bank stated.
It added that the exposure of banks to residential RELs remains manageable, as bad loans made up only 3.7 percent of total residential RELs.
Meanwhile, banks’ investments in real estate securities rose by 8.3 percent to P138 billion at end-June from P127 billion at end-March.
The central bank said the total REE of U/KBs and TBs is 21.7 percent of the banking system’s total loan portfolio of P4.2 trillion.
The BSP has widened its scope of monitoring the real estate industry starting this year. The expanded reporting system for banks on REE includes loans to developers of socialized and low-cost housing, loans to individuals, loans supported by nonrisk collaterals or Home Guarantee Corp. guarantee, investments in securities to finance real estate activities, as well as exposure by 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 BSP stated.