Philippine Banks’ exposure to real estate expanded by nearly 22 percent year-on-year in the second quarter of 2014 and by 6 percent from the preceding quarter, the central bank said.
The real estate exposure (REE) of universal, commercial and thrift banks in the country stood at P1.097 trillion at end-June, broadening by 21.9 percent from the P900 billion exposure recorded a year earlier, and by 6 percent from P1.035 trillion at end-March, data released by the Bangko Sentral ng Pilipinas (BSP) over the weekend showed.
Banks’ REE represented 21.8 percent of their total loan portfolio in June, up from the 21.7 percent posted a year earlier and the 21.3 percent in the previous quarter.
The REE during the second quarter consisted of real estate loans (REL 84 percent) and investment in real estate securities (16 percent).
Real estate loans (RELs) alone rose 21 percent to P924.3 billion in the quarter to June from P762.5 billion a year earlier, and by 6.7 percent from P866.6 billion in the preceding quarter.
The loans were distributed to developers of socialized and low-cost housing, loans to individuals and loans supported by non-risk collaterals under guarantees granted by Home Guaranty Corp.
Land developers, construction companies and other corporate entities obtained 60 percent of the total REE loans, while borrowers acquiring residential properties received the remaining 40 percent.
Investment in real estate securities, meanwhile, surged 25.6 percent to P172.9 billion in the second quarter from P137.7 billion a year earlier, and was up by 2.6 percent from P168.6 billion a quarter ago.
The second-quarter investments in real estate securities accounted for 16 percent of the REE during the second quarter, the BSP added.
Real estate NPLs
The BSP said it is monitoring the REE of universal, commercial and thrift banks as part of its broader role of assessing the quality of the banks’ exposure to the different sectors of the economy.
“Maintaining high loan quality is essential to the promotion of financial stability, which is a key policy objective of the BSP,” it added.
Non-performing loans to real estate (RELs) at end-June represented 2.64 percent of the banks’ loans to the sector, down from 2.77 percent the previous quarter.
The central bank noted that while REEs have risen steadily since 2012, non-performing RELs have followed a declining trend.