Banks Q4 real estate exposure up 21%

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But NPL ratio down

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Philippine banks’ exposure to real estate rose 21.4 percent year-on-year in the fourth quarter of 2014, with loans to the sector accounting for the bulk of the total, but marking a drop in the bad loans ratio.

The latest data released by the Bangko Sentral ng Pilipinas (BSP) showed that the real estate exposure (REE) of universal, commercial and thrift banks in the country reached P1.221 trillion at end-December, up by P215 billion from the P1.006 trillion exposure recorded a year earlier, and by 5.4 percent from P1.159 trillion at end-September.

Real estate loans made up 85.4 percent of the REE in the fourth quarter, while securities investments account for the remaining 14.6 percent, the BSP said.

Loans surge 23.7%, investment up 8.8%
The loan component of the total exposure rose 23.7 percent to P1.043 trillion in the quarter ending December from P843 million a year earlier, and by 6.8 percent from the preceding quarter.

The loans were distributed to developers of socialized and low-cost housing, individual property buyers, and those 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, the central bank said.

Investment in real estate securities, meanwhile, grew only 8.8 percent to P178 billion in the fourth quarter from P163.6 billion a year earlier. Compared with the preceding quarter, it was down by 2.1 percent.

Real estate NPLs fall
The BSP noted that banks’ credit positions with respect to real estate exposure improved despite the increase in REE, mainly owing to a reduction in the aggregate level of non-performing loans.

“While REEs sustained an increase, the ratio of non-performing RELs of universal, commercial and thrift banks followed a downtrend,” the central bank said.

Non-performing loans to real estate (RELs) at end-December represented 2.47 percent of the banks’ loans to the sector, down from 2.80 percent the previous year.

The real estate NPL ratio during the quarter was also the lowest posted for the quarterly indicator since December 2012.

“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 system,” the BSP added.

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