Real estate loans rise 19.2% – BSP data

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LENDING by big banks to the real estate sector rose in double-digit terms in the first nine months of the year, mostly for commercial purposes, central bank data showed on Tuesday.

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The loans universal and commercial banks released to the real estate sector totaled P1.19 trillion as of end-September 2016, 19.2 percent from P999.46 billion a year earlier, data released by the Bangko Sentral ng Pilipinas (BSP) showed.

Loans to the real estate sector accounted for 19.4 percent of the big banks’ P6.14 trillion loan portfolio (TLP) that included interbank loan receivables (IBL).

Minus the IBL, loans to the sector accounted for 20.1 percent of P5.92 trillion of TLP.

Twenty-five percent or P297.67 billion of the real estate loans (REL) consisted of residential loans, and 75 percent or P893.77 billion were accounted for by commercial loans.

Credit growth has tended on its own to serve as a poor indicator of a financial crisis, because it takes no account of the ability of the country to service its debts.

The central bank has downplayed concerns that a real estate bubble is forming in the financial system, saying the demand for residential and commercial space and banks’ exposure to the sector remains at a comfortable levels.

“No, there is no evident sign of a bubble in the real estate sector today,” BSP Governor Amando Tetangco Jr. earlier said.

The BSP also noted earlier that residential property prices continued to rise in the second quarter from a year earlier, driven by higher prices in areas outside of Metro Manila.

The Residential Real Estate Price Index report noted residential property prices in April to June increased by 11.3 percent from a year earlier.

Real property prices in the National Capital Region (NCR) grew by a moderate 2.7 percent in the second quarter from 17.6 percent a year earlier, but prices in areas outside NCR (AONCR) climbed by 18.4 percent from 9.9 percent in the same comparable period.

The NCR accounted for 42.1 percent of residential real estate loans in the second quarter, followed by Calabarzon (31.5 percent), Central Luzon (6.7 percent), Central Visayas (5.2 percent), Western Visayas (4.9 percent), Northern Mindanao (3.4 percent), and Davao Region (2 percent).

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