Real estate loans inch up to P716-B in March

MANILA, Philippines – The real estate exposure of universal, commercial and thrift banks inched up to P842.6 billion in March, up 2.5% from December 2012, according to latest data from the Bangko Sentral ng Pilipinas.

Of this, real estate loans accounted for about 85%, or P715.5 billion. This reflected a 1.7% increase from December’s P703.2 billion.

Of the real estate loans, 78% were used to finance residential projects, including the acquisition, construction and improvement of housing units.

“The exposure of banks to such residential real estate loans remains manageable as the non-performing portion was only 4% in March,” the central bank said in a statement Wednesday, September 11.

On top of the loans, the BSP also adds up the banks’ investments in securities issued by real estate firms to account for the financial system’s overall exposure to this particular industry.

Real estate securities investments grew 7% to P127.1 billion in March.

“Internal simulations on credit impairment using March 2013 data indicated that the industry’s capital adequacy ratio will remain well above the 10% minimum even with the simulated 50% write down in real estate exposure,” the regulator stressed.

Real estate investments in the Philippines have been strong amid record low interest rates, as well as the introduction of more affordable condominium units by real estate developers. – Rappler.com