Banks’ exposure to real estate rises by 6.8% – BSP
Banks’ exposure to real estate rises by 6.8% – BSP

John Javellana

BSP data show that loans by banks reached P1.4 trillion ($294.6 billion) as of the end of the second quarter of 2015

MANILA, Philippines – Philippine banks are continuing to fuel the real estate sector through loans, based on the latest data released by the Bangko Sentral ng Pilipinas (BSP).

The real estate exposures (REEs) of universal, commercial (U/KBs), thrift banks (TBs) and trust departments reached P1.4 trillion ($294.6 billion) at the end of the second quarter in 2015, the BSP said in a statement over the weekend.

This represents a 6.8% quarter-on-quarter (Q-o-Q) increase from the REEs posted by the banks at end-March 2015.

The exposure increased amid a 7.6% quarter-on-quarter rise in Real Estate Loans (RELs) to P1.2 trillion ($252.5 billion) at end-June 2015. RELs comprised 86.6% of REEs during the period. 

Meanwhile, investments in real estate securities (REIs), the proceeds of which were used to finance real estate activities, amounted to P182.6 billion ($3.842 billion) in June 2015 as compared to P180.1 billion ($3.790 billion) of the first quarter in 2015.

REIs accounted for 13.4% of real estate exposure during the period.  

Despite the increase in exposure the BSP pointed out that the non-performing REL ratio of U/KBs and TBs was at 2.3%  in June 2015, lower than the 2.6 % posted a quarter earlier.

The non-performing REL ratio has been on a downward trend since end-December 2013, the BSP said.

Results of a BSP stress test of banks conducted early this year revealed that the capital adequacy ratio (CAR) of banks would remain above the central bank requirement even if 25% of their real estate loan portfolio turns sour. (READ: Stress tests show no real estate bubble in PH – BSP)

Late last year, the BSP enacted a new resolution requiring banks to submit quarterly reports on all housing loans granted to customers.

The data from the banks will be used to provide information for the establishment of a Residential Real Estate Price Index (RREPI) that the BSP is preparing. –

$1 = P47.52

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