Banks increase real property exposure as of March, but growth slows

BANKS handed out more real estate loans as of March, although growth eased from a year ago as the central bank tightened its watch on the sector.

Banks’ exposure to the real property sector reached P2.115 trillion in the first quarter, up 13.3% from a year ago, according to data from the Bangko Sentral ng Pilipinas (BSP).

The increase is slower than the 17% pickup recorded a year ago.

Broken down, property loans grew by 14.3% to reach P1.824 trillion in the first quarter. This softened from a 19.8% growth in lending recorded the previous year.

Commercial lending reached P1.201 trillion, 14% more than the P1.053 trillion lent a year ago.

Home loans increased by 15% to P623.549 billion from P542.132 billion the past year.

Of these outstanding loans, P30.662 billion are considered non-performing, or those left unpaid at least 30 days past due date. This accounted for a 1.68% of total debts, improving from the 1.93% ratio posted in March 2017.

Property loans took a 20.48% share of banks’ total loan portfolio as of March, down from 21.04% posted a year ago.

WATCHED CLOSELY

The BSP requires all banks to keep their real estate exposures to a maximum of 20% of total loans, as part of industrywide risk management.

The central bank has been monitoring the property market closely in the of the 1997 and the 2008 global economic crises.

Home prices in the Philippines picked up by 2.1% in January-March, softer than the 5.7% climb of prices in the fourth quarter of 2017, according to latest available BSP data.

Banks’ investments in real estate reached P290.849 billion, rising 7.5% from P270.473 billion recorded as of March last year. Such growth accelerated from a 2.8% increase in property investments the prior year.

Placements in real estate debt notes grew 15.7% to P188.456 billion, while placements in property-related stocks slipped by 4.9% to P102.394 billion, data showed.

The BSP has tightened rules on banks’ real estate exposure as it sought to temper rapid credit growth, which some observers flagged as a possible sign of an overheating economy.

Circular 976 issued in October 2017 requires banks to report details of real

estate loans covering mid- and high- end housing units, as well as socialized and low-cost housing within a month after the end of every quarter starting this year.

However, the central bank has pushed back report deadlines to the second semester of 2018 to allow lenders to make adjustments for their data submissions.

In April, the central bank also relaxed lending ceilings imposed on banks by allowing construction firms implementing major infrastructure projects to have a separate borrowing limit as they secure funding from banks and quasi-banks, as a way to support the “Build, Build, Build” infrastructure program of the Duterte administration. —