Banks’ real estate exposures up 5.4% to 1.221 trillion

The real estate exposures (REEs) of universal and commercial banks increased 5.4 percent in 2014 to 1.221 trillion from 1.159 trillion in the previous quarter ending in September.

The REE central bank statistics includes data from the smaller thrift banks and banks’ trust departments.

The Bangko Sentral ng Pilipinas (BSP) yesterday said the growth in real estate loans had a large hand in boosting REEs, it went up by 6.8 percent quarteron-quarter to 1.043 trillion.

For the last quarter of 2014, real estate loans accounted for 85.4 percent of total REEs. About 60 percent were loans to land developers, construction firms and other corporate borrowers. The rest or 40 percent are loans to so-called “individual households for occupancy”.

The BSP, which regularly assess the quality of REEs to determine banking stability, said 178 billion worth of real estate securities were tagged as investments by banks as of end-2014. This number is 2.1 percent lower from end-September, 2014.

Overall, banks’ investments in real estate securities accounted for 14.6 percent of total REEs for the quarter period.

“While REEs sustained an increase, the ratio of non-performing real estate loans of universal and commercial banks and thrift banks followed a downtrend,” according to BSP.

Last year, the ratio of real estate loans that went sour stood at 2.47 percent of total real estate loans. This is lower compared to 2.8 percent at the end of 2013.

The central bank said the 2.47 percent NPL ratio for real estate loans is the lowest since December 2012.