Banks stay heavy on real estate loans

The real estate exposure of Philippine banks continued to stay above 20 percent amid strong property loans and investments, data from the Bangko Sentral ng Pilipinas (BSP) showed.

According to the BSP, real estate loans increased 18.5 percent to P1.55 trillion last year amid the steady rise in housing prices due to strong demand.

Residential loans expanded 18.7 percent to P529.9 billion while commercial real estate loans went up 18.4 percent to P1.02 trillion.

The share of real estate exposures from the banks’ total loan portfolio increased to 20.77 percent.

The total loan portfolio of Philippine banks rose 15.7 percent to P7.22 trillion.

Real estate investments of Philippine banks likewise jumped 25.5 percent to P263.11 billion. About 60.4 percent or P158.82 billion went to debt securities while 39.6 percent or P104.28 billion went to equities.

The BSP monitors the real estate exposures of universal, commercial, and thrift banks as part of its broader role of assessing the quality of bank exposures to the different sectors of the economy.

It stepped up its watch over the real estate sector as early as 2012 by ordering banks to disclose more comprehensive reports on their exposures to property industry. It has set the cap on real estate loans at 20 percent of the bank’s total loan portfolio.

Housing prices nationwide rose at a slower pace in the third quarter amid a better supply and demand balance in the market. The Residential Real Estate Price Index (RREPI) inched up 2.2 percent to 113.4 in the third quarter of last year.

This was slower than the revised 11.3 percent increase booked in the second quarter of last year when the RREPI stood at 122.8 compared to 110.3 a year earlier.

BSP Governor Amando Tetangco Jr. earlier said housing prices were beginning to stabilize.

For his part, BSP Deputy Governor Diwa Guinigundo said there was no overheating in the country’s property market after a stress test conducted by banks on real estate exposure and other real estate properties showed the industry could absorb shocks.