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Philippines: Banks’ real estate exposure rises to 23.3% in Q1
MANILA, Philippines — The exposure of Philippine banks to the volatile property segment grew further to 23.3 percent in the first quarter from 22.01 percent in the same period last year, with the industry’s non-performing loan (NPL) ratio to the property sector breaching five percent.
Data from the Bangko Sentral ng Pilipinas (BSP) showed the industry’s real estate exposure was well within the 25 percent ceiling set by the regulator.
The BSP raised the real estate loan limit of big banks to 25 from 20 percent in August 2020 as part of its COVID response measures to free up P1.2 trillion in additional liquidity for lending amid the uncertainties.
Preliminary data released by the central bank showed investments and loans extended by the banking industry to the property sector went up by 7.1 percent to P2.85 trillion in end-March compared to a year-ago level of P2.66 trillion.
Lending to the sector increased by 7.4 percent to P2.46 trillion from P2.29 trillion.
Commercial real estate loans rose by 6.9 percent to P1.55 trillion from P1.45 trillion, while residential real estate loans grew by eight percent to P908.65 billion from P841.07 billion.
Statistics showed past due real estate loans rose by 2.1 percent to P152.39 billion from P149.17 billion.
This was after past due commercial real estate loans grew by 8.5 percent to P44.28 billion from P40.81 billion, while past due residential real estate loans remained steady at P108.11 billion from P108.36 billion.
Due to uncertainties brought about by the global health crisis, the gross non-performing real estate loans of Philippine banks went up by 12.9 percent to P124.03 billion from P109.84 billion.
This translated to a higher gross non-performing real estate loan ratio of 5.04 percent from 4.79 percent.
On the other hand, data from the BSP showed real estate investments in debt and equity securities expanded by 5.6 percent to P393.55 billion from P372.75 billion.
To ensure that banks’ exposure to the property sector remains manageable, the BSP continues to maintain prudential measures, including the real estate limit.
These measures also included the heightened surveillance of banks’ real estate and project finance exposures, and the real estate stress test (REST) thresholds for universal and commercial banks as well as thrift banks.
Source: https://www.philstar.com/business/2022/06/22/2189991/banks-real-estate-exposure-rises-233-q1