THE local banking system’s exposure to the real-estate sector continued to grow larger in the quarter ending
June this year due largely to the rise of property loans in the period.
The Bangko Sentral ng Pilipinas (BSP) reported that the universal, commercial and thrift banks’ total real-estate exposure hit P1.097 trillion in end-June this year.
This is 6 percent higher compared to the year-ago level.
The rise in the banks’ exposure to the property sector was attributed by the central bank to the higher loans extended to the industry in the period. In particular, the banks’ real-estate loans comprised 84 percent of the banks’ exposure to the property sector, which hit P924.3 billion as of end-June this year.
This is 6.7 percent higher than the levels seen in the previous year.
“Land developers, construction companies and other corporate entities obtained 60 percent of the real-estate loans, while borrowers acquiring residential properties received the remaining 40 percent,” the central bank said.
Investments by banks to real-estate securities, meanwhile, hit P172.9 billion. This is 16 percent of the banks’ total exposure during the period, and 16 percent of the total exposure of the banking sector during the period. “The BSP monitors the real-estate exposure of universal, commercial and thrift banks as part of its broader role of assessing the quality of the banks’ exposures to the different sectors of the economy. Maintaining high loan quality is essential to the promotion of financial stability, which is a key policy objective of the BSP,” the central bank said.
The BSP noted that, while banks have been beefing up their exposure to the property sector, the nonperforming real-estate loans—or more popularly known as bad or soured loans—comprised 2.64 percent of their total real-estate loan portfolio during the period. This is lower than the 2.77 percent posted a quarter earlier.