Real estate exposure of banks increases


Local banks have reported wider exposure to the real estate sector as of end-June 2020, Bangko Sentral ng Pilipinas data showed.


The real estate exposure of banks and trust departments soared by 8 percent or P188 billion to P2.50 trillion from the P2.31 trillion as of the first half of 2019.


Of the P2.50 trillion, 87.99 percent of the banks’ exposure was in terms of real estate loans, while the remaining 12 percent was in securities investments.


Real estate loans surged by 11.18 percent to P2.20 trillion from P1.97 trillion a year ago.


Broken down, commercial real estate loans accounted for 64.20 percent of the total loans, while borrowers acquiring residential properties took the remaining 35.79 percent.


Non-performing loans (NPL) ballooned  by 71.39 percent to P60.88 billion at the end of June 2020 from P34.52 billion a year earlier. Thus, the NPL ratio inched up to 2.77 percent from 1.74 a year ago.


Investments in real estate securities, on the other hand, fell by 9.93 percent to P300.30 billion from P333.41 billion at the end June 2019.


The BSP’s earlier assured the public that the property market is safe from an asset bubble for now as prices remained broadly in line with market fundamentals.


“While there is persistent demand for residential properties, it would not indicate an asset bubble,” Bangko Sentral Governor Benjamin Diokno has said.


He said property prices were still driven by Philippine offshore gaming operators (POGOs), traditional companies and business process outsourcing (BPO) firms’ demand for office spaces.


Domestic and foreign workers connected with BPOs, including POGOs, fueled demand in the residential segment.


Diokno added the increased demand for condominium units fundamentally reflects the existing sizeable housing backlog in the country, and the desire of many Filipinos working or studying in city centers to live near their workplace or school because of worsening traffic.


This was followed by the Monetary Board’s approval of higher real estate loan limit of universal and commercial banks from 20 percent to 25 percent.


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