Loan exposure to real estate stays over 20%

MANILA, Philippines — The real estate exposure of Philippine banks stayed above 20 percent in the first half of the year as housing prices remained steady amid sustained demand, data from the Bangko Sentral ng Pilipinas (BSP) showed.

The BSP said real estate loans rose 18.4 percent to P1.64 trillion in the first half of the year from P1.39 trillion in the first half of last year amid the steady rise in housing prices due to strong demand.

Residential loans grew 21.3 percent to P561.31 billion from P481.31 billion while commercial real estate loans increased 19.3 percent P1.08 trillion from P907.97 billion.

The share of real estate exposures from the banks’ total loan portfolio remained steady at 20.79 percent in end-June this year from 20.76 percent in end-June last year but eased from 21.04 percent in the first quarter of the year.

The total loan portfolio of Philippine banks increased 19 percent to P6.43 trillion in end-June from P5.41 trillion in end-June last year.

On the other hand, real estate investments in debt securities and equities jumped 19.9 percent to P279.83 billion in the first half of the year from P233.33 billion in the first half of last year.

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.

The BSP 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 inched up in the first quarter of the year amid sustained demand as the economic expansion is also being felt in the provinces.

The Residential Real Estate Price Index (RREPI) climbed 1.1 percent to 117.2 in the first quarter of the year from 115.9 in the same quarter last year.

The RREPI measures the average changes in prices of different types of housing units over a period of time across geographical areas where the growth rate of the index measures house price inflation.