Loans to property sector up 2.4%

Bank loans to the property sector rose during the first three quarters of the year as universal and commercial banks continued to take tentative steps back into the real estate industry following the collapse in 1997.

Data from the Bangko Sentral ng Pilipinas (BSP) show that the total real estate exposures of universal and commercial banks (U/KBs) reached P205.4 billion in the first nine months of the year, rising by 2.4 percent from a year ago level.

According to the BSP, additional exposures for the quarter comprised mainly of real estate loans while new investments in securities held by real estate companies stayed at P141 million.

The BSP reported that the industry’s combined real estate loans (RELs) as of end-September increased from P184.3 billion in the second quarter to P188.9 billion in the third quarter, halting two consecutive quarters of decline.

The ratio of RELs to the total outstanding loans of U/KBs, according to the BSP, increased marginally from 11.1 percent to 11.9 percent, excluding interbank loans.

The BSP said the bulk, or 97.1 percent of total RELs, were granted by U/KBs directly while the remaining 2.9 percent was lent out by their trust department.

The BSP report said the loans primarily went to construction and development of real estate properties for commercial purposes including infrastructure projects. These projects accounted for 83.5 percent or P157.8 billion of total RELs.

The remaining P16.5 percent or P31.1 billion, the BSP said, was utilized for the acquisition of residential units by individual homeowners and borrowers.

On the other hand, the BSP said past-due RELs dropped by 4.5 percent to P36.1 billion from P37.7 billion in the second quarter. As a result, the ratio of past due RELs to total RELs went down from 20.5 percent to 19.1 percent.

The BSP said this ratio was also better than last year’s 20.4 percent ratio.

The BSP said the RELs accounted for 92 percent of the P205.4 total U/KB exposure to the real estate industry. The remaining eight percent was in the form of investments in securities issued by property firms.

"Altogether, the ratio of RELs and investments in real estate companies to total loans plus total debt and equity investments stood at six percent," the BSP said.

This was slightly higher than the 5.7 percent in the second quarter but lower than the 6.3 percent ratio recorded over the same period last year.