^

Business

Despite rise, property loans remain manageable – BSP

Lawrence Agcaoili - The Philippine Star

MANILA, Philippines – The real estate exposures of big banks remain manageable despite a 5.6 percent increase in the fourth quarter of last year, the Bangko Sentral ng Pilipinas (BSP) reported over the weekend.

The real estate exposures of universal, commercial, thrift banks (TBs) and trust departments reached P1.51 trillion in end-December, P84.16 billion higher compared to P1.43 trillion in end-September last year.

The BSP said the share of real estate exposures from the banks’ total loan portfolio declined slightly to 23.7 percent in end-December from 24.1 percent in end-September.

Data showed real estate loans went up six percent to P1.31 trillion in end-December from P1.23 trillion in end-September and accounted for 20.4 percent of the total banking industry’s total loan portfolio.

On the other hand, investments in real estate securities rose 5.1 percent to P209.7 billion from P199.44 billion and accounted for 3.3 percent of the bank’s total loan portfolio.

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.

Despite the sustained increase, the non-performing real estate loans of big banks continued to follow a downtrend, slipping to 2.1 percent in the fourth quarter from 2.2 percent in the third quarter of last year.

“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.

BSP Deputy Governor Diwa Guinigundo earlier said initial results of a stress tests conducted by banks validated the assessment that there are no risks from the real estate market.

The stress tests showed the capital adequacy ratio (CAR) of banks would remain above the central bank requirement even if 25 percent of their real estate loan portfolio turns sour.

“At this point we don’t see any signs of stress in the real estate sector,” he said.

The bank regulator has tasked banks to submit data on their real estate portfolio to include exposure in socialized housing as well as debt incurred through the issuance of bonds to finance real estate activities.

Based on the new definition of the exposure of banks to real estate, Guinigundo explained that stress tests conducted by big banks showed that their CAR would still be above the 10 percent requirement set by the BSP and the eight percent threshold set under the Bank for International Standards (BIS).

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.

The BSP is set to release a residential residential real estate price index (RREPI) soon since the lack of data on property prices and affordability indicators make it difficult for the debt watcher to assess the effect of credit growth on the real estate market.

Philstar
  • Latest
  • Trending
Latest
Are you sure you want to log out?
X
Login

Philstar.com is one of the most vibrant, opinionated, discerning communities of readers on cyberspace. With your meaningful insights, help shape the stories that can shape the country. Sign up now!

FORGOT PASSWORD?
SIGN IN
or sign in with