MANILA, Philippines — The real estate exposure of big and mid-sized banks remained manageable, rising by nearly seven percent to P2.14 trillion as of end-September last year, according to the Bangko Sentral ng Pilipinas.
The BSP said the increase was notably slower than the double-digit growth recorded in the past five years.
The central bank said the real estate exposure of universal and commercial as well as thrift banks was composed mainly of real estate loans with 85.9 percent, while the rest were real estate investments.
Commercial real estate loans, which accounted for approximately two-thirds of total loans, drove the increase in real estate exposure.
The BSP reported a 7.7 percent increase in real estate loans to P1.84 trillion despite a deceleration in the year-on-year growth for both commercial real estate loans and residential real estate loans.
The BSP stepped up its monitoring of the real estate sector as early as 2012 by ordering banks to disclose more comprehensive reports on their exposures to property industry.
Under the expanded report, real estate exposures are composed of loans, as well as investments in debt and equity securities where the proceeds are used to finance real estate activities.
The regulator has placed the real estate and project finance exposures of Philippine banks under tight watch after debt watchers and multilateral lending agencies raised the red flag over the possible overheating in the economy,
The BSP has approved enhancements to the prudential reporting requirements in order to strengthen oversight of banks’ real estate and project finance exposures.
The reportorial enhancements form part of BSP’s macroprudential toolkit and are being deployed to sharpen the central bank’s assessment of banking system exposures to the property sector.
Under the new guidelines, covered banks should report granular information on their real estate loans to mid- and high-end housing units, in addition to socialized and low-cost housing.