Foreclosures remain minimal in Cebu

CEBU, Philippines - The volume of foreclosed properties in Cebu has continued to drop despite the eased credit consumer lending offered by financial institutions.

Cebu Bankers Club (CBC) president Maximo Rey S. Eleccion, attributed Cebu's good standing in NPL (non-performing loan) to the conservative characteristic of Cebuanos when it comes to loans.

While the national NPL figure is also at its lowest at 1.94 percent, there is a high possibility that Cebu has more impressive figure, although it’s not officially recorded.

"Cebu's quality of borrowers is very good. Besides, banks now are much stricter in granting loans, such as housing loans, to customers. There is not much foreclosed properties in banks in Cebu now, unlike in the past," said Eleccion, who is also the BPI Cebu Capitol Cluster, relationship manager.

 Based on the published foreclosed properties of banks, Eleccion said the volume is very minimal.

 The number of foreclosed properties that are up for public bidding is closely linked with the standing of NPL in the banking sector. The national figure of 1.94 percent, of which Cebu could hit lower than this, is considered lowest in recent years.

According to Eleccion, the Cebu market in general has distinct characteristic when it comes to acquiring properties, Entering into financing is their last option, because "as much as possible, Cebuanos want to pay in cash, including acquisition of properties."

NPLs are obligations that have remained unpaid for at least 30 days after their due date.

The 1.94 percent NPL recorded as of May this year, is smaller than the 2.17 percent recorded in the comparable 2014 period.

The NPL ratio is a key indicator of the quality of assets held by the banking industry.

Big banks posted a lower NPL ratio as the expansion of their lending business outpaced the growth in bad loans, latest data from the Bangko Sentral Ng Pilipinas (BSP) showed.

Big banks’ non-performing assets — which include bad debts and foreclosed homes — likewise went down to P184.970 billion from P192.596 billion.

Still, even as they improved their asset quality, banks also continued to set aside substantial funds to cover for potential credit losses, BSP revealed.

The BSP monitors the loan quality of Philippine banks as part of its efforts to maintain high standards for credit risk management.

The Philippine banking system is the only industry out of 69 sovereigns rated by Moody’s Investors Service that carries a positive outlook. Last year was the third straight year since 2012 that the sector held that tag from the global debt watcher. (FREEMAN)