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Banks' real estate loans rise to P224B as of September

By Des Ferriols Updated December 28, 2008 12:00 AM

[ philstar.com ]


Pushed by steady demand in the property sector, real estate lending by commercial banks stayed on the uptrend in the third quarter of the year, the Bangko Sentral ng Pilipinas (BSP) reported.


But the BSP noted that the increase in real estate loans was also accompanied by a slight increase in non-performing real estate loans as the system showed some signs of stress that could stem from rising interest rates in the beginning of the year.


The BSP said at the end of September, the exposure of universal and commercial banks in real estate lending rose to P223.9 billion, higher by 5.1 percent from the prior quarter’s P213.1 billion and by 16.4 percent from the year ago’s P192.3 billion.


The BSP said the additional exposure for the quarter came from real estate loans (RELs) amounting to P7.7 billion and investments in securities issued by real estate companies amounting to P3.2 billion.


Despite the 3.7-percent growth in RELs, however, the BSP said the proportion of RELs to total loan portfolio, exclusive of interbank loans (TLP) only increased by a meager 0.1 percentage point from the second quarter.


The BSP said RELs accounted for 10.4 percent of the total loan portfolio which simultaneously increased 2.9 percent to P2.076 trillion. However, this ratio was 0.8 percentage point lower than the year ago’s 11.2 percent ratio.


The BSP reported that the 3.7-percent growth in RELs during the quarter stemmed from the P5.4-billion growth in commercial RELs while residential RELs provided the remaining P2.2 billion.


According to the BSP, RELs extended for the construction and development of real estate properties for commercial purposes held the bulk at 71 percent of total RELs, equivalent to a total of P152.7 billion.


The remaining 29 percent (or P62.3 billion) was granted for the acquisition, construction and/or improvement of residential units occupied or to be sold by individual or household borrower.


The increase in real estate loans, however, was also accompanied by an increase in non-performing RELs during the period in review. The BSP said non-performing RELs rose by 5.2 percent or P800 million to P16 billion from previous quarter’s P15.2 billion.


Consequently, the BSP said the ratio of non-performing RELs to total RELs slightly rose to 7.4 percent from the previous quarter’s 7.3 percent. As a percentage of TLP, delinquent RELs remained unchanged from the past quarter’s 0.8 percent.


Investments in debt securities issued by and in equity securities of real estate companies amounted to P8.9 billion at end-September 2008, up from last quarter’s P5.7 billion and year ago’s P6 billion.


The ratio of combined RELs and investments to the real estate industry to TLP plus total debt and equity investments stood at 6.8 percent. This was slightly higher than the past quarter’s and year ago’s 6.7 percent ratio.

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