Posted on 08:13 PM, December 21, 2010 [ BusinessWorld Online ]
BANKS ARE extending more loans to the real estate sector amid a construction boom.
Data released by the Bangko Sentral ng Pilipinas (BSP) yesterday showed that banks’ exposure to the real estate sector in terms of loans and investments in securities rose by 10.31% year on year to P415.62 billion in the nine months to September.
Real estate loans rose by 10.07% to P403.85 billion while investments in debt securities and equities of real estate firms rose by 19.23% to P11.78 billion.
The BSP did not provide a reason for the increase, but Lindsay Orr, chief operating officer of Jones Lang LaSalle Leechiu, said in a telephone interview yesterday this could be due to more construction of residential units.
“There would appear to be a surge in construction of residential units.
Most firms have also reported an increase in sales and increase in take up of residential spaces,” he said.
Money that real estate firms borrowed from banks or raised from debt or share sales was used to construct and develop real estate properties for commercial and residential purposes. Individuals and households also took out loans to acquire, construct and/or improve their residential units.
Universal and commercial banks’ exposure to the real estate sector totaled P304.58 billion, accounting for 73.3% of the P415.62 billion total, while that of thrift banks amounted to P111.04 billion.
However, as ratio of the banks’ total loan portfolio, banks’ real estate exposure, excluding the borrowings they made among themselves, declined to 14.67% from 14.70% a year ago because their total loan portfolio expanded faster. The central bank limits banks’ real estate exposure to 20%.
Central bank data also showed that over half of real estate loans went to the construction of real estate properties for commercial purposes, accounting for 55.7% or P225.01 billion, while the balance was lent for the acquisition, construction and/or improvement of residential units of individual borrowers.
Bad real estate loans amounted to P27.11 billion, higher than the P24.41 billion a year ago. The ratio of non-performing real estate loans to total real estate loans increased to 6.71% from 6.65% a year ago. -- Louella D. Desiderio
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