By Prinz P.
Magtulis (The Philippine Star) | Updated May 13, 2013 - 12:00am
MANILA,
Philippines - Banks are in agreement with the Bangko Sentral ng Pilipinas (BSP)
when it said that a property bubble is far from forming despite exposures
breaching regulatory limits.
Last
Thursday, the central bank reported that property exposure of banks – real
estate loans as a proportion of total loan portfolio – hit 20.86 percent last
year, exceeding the 20-percent cap set during the Asian financial crisis.
The latest
figure represented a revised calculation though, which dropped original
exclusions granted to loans for low-cost housing and those with guarantees. It
also captured data on securities issued to property firms.
“Exposure is
still okay… We still have structural demand from new jobs and household
formation,” Bankers Association of the Philippines president Lorenzo Tan said
in a text message.
While data
indeed exceeded limits, he said more important to monitor is the level of
non-performing property loans – those unpaid 30 days after the due date – which
continued to remain stable at just 3.7 percent of the total.
Vacancy
levels in the market, affordable down payment schemes and the level of
disposable income should also be watched.
“(Only) when
these numbers exceed acceptable norms, it will be time to impose
macro-prudential measures to down the market,” Tan pointed out.
For her part,
Suzanne Felix, executive director of the Chamber of Thrift Banks, said the
strong housing demand is structural in nature because it remains fueled
primarily by a “booming economy.”
This, in
effect, translates to higher per capita income across the population which in
turn gives people more purchasing power to buy properties and developers to
continue boosting the supply.
“End-users,
which are a major market of thrift banks, remain the major market for housing,
rather than speculators or investors,” Felix said in a separate text message.
“The Philippines
is thus far from an oversupply problem,” she added.
The demand,
BDO Capital president Eduardo Francisco said, is more of having “many
opportunities” than banks relaxing their credit standards in chase of profits.
Jose
Cuyegkeng, chief economist of ING Bank, said with the expectation of six- to
seven-percent growth this year, it should not be a surprise that the real
estate sector is expanding similarly fast.
What should
be done is to contain the euphoria so that there is no “unwarranted exuberance
in the property sector,” he said in a lecture over the weekend.
“That is why
(the BSP) put in macro-prudential measures… They are always monitoring all
these things, but so far I don’t think we have (asset bubbles),” Cuyegkeng
said.
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