By Julito G. Rada | Nov. 23, 2014 at 11:20pm [ manilastandardtoday.com]
Banks’ exposure to the real estate
sector continued to rise this year, as it breached the P1-trillion mark for the
first time in the second quarter, the Bangko Sentral said over the weekend.
Data showed total real estate exposure
of universal, commercial and thrift banks hit P1.097 trillion in the second
quarter, up 6 percent from the first quarter. It also jumped 21.9 percent from
a year ago.
“The REEs of U/KBs and TBs represented
21.8 percent of their total loan portfolio in June, marginally higher than the
21.3 percent recorded a quarter earlier,” the Bangko Sentral said in a
statement.
“The banks’ REEs expanded amid a rise
in real estate loans [RELs], which comprised 84 percent of their REEs,” it
said.
Banks’ real estate loans increased 6.7
percent to P924.3 billion in June this year from March. Land developers,
construction companies and other corporate entities obtained 60 percent of the
RELs, while borrowers acquiring residential properties received the remaining
40 percent.
Investments in real estate securities
increased 2.6 percent to P172.9 billion in June 2014. Said investments
represented the remaining 16 percent of the REEs during the period.
Bangko Sentral said while real estate
exposure rose steadily since 2012, non-performing real estate-loans followed a
decreasing trend. “At end-June this
year, the non-performing RELs of U/KBs and TBs comprised 2.64 percent of their
RELs, lower than the 2.77 percent posted a quarter earlier,” it said.
The Bangko Sentral said it monitored
the real estate exposures of universal, commercial and thrift banks as part of
its broader role of assessing the quality of the banks’ exposures to the
different sectors of the economy.
The Bangko Sentral last month issued
revised rules on bank lending, focusing on the ability of the borrower to pay,
and not collateral, as the basis of loan approvals.
It also intends to cap the value of
real estate mortgage as collateral at 60 percent in securing loans.
Moody’s Investors Service said “the
new regulation is credit positive for Philippine banks because it will require
them to cap the value of real estate collateral and will accelerate loan-loss
provisioning for distressed loans.”
“The regulation will also reduce
banks’ credit risk concentration among borrowers in interconnected industries,”
Moody’s said.
________________________________________________________________
