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Real estate loans still rising

By Julito G. Rada | Mar. 31, 2015 at 11:30pm [ manilastandardtoday.com ]

The real estate exposures of universal, commercial, thrift banks and trust departments stood at P1.221 trillion at the end of 2014, up 5.4 percent from P1.159 trillion at the end of third quarter, on higher real estate loans, the Bangko Sentral ng Pilipinas said Tuesday.

Data from the bank regulator showed real estate loans increased 6.8 percent to P1.043 trillion quarter-on-quarter. RELs represented 85.4 percent of real estate exposures during the period.

“Sixty percent of the RELs were extended to land developers, construction firms and other corporate entities. The remaining 40 percent, on the other hand, went to individual households for occupancy,” the Bangko Sentral said.

Investments of banks in real estate securities, meanwhile, dropped 2.1 percent quarter-on-quarter to P178 billion at the end of 2014. Investments in real estate securities comprised 14.6 percent of the banks’ real estate exposures during the period.

“While REEs sustained an increase, the ratio of non-performing RELs of U/KBs and TBs followed a downtrend. At end-2014, the banks’ non-performing RELs represented 2.47 percent of total RELs from 2.80 percent at end-2013. This is the lowest posted for the quarterly indicator since December 2012,” the BSP said.

The Bangko Sentral regularly assesses the quality of banks’ real estate exposures as part of its mandate to foster the strength of individual banks as well as the systemic stability of the local banking industry.

Meanwhile, the gross non-performing loan ratio of U/KBs dropped to 1.82 percent as of end-December 2014 from 1.98 percent as of end-December 2014. This is the lowest NPL ratio posted by the U/KBs in the years after the 1997 financial crisis.

“The indicator reached a record low amid a month-on-month decline in NPLs and an increase in the banks’ total loan portfolio,” the BSP said.

The banks’ NPLs decreased to P93.06 billion at the end-2014 from P95.52 billion in November last year. Total loan portfolio of U/KBs rose to P5.118 trillion last December from P4.83 trillion a month earlier.

Aside from keeping the NPL ratio low, U/KBs continued to allocate substantial reserves for potential credit losses. The industry’s loan loss reserves at the end of December represented 142.43 percent of NPLs. The figure rose from the 140.91 percent recorded a month earlier.

“The industry’s gross NPLs also remained manageable across economic sectors, as seen in financial intermediation; real estate, renting and business activities; manufacturing; wholesale and retail trade; and electricity, gas and water supply. Said sectors received 72.4 percent of the U/KBs total loan portfolio at end-2014,” the Bangko Sentral said.
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