By Kathleen A. Martin (The Philippine
Star) | Updated October 6, 2014 - 12:00am
MANILA, Philippines - Banks further
tightened their lending standards for credit extended to the real estate sector
in the third quarter, a Bangko Sentral ng Pilipinas survey showed.
The central bank, in its latest Senior
Loan Officers Survey, observed a “net tightening” for standards of commercial
real estate borrowings for the ninth consecutive quarter.
“The net tightening of overall credit
standards for commercial real estate loans was attributed by respondent banks
to perceived stricter oversight of banks’ real estate exposure along with
banks’ reduced tolerance for risk, among others,” the BSP said.
“In particular, respondent banks
reported wider loan margins, reduced credit line sizes, and stricter loan
covenants for commercial real estate loans,” the central bank added.
Latest central bank data showed loans
extended by banks to the property sector went up 21 percent to P924.32 billion
as of the end of June from the P762.49 billion recorded in the same period last
year.
Borrowings made by land developers,
construction companies and other corporate entities reached to P583.21 billion
in end-June, while credit made for residential properties amounted to P341.11
billion.
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Most of the respondent banks expect
the keep their credit standards for commercial real estate loans in the fourth
quarter, the BSP said.
Meanwhile, the survey also showed the
demand for real estate loans remained the same in the third quarter with 65
percent of the respondent banks saying standards “remained basically
unchanged,” the BSP said.
For the remaining 35 percent which
observed an increase in the demand, the BSP said this was due to improved
clients’ economic outlook, lower interest rates, and increased working capital
financing needs of clients.
The special questions on commercial
real estate loans have been included in the quarterly Senior Loan Officers
Survey of the BSP. The quarterly survey has been conducted by the BSP since the
second quarter of 2009 to assess credit standards, demand conditions for loans,
and potential risks in asset markets.
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