By Kathleen A. Martin (The Philippine
Star) | Updated January 14, 2015 - 12:00am
MANILA, Philippines - The exposure of banks to the real estate sector climbed 23 percent to P1.160 trillion as of September last year from P939.775 billion in the same period in 2013, the Bangko Sentral ng Pilipinas reported yesterday.
Real estate loans, which accounted for
the lion’s share of banks’ real estate exposure, went up 24 percent to P977.085
billion from P787.967 billion.
Central bank data showed banks
increased their loans to land developers, construction companies, and other
corporate entities by 24 percent to P592.966 billion as of September from
P479.688 billion a year ago.
Credit made for residential
properties, meanwhile, was also higher by 25 percent at P384.119 billion from
P308.279 billion in the same period in 2013.
The rest of the banks’ real estate
exposure comprised of investments in the property securities which rose 20
percent to P181.882 billion as of September last year from P151.808 billion in
the same period in 2013.
The BSP assesses banks’ exposure to
the real estate sector and introduces new regulations as necessary in order to
moderate the risks of lending and investing in the property market.
Policy actions made based on banks’
real estate exposure are meant to ensure no asset bubbles arise given the
continued robust growth of the property sector.
For one, the central bank in July last
year required banks to undergo a separate stress test to evaluate the impact of
the exposure in the said sector once borrowers fail to pay their loans.
Meanwhile, the BSP in 2012 tightened
reportorial requirements of banks with regard to their exposure to the real
estate sector.
The reporting system now covers loans
to developers of socialized and low-cost housing, and to individuals, and
credit supported by non-risk collaterals or Home Guarantee Corp. guarantee.
At the same time, banks have been
required to report investments in debt and equity securities that finance real
estate activities.
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