Real estate loans rise 4.3% to  P2.44 trillion

The exposure of local banks to the property sector accounted for 21.8 percent of their total loans as of end-June 2022, slightly higher than 22.2 percent a year ago.

This ratio was within the 25-percent ceiling set by the Bangko Sentral ng Pilipinas.

Data from the Bangko Sentral ng Pilipinas (BSP) show that investments and loans provided by the banking industry to the property sector went up 6 percent to P2.91 trillion as end-June from P2.74 trillion a year earlier.

Loans to the sector rose 4.3 percent to P2.44 trillion as end-June from P2.34 trillion a year ago. Commercial real estate loans grew by 6.7 percent to P1.58 trillion from P1.48 trillion, while residential real estate loans increased 8.2 percent to P919.89 billion from P850.34 billion.

Statistics showed past due real estate loans fell by 5.7 percent to P141.32 billion in June from last year’s P149.88 billion. Past due commercial real estate loans decreased by 7.6 percent to P39.91 billion from P43.21 billion, while past due residential real estate loans slipped by 4.9 percent to P101.41 billion from P106.67 billion.

Amid uncertainties brought about by the global health crisis and elevated global inflation resulting in tighter monetary conditions, the gross non-performing real estate loans of domestic banks slipped by 3.2 percent to P116.58 billion in end-June from P120.44 billion a year ago.

This translated into an improved gross non-performing real estate loan ratio of 4.65 percent from 5.15 percent.

Meanwhile, real estate investments in debt and equity securities rose to P401.26 billion from P400.17 billion.

As part of its COVID response measures, the BSP raised the real estate loan limit of big banks to 25 from 20 percent in August 2020 to free up P1.2 trillion in additional liquidity for lending.

To ensure that banks’ exposure to the property sector remains manageable, the BSP continues to maintain prudential measures including the real estate limit.

These measures also include the heightened surveillance of banks’ real estate and project finance exposures, and the real estate stress test thresholds for universal and commercial banks as well as thrift banks.