Real Estate Loans of Banks up 17.5%

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Real estate loans of banks up 17.5%

Real Estate Loans

Real Estate Loans

The exposure of universal, commercial and thrift banks to the real estate sector hit P376.8 billion at the end of the third quarter, up 17.5 percent from P320.7 billion year-on-year. The loans, however, were 0.3 percent lower than P377.8 billion in the second quarter.

The central bank monitors the exposure of banks and limits their exposure in specific companies or sectors to ensure that they remain strong even when one company or one sector suffers a downturn.

The quarter-on-quarter drop in the banks’ real estate exposure was due mainly to the P2.1-billion decrease in real estate loans that outweighed the P1.1- billion rise in their securities investments in property.

Real estate loans of universal, and commercial and thrift banks accounted for 14.70 percent of total loans at the end of the third quarter, up from 14.4 percent at the end of June.

Total loan portfolio declined to P2.496 billion at the end of September from the P2.562 billion at the end of June. Non-performing real estate loans increased to 6.65 percent of the total portfolio at the end of September from June’s 6.58 percent as more residential loans defaulted.

The real estate investments of banks are in the form of debt securities or equity securities. Investment of banks in debt securities of real estate firms increased to P6.824 billion from P5.886 billion at the end of June while investments in real estate equity securities increased slightly to P3.055 billion from P3.015 billion.

Real estate loans of universal and commercial banks, accounted for 11.81 percent of the total at the end of September, bigger than the 11.73 percent reported at the end of June.

Non-performing real estate loans of universal and commercial banks accounted for 5.57 percent, smaller than the 5.99 percent at the end of June.

Universal and commercial banks also reported an decrease in non-performing commercial real estate loans to 5.8 percent of total from 5.99 percent.

Thrift banks, however, reported a rise in non-performing real estate loans.

Non-performing real estate loans accounted for 9.29 percent of real estate loans at the end of September, bigger than 8.09 percent at the end of June.

Thrift banks also reported an increase in defaults in residential real estate loans that accounted for 9.11 percent of the total.