Lenders’ exposure to real estate falls as of end-Sept.
Several buildings are seen amid the sunset in Metro Manila. — PHILIPPINE STAR/ MICHAEL VARCAS
LOCAL BANKS and trust entities saw a decline in their exposure to the real estate industry at the end of the third quarter of 2021, based on data from the Bangko Sentral ng Pilipinas (BSP).
Banks and trust departments have a cumulative 22.18% exposure to the property market as of end-September, well-within the 25% limit set by the central bank. It inched down from the record 22.2% exposure seen as of end-June.
“I think [this level of exposure] is not much of a concern because we are still grappling with the pandemic and it is only in the fourth quarter that much of the demand [in the sector] has returned,” UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message.
“The Omicron threat may again dampen overall demand and may eventually affect demand for real estate at least in the short term,” he added, referring to the more transmissible coronavirus disease 2019 (COVID-19) variant that is driving a fresh surge in infections.
Broken down, real estate exposure of Philippine banks edged up to 22.24% as of end-Sept. from 22.21% as of end-June.
Meanwhile, trust departments’ exposure to the property sector plunged to 14.69% as of end-September from 21.16% as of end-June.
BSP data showed that loans and investments to the real estate industry reached P2.76 billion as of end-September, higher by 8.3% from the P2.548 billion seen in the same period of 2020.
Lending to the property sector reached P2.367 billion, up 6.9% from P2.214 billion a year ago. Broken down, banks disbursed credit worth P2.356 billion, while trust department extended loans amounting to P11.5 billion.
Gross nonperforming real estate loans hit P122.812 billion, rising 32% from the P92.991 billion as of end-September 2020. This brought the ratio to 5.19%, up from the 5.15% seen at the end of the second quarter as well as the 4.2% a year prior.
Meanwhile, past due real estate loans amounted to P152.186 billion as of end-September, up 6.11% from P143.411 billion a year earlier. These borrowings accounted for 6.43% of credit to the sector, edging up from the 6.41% as of June but lower than the 6.48% seen as of end-September 2020.
Real estate investments to debt and securities amounted to P394.476 billion as of end-September, increasing by 18% from the P334.256 billion a year earlier. Investments by banks amounted to P104.969 billion, while P289.506 billion came from trust departments.
The BSP monitors lenders’ exposure to the real estate industry as part of its mandate to guide financial stability.
As part of its relief measures during the pandemic, the central bank in August 2020 raised the real estate loan limit of banks to 25% of their total loan portfolio from 20% previously. The move was done to unleash liquidity for the sector during the crisis.
Home prices in the third quarter of 2021 rose by 7.3% year on year, ending two consecutive quarters of annual decline, based on data released by the BSP last month. The higher prices was attributed to the uptick in demand for condominium units and townhouses. — Luz Wendy T. Noble