Property loans hit fresh peak

Posted on June 29, 2012

BANK EXPOSURE to the real estate sector -- bulk of it in loans -- hit a new high at the end of May, but stayed below the limit set by the Bangko Sentral ng Pilipinas (BSP), an official statement yesterday said.

About 44.37% of total loans, at P232.57 billion as of end-March, was for housing. -- Photo By Jonathan L. Cellona

BSP said in its statement that combined exposure to the property sector of universal and commercial banks, as well as thrift banks, “reached its highest level yet” of P538.141 billion by the end of the first quarter, 21% more than the P444.903 billion recorded the previous year and 3.77% bigger than the P518.614 billion at the end of December 2011.

Real estate loans acccounted for 97.4% of total exposure at P524.128 billion, up 21.03% annually from P433.050 billion and 3.6% from P505.867 billion at the end of December.

Investments in debt and equity securities, which made up the balance at P14.012 billion, were 18.2% more than the P11.854 billion of the previous year and 9.9% up from end-December’s P12.748 billion.

By industry, universal and commercial banks accounted for 76.9% of total exposure at P413.91 billion (P399.898 billion in loans and P14.012 billion in investments), while thrift banks made up the balance with P124.231 billion in loans.

Still, BSP noted the ratio of real estate loans to total loan portfolio, less interbank loans, “continued to remain stable.”

Real estate loans made up 15.19% of banks’ total loans as of end-March, compared to 14.73% the previous year and 14.52% at the end of December.

Hence, while bank exposure to the property exposure has continued to rise to new peaks, its proportion to total loans has remained below the 20% limit for universal and commercial banks set by Circular No. 600, which BSP issued in February 2008 in the wake of the Asian financial crisis.

Real estate loan-total loan ratio of universal and commercial banks stayed below that level at 13.07% as of end-March, compared to 12.31% the previous year and 12.42% as of end-December.

The same ratio for thrift banks, which do not have such limit, was 31.64% as of end-March, from 32.75% the previous year and 31.39% as of end-December.

The entire industry’s non-performing real estate loan ratio (non-performing real estate loans to total loans) eased to 5.11% as of end-March from 6.05%% the previous year, but was slightly up from end-December’s 5.01%.

Loans that universal and commercial banks extended were mostly for commercial purposes (67% at P267.9 billion), in contrast to those by thrift banks that were used to finance the acquisition, construction and improvement of residential units for occupancy by individuals or households (80.9% at P100.5 billion). -- KAM