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BSP Releases Results of Expanded Real Estate Exposure Monitoring

05.10.2013

The Monetary Board announced that the total real estate exposure of universal, commercial (U/KBs) and thrift banks (TBs) was Php 821.7 billion as of December 2012.

This figure represents the inaugural finding of the expanded real estate report that the Bangko Sentral ng Pilipinas (BSP) has initiated for bank exposures to the real estate sector. This new report is meant to get a comprehensive reading of banks’ exposure to the real estate sector without pre-qualifying the potential risk impact of these exposures.

BSP has been reporting the aggregate real estate loans (RELs) data series. In addition, BSP has been monitoring the 20 percent cap on RELs since 1997. The new report extends the previously released data series by including loans by developers of socialized and low-cost housing, loans to individuals, loans supported by non-risk collaterals or Home Guarantee Corporation guarantee as well as exposures by bank trust departments and thrift banks.

This expanded coverage of banks’ exposure towards the real estate sector is in line with the BSP’s pursuit of financial stability. In line with its constitutional mandate over money, credit, and banking, BSP is keen on monitoring credit conditions that support the heightened activity in property development.

Governor Amando M. Tetangco, Jr. pointed out that “it is important that we have a continuing appreciation of the quality of credit standards, specially at this juncture where market rates have declined against historical norms.”

“Taking this holistic view of the market is an effective way to ensure that we preserve and build upon the gains that we have already achieved thus far,” the Governor added.

  The data from the survey suggests that the non-performing RELs ratio continues to be stable, reported at 3.7 percent as of end-December 2012.

Furthermore, semestral stress tests on banks have consistently showed the ability of bank balance sheets to withstand simulated across-the-board defaults in residential real estate exposures. 

Based on the latest stress test results, the capital adequacy ratio of tested U/KBs and TBs will stand at 15.77 percent despite a 50 percent simulated default on residential real estate loans.

Further data refinements may still be introduced into the expanded report.

Real Estate Exposures of U/KBs and TBs at end-2012 (in billion pesos)

 

U/KBs + TBs 

Trust Total

RELs

695.3

7.9

703.2

Investments in Securities 

33.0

85.5

118.5

Total REEs 

728.3

93.4

821.7

TLP net of IBL 

3,938.9

85.0

3,938.9


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