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Banks' Real Estate Exposure Rises at End-2013

05.20.2014

The real estate exposure (REE) of universal, commercial (U/KBs) and thrift banks (TBs) stood at Php 1.006 trillion at end-2013, 7.1 percent higher than the Php 939.8 billion posted at the end of third quarter last year.

The rise in REE was mainly driven by real estate loans (RELs) which grew by 7.0 percent to Php 843 billion at end-2013 from Php 788 billion a quarter earlier. RELs accounted for 83.8 percent of the banks’ REE in December last year.

Sixty percent of the RELs was granted to commercial entities such as land developers and construction companies while the rest of the RELs was extended to borrowers acquiring residential properties.

On the other hand, investments in real estate securities grew by 7.8 percent to Php 163.6 billion at end-2013 from Php 151.8 billion during the third quarter last year. Investments in RE securities comprised the remaining 16.2 percent of the REE.

The end-2013 REE represented 21.8 percent of the banks’ total loan portfolio. The exposure is similar to the figure recorded a quarter earlier.

The banks’ non-performing RELs remain manageable amid the increase in real estate credit. At end-2013, the non-performing RELs of U/KBs and TBs accounted for 2.8 percent of their RELs, lower than the 3.2 percent posted at end-September last year.

The Bangko Sentral ng Pilipinas (BSP) monitors various segments of the credit market in its continuing effort to assess and address potential concerns that may undermine the stability of the financial system.

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