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Banks' Real Estate Exposures Remain Manageable

05.06.2016

The real estate exposures (REEs) of universal, commercial (U/KBs), thrift banks (TBs) and trust departments reached Php 1.5 trillion at end-2015.

The REEs accounted for 23.7 percent of the banks’ total loan portfolio (TLP) during the period, slightly lower than the 24.1 percent posted at end-September 2015. Moreover, real estate loans (RELs) and investments in real estate (RE) securities as a percentage to TLP stood at 20.4 percent and 3.3 percent, respectively, as of end-2015. 

The end-2015 REE is 5.9 percent higher than that posted by the banks a quarter earlier. The rise is attributed to the banks’ real estate loans, which grew by 6.0 percent to  Php 1.3 trillion quarter-on-quarter. RELs comprised 86.2 percent of REEs at end-2015.  

The banks’ investments in RE securities, meanwhile, expanded by 5.1 percent quarter-on-quarter to Php 209.7 billion at the end of last year. The banks’ exposure to RE securities accounted for 13.8 percent of REEs during the period.  

While REEs sustained an increase, the non-performing RELs ratio of U/KBs and TBs followed a downtrend. At end-2015, the banks’ non-performing RELs ratio stood at 2.1 percent, marginally lower than the 2.2 percent recorded a quarter earlier.

The Bangko Sentral ng Pilipinas (BSP) monitors the REEs of U/KBs and TBs as part of its broader role of assessing the quality of bank exposures to the different sectors of the economy. Maintaining high loan quality is essential to the promotion of financial stability, which is a key policy objective of the BSP.

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