Bank exposure to real estate sector climbs by 5.2% in June

MANILA, Philippines - Bank's exposure to the real estate sector in the form of loans and investments continued to grow as of June, indicating the property market remained upbeat despite the gloomy economic conditions. Data released Monday by the Bangko Sentral ng Pilipinas (BSP) showed that universal and commercial banks’ exposure to the real estate sector rose to P213.2 billion as of June, 5.2% higher than in March and 11.4% higher than a year ago. Exposure is in terms of loans made to residential and commercial borrowers, and investments in the form of bonds and stocks. Real estate loans grew to P207.43 billion in June from P194.92 billion in March, the growth fueled by the acquisition, construction and/or improvement of residential units by individual borrowers. Loans extended for the construction and development of properties for commercial purposes also grew but not as much The BSP noted that the share of commercial real estate loans to the total had gone down while the share of residential real estate loans had risen. It said the the healthy demand for residential units is fueled by remittances from Filpinos living and working abroad. On the other hand, the growth in loans was offset by the decline in banks’ investments in securities issued by property development firms. Investments in bonds and stocks of real estate firms amounted to P5.7 billion in June, down from P7.6 billion a quarter ago and P5.9 billion a year ago. The BSP also noted that banks’ total exposure to the real estate sector as percentage of loans and investments combined rose to 6.7% from 6.6% in the previous quarter. — Gerard S. dela Peña, BusinessWorld