The exposure of Philippine banks and trust entities to the volatile property segment eased slightly to 19.92 percent of total loans as of end-June from 20.31 percent as of end-March, data from the Bangko Sentral ng Pilipinas (BSP) showed.
The ratio was also down from the 20.8 percent seen in the same period last year. It marked the lowest in more than four years or since the 19.84 percent in December 2019.
Based on central bank data, investments and loans extended to the property sector inched up by 3.6 percent to P3.16 trillion in end-June from P3.05 trillion in the same period a year ago.
Broken down, lending went up by 7.7 percent to P2.79 trillion from P2.59 trillion a year ago. Commercial real estate loans rose by 6.1 percent to P1.74 trillion, while residential real estate loans grew by 8.9 percent to P1.04 trillion.
Likewise, past due real estate loans increased by 7.1 percent to P141.25 billion. This came after past due commercial real estate loans grew by 16.4 percent to P43.36 billion, while past due residential real estate loans inched up by 3.5 percent to P97.88 billion.
The gross non-performing loans (NPLs) from the real estate sector stood at P110.86 billion as of end-June, five percent higher than the P105.63 billion in the comparable year-ago period.
Despite the pick-up in soured loans, the gross NPL ratio went down to 3.98 percent in end-June from 4.07 percent a year ago.
Meanwhile, real estate investments in debt and equity securities fell by 18.4 percent to P371.11 billion from P454.86 billion the previous year.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the easing exposure to the real estate sector was due to high denominator effects, with faster growth in overall bank loans.
Separate BSP data showed credit growth accelerated for a second straight month to 10.9 percent in August from 10.4 percent in July. It marked the fastest in 20 months or since the 13.7 percent expansion in December 2022 despite the high interest rate environment.
“The adoption of credit risk management based on global best practices also led to more prudent management of real estate/property exposures in view of prescribed limits/ceilings set by regulators also partly led to the decrease in the said exposures to the sector,” Ricafort said.
Source: Philstar
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