The exposure of the banking industry in the real-estate sector grew by 11 percent in the first quarter from a year ago.
A bank’s exposure is measured in terms of real-estate loans, earmarked for purchasing residential and commercial properties, extended by banks and of investments by banks in bonds and equities issued by real-estate firms.
Industry players said rising incomes within the economy has been boosting savings, and the resulting increase in bank deposits allowed banks to lend more to the sector and buy more portfolio instruments. They said the low interest rate environment was also boosting demand for housing loans.
Data from the Bangko Sentral ng Pilipinas showed that as of end-March this year, the total loans extended by universal, commercial and thrift banks to the real-estate sector reached P444.9 billion, up from P400.7 billion a year ago.
Of the latest amount, P433.055 billion was in the form of real-estate loans, while the balance of P11.85 billion represents the bonds and equities issued by real-estate firms and bought by banks.
The first-quarter figure was also higher than the P433.59 billion registered in the fourth quarter of 2010.
The increase in exposure resulted in a slight increase in the bad debts carried by banks. Data showed that as of end-March, non-performing real-estate loans hit 6.05 percent of the total real-estate loans, up from 5.98 percent a year ago.
Industry players expect banks to extend more loans this year given a more optimistic outlook on the economy.