Banks’ real estate exposure up 19%
Real estate loans extended by banks in the first semester grew by 19 percent bringing the total to a new high.
The growth in real estate loans was driven by the strong market demand for both commercial and residential properties, official data showed.
Based on a report of the Bangko Sentral ng Pilipinas, the real estate loans extended by universal/commercial and thrift banks reached P546.46 billion as of the end of the first semester, up from P459.87 billion in the same period last year.
The report likewise showed a 22-percent rise in banks’ investments in securities sold by real estate firms to P15.19 billion from P12.42 billion a year ago.
These brought the total exposure of banks to the real estate sector—that is, the sum of real estate loans and investments in real estate securities—to a record high of P561.64 billion, up by 19 percent from P472.29 billion.
The robust growth in real estate loans was a result of the better-than-expected performance of the economy during the period. A favorable economic performance results in rising incomes which, in turn, jacks up demand for real properties, according to industry players.
In the first half, the economy posted a year-on-year growth of 6.1 percent, registering one of the fastest in Asia during the period.
Data showed that of the total real estate loans, P302.03 billion represented borrowings used in the purchase of commercial properties. The balance of P244.43 billion covered loans for residential property.
Demand for residential properties is partly driven by the strong growth in remittances from Filipinos overseas.
The growth of the property sector over the last three years has elicited concerns that the Philippines may be headed toward another asset price bubble, similar to what happened in the late 1990s, in the next few years if nobody steps on the breaks.
BSP officials said earlier that as of the moment, there was no substantial evidence showing that an asset price bubble was forming. They, however, added that the central bank had been tightly monitoring the banks’ real estate lending.
