Philippine banks' exposure to the real estate industry increased by 7.06 percent year on year, with loans accounting for the majority, as of end-March this year.
Banks and trust departments' real estate exposure climbed to P2.85 trillion as of end-March 2022, up from P2.66 trillion a year ago, according to the latest Bangko Sentral ng Pilipinas data.
Real estate loans accounted for 86.21 percent of the total, with financial investments accounting for 13.78 percent.
The entire exposure's loan component was up 7.31 percent to P2.46 trillion from P2.29 trillion a year ago. Borrowers buying homes received 36.92 percent of total loans, while those buying commercial properties received 63.07 percent.
Commercial real estate loans saw an uptick of 6.89 percent year on year to P1.55 trillion at the end of March from P1.45 trillion a year earlier. Residential real estate loans, meanwhile, expanded by 8.03 percent year on year to P908.66 billion from P841.07 billion.
Non-performing loans, on the other hand, grew by 12.95 percent to P124.02 billion by the end of March 2022, accelerating from P109.24 billion the previous year. As a result, the overall ratio of non-performing real estate loans to total real estate loans soared to 5.04 percent, wider than the 4.79 percent a year ago.
Real estate securities investments, in the meantime, expanded by 5.57 percent year on year from the end of March 2021 to P393.54 billion.
Banks are safe, the central bank has pointed out earlier, and have sufficient buffers against any potential real estate market downturn.
"The latest results of the real estate stress test exercise show that banks remain adequately capitalized against a potential downturn in the real estate market," Bangko Sentral Governor Benjamin Diokno assured.
He noted that, assuming a 25-percent write-off in real estate exposures, the post-shock capital adequacy ratios of universal and commercial banks, including subsidiary thrift institutions, remain comfortably above the regulatory minimum of 10 percent.
Source: Manila Times