Lenders’ real-estate exposures remain manageable

The real estate exposures (REEs) of universal, commercial and thrift banks and trust departments reached P1.5trillion at the end of 2015. 

The REEs accounted for 23.7 percent of the banks’ total loan portfolio (TLP) during the period, slightly lower than the 24.1 percent posted at end-September 2015.

Moreover, real estate loans (RELs) and investments in real estate (RE) securities as a percentage to TLP stood at 20.4 percent and 3.3 percent, respectively, as of end-2015.

The end-2015 REE is 5.9 percent higher than that posted by the banks in the preceding quarter. The rise is attributed to the banks’ real-estate loans, which grew by 6 percent to P 1.3 trillion quarter-on-quarter. RELs made up 86.2 percent of REEs at end-2015.

The banks’ investments in RE securities, meanwhile, expanded by 5.1 percent quarter-on-quarter to P209.7 billion at the end of last year.

The banks’ exposure to RE securities accounted for 13.8 percent of REEs during the period.

While REEs sustained an increase, the non-performing RELs ratio of universal, commercial and thrift banks followed a downtrend.

At end-2015, the banks’ non-performing RELs ratio stood at 2.1 percent, marginally lower than the 2.2 percent recorded a quarter earlier.

The Bangko Sentral ng Pilipinas (BSP) monitors the REEs of universal, commercial and thrift banks as part of its broader role of assessing the quality of bank exposures to the different sectors of the economy.

Maintaining high loan quality is essential to the promotion of financial stability, which is a key policy objective of the BSP.