The exposure of Filipino banks and trustentities to the real estate sector increased at the end of December in the midst of an increase in residential and commercial real estate loans, according to data from the Bangko Sentral NG Pilipinas (BSP).
The ratio of the real estate exposure of Banks rose to 19.75% from the end of December of 19.55% at the end of September. However, it was lower than 20.17% in the same period in 2023.
The BSP monitors The exposure of lenders to the real estate sector as part of its mandate to maintain financial stability.
The total investments and loans that were expanded by Filipino banks and trust departments to the real estate sector grew by 5% to P3.31 trillion from the end of December from P3.15 trillion in 2023.
Data from the Central Bank showed that real estate loans year after year 7.9% rose to P2.95 trillion in the end of December from P2.74 trillion a year ago.
Residential real estate loans climbed with an annual 9.6% to P1.1 trillion, while commercial real estate loans increased by 6.9% to P1.85 trillion.
Layed property loans amounted to P140.645 billion, higher with 4% of P135,261 billion a year ago.
Destroyable, past duration of real estate loans rose by 4.7% to P99.727 billion, while the past due commercial real estate loans were higher by 2.3% to P40.918 billion.
In the meantime, the gross non -performing real estate loans rose by 0.4% to P108.807 billion from the fourth quarter of P108.389 billion a year ago.
This brought the gross non-performing ratio for real estate loan to 3.68% at the end of December, lower than 3.96% a year earlier.
On the other hand, the investments in real estate fell by 13.8% to P353,809 billion from the end-December from P410,653 billion in the same period a year ago.
The debt of this fell by 10.5% years after year to P236.881 billion, while stock effects fell by 19.8% to P116.928 billion.
Joey Roi H. Bondoc, director and head of research at Colliers Philippines, said that the jump in real estate exposure was due to the fact that companies expanded their activities in the last part of the year.
“For Residential, I would partially attribute that to units for ready-made (RFO) (RFO). We now have many RFOs, “he said via the phone call.
“Since there is a lot of stock now, many of these RFO promotions are sweeter, which probably contributed to the increase,” he added.
Buying an RFO unit was much more difficult before the pandemie, said Mr. Bondoc, and noticed that buyers had to pay 5% to 10% of the total contract price before they could transfer to the unit.
“Now there are promos if you are an investor and buyer of RFOs, you only have to secure bank loans. Have approved that and you can transfer. You don’t have to pay a substantial deposit, “he added.
Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the rise of real estate loans is also consistent with a faster growth of the general loans “making it cheaper to finance new real estate developments.”
The last BSP data showed that bank loans have risen by 12.2% year after year to P13.1 trillion in December, the fastest growth in two years.
Mr. Ricafort said that this can be compensated by the higher vacancy rates in the midst of the ban on Filipino offshore gaming operators (Pogos).
“However, some buyers would be opportunistic and the bargains make it in the midst of higher vacancy and an increased offer after the Pogo output,” he added.
In the coming months, Mr. Bondoc said that he is expecting an increased demand for real estate loans, especially for the residential segment, because promos are becoming more attractive for RFOs.
‘We will probably see larger purchases from these RFOs. Since these also require bank loans, this will probably result in the exposure of real estate to the banking sector, which will generally predict well for the property sector. “
Mr. Ricafort said that further policy rate reductions and reserve -requirement Ratio (RRR) reductions in general would also strengthen bank loans.
Despite surprising markets with a policy break last month, BSP governor Eli M. Remolona, Jr. Said that the central bank is still in the relaxation, which indicates the possibility of 50 basic points (BPS) of cutbacks this year.
Last month the BSP also announced that it will reduce the RRR of universal and commercial banks and non-bank financing with quasi-banking functions of 200 bps to 5% of 7%, with effect from 28 March.
In 2020, the Central Bank increased the limit of the real estate loan from banks to 25% of their total credit portfolio of 20% earlier to release extra liquidity as an aid measure during the coronavirus pandemia. – Luisa Maria Jacinta C. Jocson