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September 26, 2022

Non-performing real estate loan ratio of Philippine banks breach 5% in Q1

The share of non-performing real estate loans of Philippine banks to the industry’s total loan book breached five percent in the first quarter of the year, preliminary data from the Bangko Sentral ng Pilipinas (BSP) showed.

Due to uncertainties brought about by the COVID-19 pandemic, the industry’s gross non-performing real estate loans went up by 12.9 percent to P124.03 billion in the first quarter of the year from P109.84 billion in the same quarter last year.

This translated to a higher gross non-performing real estate loan ratio of 5.04 percent in end March this year from 4.79 percent in end March last year.

Likewise, past due real estate loans inched up by 2.1 percent to P152.39 billion from P149.17 billion.

The past due commercial real estate loans grew by 8.5 percent to P44.28 billion from P40.81 billion, while past due residential real estate loans remained steady at P108.11 billion from P108.36 billion.

Preliminary data released by the central bank showed investments and loans extended by the banking industry to the property sector went up by 7.1 percent to P2.85 trillion in end March compared to a year-ago level of P2.66 trillion.

Lending to the sector increased by 7.4 percent to P2.46 trillion from P2.29 trillion. Commercial real estate loans rose by 6.9 percent to P1.55 trillion from P1.45 trillion, while residential real estate loans grew by eight percent to P908.65 billion from P841.07 billion.

On the other hand, data from the BSP showed real estate investments in debt and equity securities expanded by 5.6 percent to P393.55 billion from P372.75 billion.

As a result, the exposure of Philippine banks to the volatile property segment grew further to 23.3 percent in the first quarter of the year from 22.01 percent in the same quarter last year.

Despite the rise, the industry’s real estate exposure was well within the 25 percent ceiling set by the regulator.

It would be recalled the BSP Monetary Board raised the real estate loan limit of big banks to 25 from 20 percent in August 2020 as part of its COVID-19 response measures to free up P1.2 trillion in additional liquidity for lending amid the uncertainties.

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