Big banks’ real estate loans up 20% in Jan-June

LENDING by big banks to the real estate sector grew in double-digit terms in the first half of the year, with most of the loans allocated to commercial purposes, the central bank reported over the weekend.

The loans universal and commercial banks released to the real estate sector amounted to P1.33 trillion as of end-June 2016, the Bangko Sentral ng Pilipinas (BSP) said late Friday.

This is higher by 19.8 percent or P388.17 billion from P949.88 billion a year earlier, according to central bank data.

Loans to the real estate sector accounted for 19.2 percent of the big banks’ P5.94 trillion in total loan portfolio (TLP) that included f interbank loan receivable (IBL). Minus the IBL, loans to the sector accounted for 19.8 percent of the f P5.73 trillion in TLP.

“A surge in lending to property-related sectors stands out as an obvious area of concern. But lending to the property sector accounts for only 20 percent of total lending,” Capital Economics said.

“That said, we don’t think the Philippines is at imminent risk of a crisis.” the research consultancy noted.

Around 24.6 percent or P279.46 billion of the total real estate loans (REL) consisted of residential loans, and 75.4 percent or P858.59 billion were accounted for by commercial loans.

Credit growth has tended on its own to serve as a poor indicator of a financial crisis, because it takes no account of the ability of the country to service its debts.

“Rapid credit growth in a fast-growing country like the Philippines is less of a concern than in a country like, for example, Japan where nominal GDP [gross domestic product]is barely growing,” it added.



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