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9 March 2010

Philippines: Real estate loans grew in Q4 of last year

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Banks lent more money to the real estate sector in the last quarter of last year, with most of the loans used to build and develop commercial properties, the central bank said on Tuesday, reported GMA News on its website.

Realty exposure of universal and commercial banks, as well as thrift banks, grew by 4.5 percent to 393.6 billion peso (1$=48 peso) from the third quarter and by almost a tenth from a year earlier, the Bangko Sentral ng Pilipinas (BSP) – the central bank - said.

The additional exposure came primarily from real estate loans, which rose by 16.8 billion peso to 383.7 billion peso. Meanwhile, investments in securities issued by property companies also went up by 0.4 percent to 9.9 billion peso, it said.

Data showed that 58 percent or 221.1 billion peso of the total real estate loans in the last quarter was lent to build commercial properties. The balance or 162.6 billion peso was lent to borrowers who built or improved their homes.

Universal and commercial banks held almost three-quarters of the loans or 285.7 billion peso, while the balance or 108 billion peso was held by thrift banks.

Universal and commercial banks’ exposure was mostly for commercial purposes — 74 percent or 203.1 billion peso — while the balance of 72.6 billion peso was for residential purposes.

In contrast, thrift banks lent more to individual borrowers — 83 percent or 90 billion peso — while the rest or 18 billion peso was lent out for commercial purposes.

The BSP noted that despite the rise in property loans, their ratio to the total loan portfolio declined to 14.1 percent from 14.7 percent in the third quarter as total loans grew at a faster pace of 9 percent.

The ratio, however, was higher than 13.6 percent in the last quarter of 2008.

Meanwhile, bad real estate loans slid by 5 percent or P1.2 billion peso to 23.2 billion peso in October to December last year from the previous quarter, resulting in a better bad loan ratio of 6 percent from 6.7 percent.


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