January 13, 2015

Real estate exposure of banks rises in Sept 2014

The Philippine Star today reported that the exposure of local banks to the property sector rose 23% YoY to P1.2t. Loans to developers, construction companies and other property-related companies increased by 24% YoY to P593.0b while loans for residential properties rose 25% YoY to P384.1b.

Our take: While this shows the strength of the country’s property sector and support the continued growth of real estate loans. This and other regulatory economy, we may see some deceleration in the growth of real estate loans as the BSP continues to implement regulatory measures to manage the property sector exposure of banks.
Specifically, the real estate stress tests (REST) may require banks to cap their property sector exposures or raise additional capital in order to pronouncements may prompt banks to re-examine their growth strategies in light of the results of REST and their capital adequacy ratios. – WealthSec