April 01, 2015

Real estate loans grow 21% in 2014

Quoting central bank data, the Philippine Daily Inquirer today reported that bank loans to the real estate sector continued to grow strongly last year. Notwithstanding regulatory restrictions and stress tests on banking exposure to the sector, property loans grew to P1.2t, up 21% YoY, on steady demand for financing from home and office builders.

As of end-2014, property loans comprised 18.6% of the sector’s total loans, up from 17.8% the previous year but still below the 20% cap set by regulators.

Our take: In a previous statement, the BSP said that all banks passed the real estate stress tests (REST) although there were some banks which barely passed the tests. Aside from this, a number of banks have conducted a series of equity offerings to shore up their capital ratios.

While this should support the continued growth of the sector, we believe that banks will continue to manage their property exposure in relation to their capital position and total loans, in light of the real estate stress test and tighter regulatory oversight. – WealthSec