BSP relaxes banks’ real estate loan limit

BANKS can now extend more real property loans to borrowers as the Bangko Sentral ng Pilipinas (BSP) eased their exposure limit to the sector.

In a message on Thursday, BSP Governor Benjamin Diokno announced that the central bank’s policy-making Monetary Board has increased the real estate loan limit of universal and commercial banks from 20 percent to 25 percent.

“The increase translates to additional liquidity for real estate lending amounting to around P1.2 trillion based on end March 2020 numbers,” he said.

Diokno did not elaborate.

Latest data showed that Philippine banks’ exposure to the real estate sector rose by 14.07 percent year-on-year as of end-2019 with loans accounting for the bulk.

Real estate exposure of banks and trust departments reached P2.48 trillion as for full-year 2019, expanding by P306.82 billion from the P2.17 trillion recorded a year earlier.

Accounting for the bulk of the total, real estate loans made up 74.82 percent of the banks’ exposure while securities investments accounted for the remaining 12.83 percent.

The loan component of the total exposure grew by 16.44 percent to P2.16 trillion from P1.86 trillion a year earlier.

Commercial real estate loans accounted for 64.73 percent of the total loans, while borrowers acquiring residential properties took the remaining 35.26 percent.

As of last year, the ratio of overall non performing real estate loans to total real estate loans remains below 2 percent.

Source: TheManila Times