Real estate loans reportedly showed an increase of 6.6 percent to P924.32 billion at the end of June, compared to P866.62 billion in March.
The loans, as of June, made up 18.34 percent of banks’ loaning portfolio, up by 0.52 percent from March’s 17.82 percent.
As per current policy, banks may lend up to 20 percent of their loanable funds to real estate.
The report, released by the Bangko Sentral ng Pilipinas (BSP), showed that real estate investment among banks rose to P172.91 billion from P168.64 billion. The figure includes holdings of bonds issued by property firms.
The BSP is set to implement a Real Estate Stress Test (REST) limit to local banks in the future.
Rest requires that universal and commercial banks (U/KBs) and thrift banks maintain their total capital adequacy ratio (CAR) above the minimum requirement of 10 percent. U/KBs and their subsidiary thrift banks must also keep a common equity tier 1 capital ratio of at least 6 percent, even when 25 percent of the bank’s real estate exposure has been written off.
Earlier in the year, the BSP clarified that the new stress test is not, by any means, a restriction to banks nor to property firms.
Rather, the central bank emphasized that the test is a preemptive macro-prudential policy measure; one to evaluate whether the bank had enough capital levels to absorb any credit risk – the “stressed conditions” – within the real estate sector.