Philippine banks' real estate exposure rises to 19.75%

Philippine banks increased their exposure to the volatile property sector at the end of December, with the real estate exposure ratio rising to 19.75% from 19.55% in September.

Total investments and loans extended by Philippine banks to the real estate sector grew to P3.31 trillion as of end-December, up from P2.84 trillion in the third quarter.

Residential real estate loans increased by 3.56% to P1.1 trillion, while commercial real estate loans rose by 4.1% to P1.8 trillion.

Despite the increase, Jonathan Ravelas of Reyes Tacandong & Co. noted that high borrowing costs would limit further growth in real estate lending.

The BSP decided to keep the benchmark rate at 5.75%, despite market expectations for a cut, citing elevated interest rates and inflation as factors affecting consumer purchasing power.