Banks ease exposure to real estate

December 18, 2025 | 12:00am

MANILA, Philippines — The exposure of Philippine banks and trust entities to the volatile property segment eased to 19.54 percent of total assets as of end-September, marking its lowest in two quarters, according to data from the Bangko Sentral ng Pilipinas (BSP).

The latest figure was slightly lower than the 19.61 percent recorded at end-June and also below the 19.55 percent posted in the same period last year, even as banks continued to grow their lending and investments in real estate.

Based on BSP data, total investments and loans extended by the banking industry to the property sector rose by 7.1 percent year-on-year to P3.45 trillion as of end-September from P3.22 trillion.

Real estate lending accounted for the bulk of the exposure, climbing by 9.2 percent to P3.1 trillion during the nine-month period from P2.84 trillion in the comparable year-ago period.

Commercial real estate loans increased by 7.3 percent to P1.91 trillion from P1.78 trillion, while residential real estate loans grew at a faster pace of 11.2 percent to P1.19 trillion as of end-September from P1.07 trillion a year earlier.

Past due real estate loans, however, also edged higher, rising by 7.1 percent to P158.62 billion from P148.16 billion a year ago. This came as past due commercial real estate loans jumped by 11.7 percent to P48.24 billion, while past due residential real estate loans inched up by 5.2 percent to P110.38 billion.

The gross non-performing loans (NPLs) of banks from the real estate sector reached P116.09 billion from January to September, 4.1 percent higher than the P111.55 billion recorded in the same period last year.

Despite the pickup in soured loans, asset quality indicators showed improvement. The gross NPL ratio declined to 3.75 percent as of end-September from 3.78 percent at end-June and 3.92 percent a year earlier.

Meanwhile, real estate investments in debt and equity securities went down by 5.8 percent to P354.75 billion from P376.41 billion in the previous year.

At the height of the global health crisis, the BSP raised the real estate loan limit of big banks to 25 percent from 20 percent in August 2020 to unleash P1.2 trillion in additional liquidity for lending amid the uncertainties brought about by the pandemic.

To ensure that banks’ exposure to the property sector remains manageable, the BSP continues to maintain prudential measures, including the real estate limit.

These measures also include the heightened surveillance of banks’ real estate and project finance exposures, and the real estate stress test thresholds for universal and commercial banks as well as thrift banks.

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