Banks’ real estate loan exposure eases to 19%

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June 12, 2026 | 12:00am

In March

MANILA, Philippines — Banks’ exposure to real estate declined in the first quarter as lenders kept a more measured approach to credit allocation in the sector amid tighter financial conditions, according to the Bangko Sentral ng Pilipinas.

Latest BSP data showed real estate loans accounted for 19.07 percent of the banking system’s total loan portfolio, excluding interbank loans, as of end-March.

This was lower than the 19.41 percent recorded in the same period last year, but slightly higher than the seven-year low of 18.93 percent seen at end-December 2025.

The ratio remained below the BSP’s 25-percent ceiling for real estate loan exposure, indicating that lending to the property sector stayed within prudential limits.

“The slight year-on-year decline in banks’ real estate exposure reflects faster expansion in non-property lending alongside more measured credit allocation to the sector amid tighter financial conditions last year,” UnionBank chief economist Carlo Asuncion said.

“The quarter-on-quarter uptick likely indicates a modest rebound in lending activity at the start of 2026, supported by improving sentiment and project resumption,” Asuncion said.

In peso terms, real estate loans of bank proper and trust departments rose by 7.7 percent to P3.2 trillion as of end-March from P2.97 trillion a year earlier. The amount was also up by 1.7 percent from P3.15 trillion at end-2025.

Commercial real estate loans continued to make up the bulk of banks’ property-related credit at P1.97 trillion, up by 7.7 percent from P1.83 trillion a year ago. These accounted for 61.6 percent of total real estate loans.

Residential real estate loans increased by 8.8 percent to P1.23 trillion from P1.13 trillion, equivalent to 38.4 percent of total real estate loans.

However, past due real estate loans rose by 9.7 percent to P164.07 billion from P149.52 billion in the same period last year. This brought the past due real estate loan ratio to 5.12 percent, slightly higher than 5.04 percent a year earlier.

Past due residential real estate loans stood at P108.56 billion, while past due commercial real estate loans reached P55.52 billion.

Gross non-performing real estate loans increased by 7.7 percent to P119.82 billion from P111.27 billion a year ago. Non-performing residential real estate loans amounted to P75.31 billion, while non-performing commercial real estate loans reached P44.51 billion.

Despite the increase in peso terms, the gross non-performing real estate loan ratio eased slightly to 3.74 percent from 3.75 percent in March last year, although it rose from 3.53 percent at end-December.

Meanwhile, banks’ real estate investments declined by 5.4 percent to P352.18 billion as of end-March from P372.40 billion a year ago. This was also lower than the P359.84 billion recorded at end-2025.

Debt securities accounted for P235.71 billion of total real estate investments, while equity securities stood at P116.47 billion.