As of end-June 2006, the real estate exposures of universal and commercial banks (bank proper and trust department) rose by 3.4 percent to P210.2 billion from last quarter. The increment came from real estate loans (RELs) at P7.2 billion, offsetting the P0.2 billion cut in investments in securities issued by real estate companies. Two (2) universal banks substantially accounted for 81.6 percent of the P7.2 billion growth in the industry’s RELs.
The industry’s RELs expanded by 3.8 percent to P193.5 billion from P186.3 billion the previous quarter. This resulted to a higher ratio of RELs to total outstanding loans (TOL), exclusive of interbank loans (IBL) at 11.7 percent from the previous quarter’s 11.6 percent. Year-on-year, this quarter’s ratio is even greater by 0.6 percentage point than the base figure of 11.1 percent.
The majority or 97.4 percent of total RELs were held by U/KBs’ bank proper while the balance of 2.6 percent came from the U/KBs’ trust department.
RELs extended for the construction and development of real estate properties for commercial purposes including infrastructure projects made up the significant portion (at 82.4 percent or P159.3 billion) of total RELs. On the other hand, RELs for the purpose of acquiring residential units by individual borrowers accounted for only 17.6 percent (or P34.3 billion) share.
Account collections and foreclosure proceedings were intensified during the quarter. These remedial measures reduced past due RELs by 1.9 percent to P25.8 billion from P26.3 billion. Together with a 3.8 percent expansion in RELs, the ratio of past due RELs to total RELs improved to 13.3 percent from the previous quarter’s 14.1 percent. This was likewise better than the 20.5 percent ratio posted in the same quarter last year. As a percentage of TOL, exclusive of IBL, delinquent RELs barely moved at 1.6 percent from last quarter but showed an improvement from year ago’s 2.3 percent ratio.
RELs comprised 92.0 percent of the P210.2 billion total U/KB exposure to the real estate industry. The remaining 8.0 percent was in the form of investments in securities issued by real estate companies. The ratio of combined RELs and investments in the real estate industry to TOL (exclusive of IBL) plus total debt and equity investments remained unchanged from previous quarter’s 5.9 percent but was a little higher than the 5.7 percent ratio a year ago.