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TBs' Exposures to Real Estate Sector Widen Anew in 2nd Quarter

09.18.2006

As of end-June 2006, the exposures of thrift banks (TBs) to the real estate sector reached P65.2 billion. The amount is higher by 4.8 percent from last quarter’s P62.2 billion and by 21.0 percent from year ago’s P53.9 billion.

Additional exposures for the quarter principally came from real estate loans (RELs) amounting to P3.0 billion. On the whole, the industry was able to sustain an uptrend in RELs for 13 consecutive quarters now.

Meanwhile, total outstanding loans (TOL), exclusive of interbank loans (IBL), grew at a quicker pace of 5.4 percent. Consequently, the ratio of RELs to TOL (net of IBL) was pared to 32.3 percent from last quarter’s 32.5 percent. On the other hand, this quarter’s ratio is 1.7 percentage points higher than year ago’s 30.6 percent.

Nearly all of total RELs were granted by thrift banks’ bank proper, while a meager 0.1 percent was lent by the industry’s trust department.

RELs were concentrated in financing the acquisition of residential property of individual homeowners/borrowers. These comprised 74.2 percent (or P48.4 billion) of total RELs while the remaining 25.8 percent (or P16.8 billion) were used for the construction and development of real estate properties for commercial purposes.

The ratio of past due RELs to total RELs stood at 11.3 percent, better than the 11.8 percent last quarter and the 12.8 percent ratio a year ago. The quarterly improvement in ratio was driven by the modest expansion in total RELs, stifling the negligible 0.7 percent increment in past due RELs. Moreover, the ratio of past due RELs to TOL (net of IBL) eased to 3.7 percent from last quarter’s 3.8 percent and year ago’s 3.9 percent ratio.

RELs comprised 99.9 percent of the P65.2 billion total TB exposure to the real estate industry. The remaining 0.1 percent was in the form of either commercial papers (CPs) or equity investments (EIs). Altogether, the ratio of RELs and investments in real estate companies to TOL (net of IBL) plus total debt and equity investments reached 24.3 percent. This was slightly lower than the 24.6 percent last quarter, but higher than the 22.8 percent ratio a year ago.

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