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Update on Thrift Banks' Exposure to Real Estate Loans

10.25.2000

In   its latest assessment, the BSP reported an increase in the exposure of thrift banks (bank proper and trust department) operating in the country to the real estate sector.  Real estate loans (REL) stood at P29.8 billion as of quarter-end June 2000.  This is 11.4 percent higher than the P26.8 billion the previous quarter.  Compared to last year’s exposure, though, this figure is 0.7 percent lower. The share of the real estate lending accounted for 22.6 percent of total outstanding loans compared to previous quarter’s 20.9 percent.  Despite the rise in REL, delinquency level was reduced to P3.8 billion from P3.9 billion, pushing down past due ratio of real estate loans to 12.9 percent this quarter as against  the previous quarter’s 14.7 percent  and  last year’s 16.5 percent.

Exposure of the bank proper,  which increased by 11.1 percent  (P29.6 billion from P26.6 billion) accounted for almost 100 percent of the industry’s total real estate exposure of P29.8 billion with the trust department’s miniscule share of P238.6 million only.  Bulk or 76.4 percent of the industry’s exposure was accounted for by Savings and Mortgage Banks (SMBs),  with Private Development Banks’ (PDBs) share at 19.6 percent and those of Stock and Savings Loan Associations (SSLAs) at 3.9 percent.

As to purpose of loans, 48.3 percent of real estate exposure of the bank proper went to the acquisition of residential property, 18.2 percent for the development of housing subdivisions, and 17.4 percent to loans for other purposes.  Distribution of loans among the industry groups varied.   

The biggest allocation went  to financing for acquisition of residential property among SMBs and SSLAs at 52.7 percent and 58.8 percent, respectively.

Meanwhile, loan allocation for PDBs was almost evenly distributed between the   development of housing subdivisions and the purchase of residential units.  On the other hand, bulk or 39.3 percent of the REL exposure of the trust department was concentrated in the development of commercial property instead of  the construction of residential condominium which was the case  in the previous quarter.

On a regional basis, exposure was found to be highest in NCR Metro Manila:  Bank Proper at 75.4 percent and Trust Department at 100  percent.

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