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TBs' Exposures to the Real Estate Sector Widen Further in 4Q 2006


As of end-December 2006, the exposures of thrift banks (TBs) to the real estate sector reached P76.1 billion. The amount is higher by 7.7 percent from last quarter’s P70.6 billion and by 26.2 percent from last year’s P60.3 billion.

Additional exposures for the quarter principally came from real estate loans (RELs) amounting to P4.9 billion. On the whole, the industry was able to sustain an uptrend in RELs for 15 consecutive quarters now.

Meanwhile, total outstanding loans (TOL), exclusive of interbank loans (IBL), grew at a slower pace of 2.1 percent. Consequently, the ratio of RELs to TOL (net of IBL) went up to 34.0 percent from last quarter’s and last year’s 32.5 percent ratio.

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 77.6 percent (or P58.6 billion) of total RELs while the remaining 22.4 percent (or P16.9 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 10.2 percent, better than the 10.7 percent last quarter and the 11.6 percent ratio last year. The quarterly improvement in ratio was driven by the modest expansion in total RELs, stifling the 2.2 percent increment in past due RELs. Moreover, the ratio of past due RELs to TOL (net of IBL) at 3.5 percent barely changed from last quarter but registered better than last year’s 3.8 percent ratio.

RELs comprised 99.2 percent of the P76.1 billion total TB exposure to the real estate industry. The remaining 0.8 percent was in the form of equity investments. Altogether, the ratio of RELs and investments in real estate companies to TOL (net of IBL) plus total investments in securities perched at 23.5 percent. This was higher than the 22.4 percent last quarter and the 22.2 percent ratio last year.

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