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Thrift Banks' Real Estate Exposures Widen Anew in 1st Quarter 2007

06.18.2007

As of end-March 2007, the exposures of thrift banks (TBs) to the real estate sector reached P78.5 billion. The amount is higher by 3.2 percent from last quarter’s P76.1 billion and by 26.1 percent from year ago’s P62.2 billion.

Additional exposures for the quarter principally came from real estate loans (RELs) amounting to P2.5 billion. On the whole, the industry was able to sustain an uptrend in RELs for 16 consecutive quarters now.

Meanwhile, total outstanding loans (TOL), exclusive of interbank loans (IBL), grew at a faster pace of 7.2 percent. Thus, the ratio of RELs to TOL (net of IBL) went down to 32.8 percent from last quarter’s 34.0 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 departments.

RELs were concentrated in financing the acquisition of residential property of individual homeowners/borrowers. These comprised 78.1 percent (or P60.9 billion) of total RELs while the remaining 21.9 percent (or P17.1 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 10.0 percent, better than the 10.2 percent last quarter and the 11.8 percent ratio a year ago. The quarterly improvement in ratio was driven by the ample expansion in total RELs, stifling the negligible 1.0 percent increment in past due RELs. Moreover, the ratio of past due RELs to TOL (net of IBL) at 3.3 percent eased from last quarter’s 3.5 percent and year ago’s 3.8 percent ratio.

RELs comprised 99.4 percent of the P78.5 billion total TB exposure to the real estate industry. The remaining 0.6 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 23.3 percent. This was lower than the 23.5 percent last quarter but registered higher than the 22.7 percent ratio a year ago.

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