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Thrift Banks’ Real Estate Exposures Reach P80 Billion Mark in 2nd Quarter

09.20.2007

As of end-June 2007, the exposures of thrift banks (TBs) to the real estate sector reached P80.9 billion. The amount is higher by 3.1 percent from last quarter’s P78.5 billion and by 24.1 percent from year ago’s P65.2 billion.

Additional exposures for the quarter principally came from real estate loans (RELs) amounting to P2.4 billion. On the whole, the industry was able to sustain an uptrend in RELs for 17 consecutive quarters now.

Meanwhile, total loan portfolio (TLP), exclusive of interbank loans (IBL), grew at a slower pace of 1.5 percent. Thus, the ratio of RELs to TLP moved up to 33.3 percent from last quarter’s 32.8 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 78.5 percent (or P63.1 billion) of total RELs while the remaining 21.5 percent (or P17.3 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 9.6 percent, better than the 10.0 percent last quarter and the 11.3 percent ratio a year ago. The improvement in ratio during the quarter was driven by the 0.6 percent marginal decline in past due RELs. Moreover, the ratio of past due RELs to TLP at 3.2 percent eased from last quarter’s 3.3 percent and year ago’s 3.7 percent ratio.

RELs comprised 99.4 percent of the P80.9 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 TLP plus total investments in securities perched at 23.3 percent. This did not change from that of last quarter, but registered lower than year ago’s 24.3 percent ratio.

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