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Thrift Banks' Real Estate Exposures Reach P82 Billion in 3rd Quarter 2007

01.11.2008

As of end-September 2007, the exposures of thrift banks (TBs) to the real estate sector reached P81.7 billion. The amount is higher by 0.9 percent from last quarter’s P81.0 billion and by 15.7 percent from year ago’s P70.6 billion.

Additional exposures for the quarter principally came from real estate loans (RELs) amounting to P0.7 billion. On the whole, the industry was able to sustain an uptrend in RELs for 18 consecutive quarters now.

Meanwhile, total loan portfolio (TLP), exclusive of interbank loans (IBL), contracted by 1.2 percent to P238.2 billion. Thus, the ratio of RELs to TLP moved up to 34.1 percent from last quarter’s 33.4 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 78.0 percent (or P63.3 billion) of total RELs while the remaining 22.0 percent (or P17.8 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 9.7 percent, up from 9.6 percent last quarter but lower than the 10.7 percent ratio recorded a year ago. The slight increase in ratio during the quarter was driven by the faster 1.9 percent buildup in past due RELs as compared with the growth rate in total RELs. Likewise, the ratio of past due RELs to TLP moved up to 3.3 percent from last quarter’s 3.2 percent but registered lower than year ago’s 3.5 percent ratio.

RELs comprised 99.4 percent of the P81.7 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 rose to 24.0 percent from last quarter’s 23.3 percent and year ago’s 22.4 percent ratio.

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