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Updates on Universal and Commercial Banks' Exposure to the Real Estate Sector as of End-June 2004


As of end-June 2004, the exposure of universal and commercial banks (U/KBs) to the real estate industry stood at P201.9 billion, an increment of 2.8 percent and 5.5 percent from previous quarter’s P196.3 billion and year ago’s P191.3 billion, respectively. The exposure included the P185.8 billion (or 92.0 percent) real estate loans (RELs) and P16.1 billion (or 8.0 percent) debt and equity investments.  These exposures accounted for 6.4 percent (the same ratio as in the last quarter but down from 7.0 percent a year ago) of the industry’s total loan and investment portfolio this quarter. 

The combined RELs of U/KBs expanded by 0.6 percent or P1.1 billion from last quarter and by 4.4 percent or P7.8 billion from year ago. Nevertheless, the 11.7 percent ratio of RELs to total outstanding loans (TOL), exclusive of interbank loans (IBL), was lower than the previous quarter’s 12.0 percent and year ago’s 12.1 percent ratio.  This transpired as TOL (exclusive of IBL) increased at a faster pace (i.e., by 2.7 percent, quarter-on-quarter and by 7.2 percent, year-on-year). The bank proper of U/KBs held 96.6 percent of total RELs, while their trust departments accounted for the balance of 3.4 percent. 

RELs granted for the construction and development of real estate properties for commercial purposes including infrastructure projects were the bulk of total RELs amounting to P150.9 billion or 81.2 percent. The balance of P34.8 billion or 18.8 percent was extended for the acquisition of residential units by individual homeowners/borrowers. 

The ratio of past due RELs to total RELs improved to 20.3 percent from 22.1 percent last quarter and from 25.1 percent a year ago. This was brought on by the 7.4 percent decline in the past due RELs to P37.7 billion from P40.7 billion last quarter.  Meanwhile, the ratio of past due RELs to TOL (exclusive of IBL) remained low at 2.4 percent, an improvement from last quarters’ 2.6 percent and year ago’s 3.0 percent ratio. 

The P16.1 billion exposure to the real estate industry in the form of investments in commercial papers (CPs) issued by and in equities of real estate companies was remarkably higher by 38.4 percent and 20.9 percent from P11.7 billion last quarter and P13.3 billion a year ago, respectively. The ratio of combined RELs and investments to the real estate industry to TOL (exclusive of IBL) plus total debt and equity investments stood at 6.4 percent, the same ratio last quarter but down from 7.0 percent a year ago.

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