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Exposure to Real Estate of U/KBs & TBs Increases to P433.6 Billion in 4th Quarter

03.22.2011

As of end-December 2010, the combined exposure to the real estate sector of universal and commercial banks (U/KBs) and thrift banks (TBs)  increased anew by 4.3 percent to P433.6 billion from previous quarter’s P415.6 billion and by 10.2 percent from last year’s P393.6 billion. 

The additional exposure for the quarter came primarily from RELs, which grew by 4.4 percent to P421.7 billion. Investments in securities issued by real estate companies also grew by 1.0 percent to P11.9 billion and contributed P0.1 billion to the increment in total real estate exposure.

Majority of the real estate exposure were real estate loans (RELs) capturing 97.3 percent share while the remaining 2.7 percent was in the form of investments in securities issued by real estate companies.
A significant portion of the exposure was held by U/KBs at 73.4 percent (P318.1 billion) share while the rest at 26.6 percent (P115.5 billion) was accounted for by TBs.

The P17.8 billion additional RELs in the fourth quarter of 2010 came from the P9.5 billion expansion in residential RELs and the P8.3 billion growth in commercial RELs. In terms of share, commercial RELs held the bulk at 55.3 percent (P233.3 billion) of total RELs while the remaining 44.7 percent (P188.3 billion) were residential RELs.

By industry, RELs extended by U/KBs at 69.9 percent (P214.0 billion) were intended for commercial purposes while 30.1 percent (P92.2 billion) were for residential purposes. On the other hand, RELs granted by TBs were mostly concentrated in financing the acquisition, construction and/or improvement of residential units that are or will be occupied by individual/household borrowers comprising 83.2 percent (P96.1 billion) of total RELs while the residual of 16.8 percent (P19.4 billion) were used for the construction and development of real estate properties for commercial purposes.

Despite the increasing level of RELs, the ratio of RELs to total loan portfolio, exclusive of interbank loans (TLP) declined to 14.3 percent from last quarter’s 14.7 percent as the 7.6 percent expansion in TLP outmatched the 4.4 percent rise in RELs. Nonetheless, this quarter’s ratio was still higher than last year’s 14.1 percent ratio. By industry, U/KBs’ ratio of RELs to TLP dropped to 11.7 percent from last quarter’s 12.1 percent but still higher than last year’s 11.5 percent while TBs’ ratio narrowed to 32.8 percent from last quarter’s 33.7 percent and last year’s 33.9 percent ratio.

Non-performing RELs rose by 5.1 percent to P28.5 billion from previous quarter’s P27.1 billion. Consequently, the ratio of non-performing RELs to total RELs slightly increased to 6.8 percent from previous quarter’s 6.7 percent. As a percentage of TLP, delinquent RELs remained unchanged from last quarter at 1.0 percent.

The non-performing ratio of commercial RELs at 6.7 percent was better than the non-performing ratio of residential RELs at 6.9 percent. The non-performing ratio of commercial RELs rose from last quarter’s 6.1 percent while the non-performing ratio of residential RELs improved from last quarter’s 7.5 percent.
By industry, U/KBs had a better ratio of non-performing RELs to total RELs at 6.1 percent compared to the 8.6 percent ratio posted by TBs.

Real estate investments (REIs) amounted to P11.9 billion, up by 1.0 percent from last quarter’s P11.8 billion and by 19.9 percent from last year’s P9.9 billion. The ratio of combined RELs and REIs to TLP plus total debt and equity investments remained at 9.2 percent from last quarter but higher than last year’s 9.1 percent ratio.

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