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Exposure to Real Estate of U/KBs & TBs Reaches P472.3 Billion in 2nd Quarter

09.23.2011

As of end-June 2011, the combined exposure to the real estate sector of universal and commercial banks (U/KBs) and thrift banks (TBs)  increased anew by 6.2 percent to P472.3 billion from previous quarter’s P444.9 billion and by 15.2 percent from year ago’s P410.0 billion.

The additional exposure for the quarter came primarily from real estate loans (RELs), which grew by 6.2 percent to P459.9 billion while investments in securities issued by real estate companies contributed a marginal increment of 4.8 percent to P12.4 billion.

Majority of the real estate exposure were RELs capturing 97.4 percent share while the remaining 2.6 percent were in the form of investments in securities issued by real estate companies.

By industry, a significant portion of the exposure was held by U/KBs at 76.2 percent (P359.9 billion) share while the remaining 23.8 percent (P112.4 billion) was accounted for by TBs.

The P26.8 billion additional RELs in the second quarter of 2011 came from the P20.5 billion expansion in commercial RELs and the P6.3 billion growth in residential RELs. In terms of share, commercial RELs held the bulk at 56.9 percent (P261.5 billion) of total RELs while the remaining 43.1 percent (P198.4 billion) were residential RELs.

About 70.2 percent (P243.8 billion) of U/KBs’ RELs were for commercial purposes while 29.8 percent (P103.7 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. These comprised 84.3 percent (P94.7 billion) of total RELs while the remaining 15.7 percent (P17.6 billion) were used for the construction and development of real estate properties for commercial purposes.

Despite the higher 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 9.6 percent expansion in TLP outpaced the 6.2 percent growth in RELs. Likewise, this quarter’s ratio was lower than year ago’s 14.8 percent. By industry, RELs to TLP ratios of both U/KBs and TBs went down to 12.2 percent and 31.0 percent from previous quarter’s 12.3 percent and 32.8 percent, respectively.

Non-performing RELs declined by 1.1 percent to P25.9 billion from last quarter’s P26.2 billion. Consequently, the ratio of non-performing RELs to total RELs improved to 5.6 percent from previous quarter’s 6.1 percent. As a percentage of TLP, delinquent RELs also eased to 0.8 percent from last quarter’s 0.9 percent.

Meantime, non-performing residential RELs ratio at 5.1 (the same last quarter) was better vis-à-vis the non-performing commercial RELs ratio at 6.1 percent (from 6.9 percent).

By industry, U/KBs have a better quality of RELs with non-performing RELs ratio at 5.6 percent compared to the 5.7 percent ratio posted by TBs.

Investments in debt securities issued by and in equity securities of real estate companies rose by 4.8 percent to P12.4 billion from last quarter’s P11.9 billion and by 6.2 percent from year ago’s P11.7 billion. Debt securities held the lion’s share of the total real estate investments at 69.9 percent (P8.7 billion) while the remaining 30.1 percent (P3.7 billion) were equity securities. Only U/KBs have exposure to real estate investments.

The ratio of combined RELs and investments to the real estate industry to TLP plus total debt and equity investments stood at 9.7 percent, higher than last quarter’s 9.5 percent and year ago’s 9.3 percent.

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