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Exposure to Real Estate of U/KBs & TBs Continues to Rise

06.29.2012

As of end-March 2012, the combined exposure to the real estate sector of universal and commercial banks (U/KBs) and thrift banks (TBs)  reached its highest level yet at P538.1 billion.  This was up by 3.8 percent from previous quarter’s P518.6 billion and by 21.0 percent from last year’s P444.9 billion.
Additional exposure during the quarter came from real estate loans (RELs), which grew by 3.6 percent (P18.3 billion) to P524.1 billion, and investments in securities issued by real estate companies which grew by 9.9 percent (P1.3 billion) to P14.0 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 76.9 percent (P413.9 billion) share while the remaining 23.1 percent (P124.2 billion) was accounted for by TBs.

The P18.3 billion additional RELs in the first quarter of 2012 came from the P11.7 billion expansion in residential RELs and the P6.5 billion growth in commercial RELs. In terms of share, commercial RELs held the bulk at 55.6 percent (P291.5 billion) of total RELs while the remaining 44.4 percent (P232.6 billion) were residential RELs. As to counterparties, loans to land developers and construction companies accounted for the biggest share of RELs at 47.2 percent (P247.5 billion).

Further breakdown of RELs by industry showed that the RELs of U/KBs were concentrated for commercial purposes at 67.0 percent (P267.9 billion) while the remaining 33.0 percent (P132.0 billion) were for residential purposes. In contrast, RELs granted by TBs to residential borrowers comprised 80.9 percent (P100.5 billion) of total RELs while the remaining 19.1 percent (P23.7 billion) were for commercial borrowers.

Despite the increasing level of RELs, the ratio of RELs to total loan portfolio, exclusive of interbank loans (TLP) continued to remain stable hovering around 14 to 15 percent level. The RELs to TLP ratio stood at 15.2 percent, higher than last quarter’s 14.5 percent as TLP contracted by 0.9 percent.

Non-performing RELs rose by 5.5 percent (P1.4 billion) to P26.8 billion from previous quarter’s P25.4 billion. Consequently, the non-performing RELs ratio slightly went up to 5.1 percent from previous quarter’s 5.0 percent. Nonetheless, this was still better than year ago’s 6.1 percent ratio.

Meantime, non-performing residential RELs ratio at 4.2 percent was still better than non-performing commercial RELs ratio at 5.8 percent..

By industry, TBs have a better quality of RELs with non-performing RELs ratio at 4.7 percent compared to the 5.2 percent ratio posted by U/KBs.

Investments in debt securities issued by and in equity securities of real estate companies rose by 9.9 percent to P14.0 billion from last quarter’s P12.7 billion and by 18.2 percent from year ago’s P11.9 billion. Debt securities held most of the total real estate investments at 78.5 percent (P11.0 billion) while the remaining 21.5 percent (P3.0 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 rose to 10.2 percent from last quarter’s 9.9 percent and last year’s 9.5 percent.

View  Table 1  |  Table 2  |  Table 3

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