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Updates on Thrift Banks' Exposure to the Real Estate Sector as of End-March 2004

07.29.2004

The exposure of the thrift banking industry to the real estate sector as of end-March 2004 aggregated to P47.2 billion, consisting of P47.1 billion (or 99.8 percent) real estate loans (RELs) and P103 million (or 0.2 percent) investments. These exposures accounted for 21.7 percent of the industry’s loan and investment portfolio of thrift banks and reflected a 22.1 percent year-on-year growth.

The majority of RELs amounting to P33.3 billion (or 70.6 percent) was extended for the acquisition of residential units by individual homeowners/borrowers. This expanded by P3.3 billion or 11.1 percent from P29.9 billion last quarter and by P7.7 billion or 30.3 percent from last year’s level of P25.5 billion. Loan availments by middle income households of Overseas Filipino Workers accounted for a large portion of this as thrift banks refocus their lending operations to the shelter program of the government.

Commercial RELs, on the other hand, aggregated P13.8 billion or 29.4 percent of total RELs. This is lower by P0.5 billion or 3.4 percent from last quarter and P3.1 billion or 18.3 percent a year ago.

The ratio of past due RELs to total RELs improved by 0.8 percentage point to 16.1 percent from 16.9 percent last quarter. This developed as the 6.4 percent growth In RELs outpaced the 1.5 percent rise in past due RELs to P7.6 billion from P7.5 billion last quarter. Likewise, this quarter’s past due REL ratio is better than year ago’s 17.2 percent ratio. Meanwhile, the ratio of past due RELs to total outstanding loans (TOL), exclusive of interbank loans (IBL) stood at 4.9 percent, slightly up from 4.8 percent last quarter, but still an improvement from year ago’s 5.1 percent ratio.

Other than loans, TB’s exposure to the real estate industry consisted of investments in commercial papers (CPs) issued by and in the equities of real estate companies. These investments aggregated to P103 million, down by 32.2 percent from P152 million last quarter, but remained unchanged from year ago’s level. Their ratio to TOL (exclusive of IBL) plus total investments in debt and equity securities stood at 21.7 percent, up from 21.0 percent last quarter but down from the 22.2 percent ratio a year ago.

The National Capital Region continued to be the largest recipient of RELs at P35.7 billion or 75.8 percent (higher from last quarter’s ratio of 73.7 percent) of total RELs. A far second was Region III (Central Luzon) with P4.3 billion exposures, representing 9.1 percent of total industry’s RELs (up from 5.8 percent last quarter).

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