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Banks' REE Levels Rise at End-2014

03.31.2015

The real estate exposures (REEs) of universal, commercial (U/KBs), thrift banks (TBs) and trust departments stood at Php 1.221 trillion at end-2014.

The end-2014 figure was 5.4 percent higher than the Php 1.159 trillion in REEs recorded a quarter earlier. The rise is attributed to the banks’ real estate loans (RELs), which increased by 6.8 percent to Php 1.043 trillion quarter-on-quarter. RELs represented
85.4 percent of REEs during the period.

Sixty percent of the RELs were extended to land developers, construction firms and other corporate entities. The remaining 40 percent, on the other hand, went to individual households for occupancy.

The banks’ investments in real estate (RE) securities, meanwhile, decreased by 2.1 percent quarter-on-quarter to Php 178 billion at the end of last year. Investments in RE securities comprised 14.6 percent of the banks’ REEs during the period.

While REEs sustained an increase, the ratio of non-performing RELs of U/KBs and TBs followed a downtrend. At end-2014, the banks’ non-performing RELs represented 2.47 percent of total RELs from 2.80 percent at end-2013. This is the lowest posted for the quarterly indicator since December 2012.

The Bangko Sentral ng Pilipinas regularly assesses the quality of banks’ REEs as part of its mandate to foster the strength of individual banks as well as the systemic stability of the Philippine banking industry.

 

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