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Universal and Commercial Banks' Exposure to the Real Estate Sector

10.02.2003

As of end-June 2003, banks’ real estate loans (RELs) (both bank proper and trust department) amounted to P178.0 billion. It decreased by P5.6 billion or 3.0 percent from the year-ago level. This quarter’s RELs accounted for 11.7 percent of total outstanding loans exclusive of Interbank Loans (TOL), down by 1.0 percentage point from a year ago’s ratio of 12.7 percent.

Residential RELs amounted to P31.7 billion or 17.8 percent of total REL down by P0.1 billion from P31.8 billion a year ago.

Past due RELs at P44.6 billion decreased by P5.9 billion from last year’s P50.5 billion.  As a result, past due ratio went down to 25.0 percent from a year ago’s 27.5 percent.

The past due ratio of residential RELs at 13.6 percent was significantly lower than the 27.5 percent past due ratio of commercial RELs.  Nevertheless, both ratios improved from year ago of 17.5 percent and 29.6 percent, respectively.

Aside from loans, exposure to the real estate industry included investments in commercial papers (CPs) and in the equities of real estate companies.   Investments in CPs slightly increased to P2.5 billion from P2.4 billion last quarter but still lower than a year ago’s P3.2 billion, while equity investments continued to rise to P10.8 billion from P9.1 billion last quarter and P8.7 billion a year ago.  Continuing the declining trend, the combined credit and equity exposures of KBs to the real estate industry aggregated P191.3 billion.

There was no change in the regional distribution of RELs.  The RELs of both bank proper and trust department continued to be concentrated in the National Capital Region (NCR) at 84.1 percent and 97.0 percent, respectively.

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