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Thrift Banks' Exposure to the Real Estate Sector

11.20.2003

As of 30 June 2003, the thrift banking system’s exposure to the real estate industry aggregated P43.7 billion, consisting of P43.6 billion (or 99.9 percent) loans and P99 million or 0.1 percent investments. RELs consisted mostly of residential loans amounting to P26.0 billion or 59.7 percent of total RELs, while the balance of P17.6 billion or 40.3 percent was extended for the construction and development of real estate properties for commercial purposes including infrastructure projects.

This quarter’s RELs accounted for 29.8 percent of total loan portfolio (TLP) compared to previous quarter’s 29.4 percent and a year ago’s 28.7 percent. The industry’s total REL remained concentrated in the bank proper at 99.9 percent.

Past due RELs of the combined bank proper and trust department declined by 2.9 percent from last quarter’s P7.3 billion to P7.1 billion. Thus, past due REL to total REL was down from last quarter by 1.0 percentage point to 16.3 percent. Year-on-year, however, end-June 2002 had lower past due REL at P5.7 billion and lower past due REL to total REL of 13.8 percent. The ratio of past due REL to total loan portfolio was 4.9 percent, down from 5.1 percent last quarter but higher than a year ago’s 4.0 percent.

Past due ratio of residential RELs at 5.3 percent was significantly lower than the 32.5 percent past due ratio of commercial RELs.

Other than loans, the industry’s exposure to the real estate industry included investments in commercial papers (CPs) and in the equities of real estate companies whose combined volume was on a declining trend to only P99 million from P184 million a year ago. Investments in CPs continued to drop to P10 million from P51 million last quarter and P148 million year-on-year.

The National Capital Region (NCR) continued to be the largest recipient of RELs at P33.1 billion or 76.0 percent of total RELs, followed by Region IV-Southern Tagalog with P4.1 billion or 9.4 percent.

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