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Thrift Banks' Exposure to the Real Estate Sector

10.13.2005

As of end-June 2005, the thrift banking industry’s total real estate loans (RELs) of both bank proper and trust department grew by 3.8 percent to P53.9 billion from last quarter’s P51.9 billion and by 12.5 percent from year ago’s P47.9 billion. These RELs made up 30.5 percent of the industry’s total outstanding loans (TOL), exclusive of interbank loans (IBL), slightly lower than last quarter’s 30.7 percent but remained unchanged from year ago. The bank proper of thrift banks accounted for 99.9 percent of total RELs, while the industry’s trust departments held only 0.1 percent. 

Meanwhile, RELs comprised 99.5 percent of the P54.2 billion total exposure to the real estate industry. The remaining P297 million (or 0.5 percent) was in the form of debt and equity investments. 

The majority of RELs (72.8 percent or P39.2 billion) was granted for the acquisition of residential property by individual homeowners/borrowers. The balance of 27.2 percent or P14.7 billion was used for the construction and development of real estate properties for commercial purposes. 

The ratio of past due RELs to total RELs improved to 12.8 percent from 13.3 percent last quarter and 14.9 percent a year ago. This favorable development took place as the 0.2 percent reduction in past due RELs accompanied the hike in RELs from last quarter. Similarly, the ratio of past due RELs to TOL, exclusive of IBL favorably declined to 3.9 percent from last quarter’s 4.1 percent and year ago’s 4.6 percent. 

The National Capital Region (NCR) continued to be the largest recipient of RELs with P39.6 billion or 73.5 percent share of total RELs. Likewise, the NCR Region took the biggest slice of the trust departments’ RELs at P46 million or 90.9 percent share.

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