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Banks’ real estate exposure up

BY JIMMY C. CALAPATI
[ Malaya.com.ph ] September 26, 2011

EXPOSURE to real estate of universal/commercial banks (U/KBs) and thrift banks (TBs) stood at P472.3 billion as of end-June, up 15.2 percent from the year-ago level, data from the Bangko Sentral ng Pilipinas (BSP) showed.

On a quarterly basis, the combined exposure of universal/commercial banks and thrift banks to the real estate sector increased 6.2 percent to P472.3 billion from the previous quarter’s P444.9 billion.

The central bank said the additional exposure for the quarter came primarily from real estate loans (RELs), which grew 6.2 percent to P459.9 billion, while investments in securities issued by real estate companies increased 4.8 percent to P12.4 billion.

"The majority of the real estate exposure was RELs capturing a 97.4 percent share while the remaining 2.6 percent was in the form of investments in securities issued by real estate companies," the BSP said.

By industry, the bulk of the exposure was held by universal/commercial banks with a 76.2 percent share (P359.9 billion) while thrift banks accounted for the remaining 23.8 percent (P112.4 billion).

The P26.8 billion additional real estate loans in the second quarter came from the P20.5 billion increase in commercial RELs and the P6.3 billion growth in residential.

In terms of share, commercial RELs held the bulk with 56.9 percent (P261.5 billion) while residential RELs made up the remaining 43.1 percent (P198.4 billion).

At least 70.2 percent (P243.8 billion) of universal/-commercial banks’ RELs were for commercial uses while 29.8 percent (P103.7 billion) were for residential purposes.

On the other hand, RELs granted by thrift banks were mostly concentrated in financing the acquisition, construction and/or improvement of residential units that are or will be occupied by individual/household borrowers.

These comprised 84.3 percent (P94.7 billion) of total RELs while the remaining 15.7 percent (P17.6 billion) were used for the construction and development of properties for commercial purposes.

Despite the higher level of real estate loans, the ratio of RELs to total loan portfolio (TLP), exclusive of interbank loans, declined to 14.3 percent from last quarter’s 14.7 percent as the 9.6 percent expansion in TLP outpaced the 6.2 percent growth in RELs.

Likewise, this quarter’s ratio was lower than a year ago’s 14.8 percent. By industry, the RELs to TLP ratios of both universal/commercial banks and thrift banks fell to 12.2 percent and 31.0 percent from the previous quarter’s 12.3 percent and 32.8 percent, respectively.

Non-performing RELs slipped 1.1 percent to P25.9 billion from last quarter’s P26.2 billion. Consequently, the ratio of non-performing RELs to total RELs improved to 5.6 percent from the previous quarter’s 6.1 percent. As a percentage of TLP, delinquent RELs eased to 0.8 percent from last quarter’s 0.9 percent.

The non-performing residential RELs ratio, at 5.1 percent (the same as the previous quarter’s), was better vis-à-vis the non-performing commercial RELs ratio of 6.1 percent (from 6.9 percent).

By industry, U/KBs have a better quality of RELs with non-performing RELs ratio at 5.6 percent compared with the 5.7 percent ratio posted by thrift banks.

Investments in debt securities issued by and in equity securities of real estate companies rose 4.8 percent to P12.4 billion from the previous quarter’s P11.9 billion, and by 6.2 percent from a year ago’s P11.7 billion.

Debt securities held the lion’s share of the total real estate investments at 69.9 percent (P8.7 billion) while the remaining 30.1 percent (P3.7 billion) were equity securities. Only U/KBs have exposure to real estate investments.

The ratio of combined RELs and investments to the real estate industry to TLP plus total debt and equity investments stood at 9.7 percent, higher than last quarter’s 9.5 percent and a year ago’s 9.3 percent.
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