Banks’ exposure to real estate loans down to P184.3B

The exposure of universal and commercial banks (U/KBs) to real estate loans (RELs) went down to P184.3 billion as of end-June 2005 from P185.6 billion as of end-May 2005, the Bangko Sentral ng Pilipinas (BSP) reported over the weekend. 

BSP Governor Amando Tetangco Jr. attributed the P1.3 billion decline in the combined  RELs of U/KBs to the reduction in the RELs of both bank and trust department. 

He said the drop was primarily due to settlement of loans, coupled with the sale of delinquent RELs made by some banks under the Special Purpose Vehicle (SPV) law. 

The majority or 96.8 percent of total RELs was held by U/KBs’ bank proper while the remaining 3.2 percent was accounted for by U/KBs’ trust department.

The RELs comprised 91.8 percent of the industry’s total exposure to the real estate industry amounting to P200.6 billion.  The rest of the exposure at 8.2 percent was accounted for by investments in securities issued by real estate companies.

The bulk of the RELs went to the construction and development of real estate properties for commercial purposes including infrastructure projects with 83.8 percent or P154.4 billion of total.  

The remaining 16.2 percent or P29.9 billion was extended for the acquisition of residential units by individual homeowners/borrowers.

Meanwhile, past due RELs likewise dropped by 2.7 percent to P37.7 billion in end-June from end-May’s P38.8 billion.

The ratio of past due RELs to total RELs also went down to 20.5 percent during the period under review from the previous quarter’s 20.9 percent. 

The figure was higher than the 20.3 percent ratio posted in the same quarter last year.

As a percentage of TOL, exclusive of IBL, delinquent RELs improved to 2.3 percent from last quarter and last year’s 2.4 percent ratio.

Another form of exposure to the real estate industry was investments in commercial papers (CPs) issued by and in the equities of real estate companies.