Real estate exposure of banks up to P207B

The exposure of banks in the real estate sector rose by one percent in 2005 to P207.5 billion, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Latest available data from the BSP indicated that as of end-December 2005, real estate exposures of universal and commercial banks (U/KBs) also rose by almost one percent from year-ago levels.

The BSP said additional exposures for the last quarter of 2005 comprised mainly of real estate loans (P2.3 billion) while new investments in securities issued by real estate companies amounted to P200 million.

Following the growth in the previous quarter, the BSP said the industry’s combined (bank proper and trust department) real estate loans (RELs) as of end-December 2005 increased by 1.2 percent to P191.2 billion from P188.9 billion in the previous quarter.

Despite the expansion in RELs, however, the BSP said the proportion of RELs to total outstanding loans (TOL) remained unchanged from previous quarter’s 11.9 percent. This, however, excluded interbank loans.

According to the BSP, the TOL of the industry excluding IBL, rose correspondingly by 1.8 percent. This ratio, however, was slightly higher than last year’s 11.8 percent.

The BSP reported that the bulk or 97.4 percent of total RELs was held by U/KBs’ bank proper while the remaining 2.6 percent was accounted for by U/KBs’ trust department.

"Loans were primarily used for the construction and development of real estate properties for commercial purposes including infrastructure projects," the BSP reported.