Thrift banks’ real estate loans up 17.5% in ’05

The real estate business turned out to be big business for thrift banks in 2005, with total industry exposure rising by 17.5 percent compared to 2004.

Data from the Bangko Sentral ng Pilipinas (BSP) revealed that as of end-2005, the real estate exposure of thrift banks amounted to P60.2 billion.

The BSP said this was equivalent to a 17.5-percent increase from P51.2 billion in end-2004.

The BSP said the increase in the real estate exposure of thrift banks came from the increase in real estate loans or RELs amounting to P3.7 billion and new investments in securities issued by real estate companies which accounted for a P27-million hike.

The BSP said the growth in real estate lending has been consistent for 11 consecutive quarters and the expansion of RELs outpaced the 5.5-percent build up in total outstanding loans exclusive of interbank loans.

As a result, the BSP said the proportion of RELs to the total loan portfolio of thrift banks increased to 32.5 percent in 2005 compared to 31 percent in the previous year;

"This is a good sign," BSP Governor Amando Tetangco Jr. said. "This means that there is real activity in the property sector and it may well be on the way to recovery."

The bulk of loans by thrift banks were used to finance the acquisition of residential property by individual homeowners, accounting for 73.3 percent or P44 billion of total REL. The rest, equivalent to 26.7 percent or P16.2 billion, went to construction and development of commercial real estate.

On the other hand, Tetangco said the ratio of delinquent loans to total real estate loans actually improved to 11.6 percent compared to 14 percent the prior year.

Tetangco said the improvement in the past-due to total loans ratio was due to the expansion in REL which outpaced the 1.3 percent increase in past due RELs.

Earlier, the BSP reported that property lending by universal and commercial banks U/KBs also grew during the same period, reaching P205.4 billion.

Thrift banks, however, out-performed their commercial counterparts whose lending to the property sector grew by only 2.4 percent compared to the recorded level in 2004.

According to the BSP, additional exposures comprised mainly of real estate loans while new investments in securities held by real estate companies stayed at P141 million.

The BSP reported that the industry’s combined real estate loans (RELs) as of end-September last year increased from P184.3 billion in the second quarter to P188.9 billion in the third quarter, halting two consecutive quarters of decline.

The ratio of RELs to the total outstanding loans of U/KBs, according to the BSP, increased marginally from 11.1 percent to 11.9 percent, excluding interbank loans.

The BSP said the bulk or 97.1 percent of total RELs were granted by U/KBs directly while the remaining 2.9 percent was lent out by their trust department.

The BSP report said the loans primarily went to construction and development of real estate properties for commercial purposes including infrastructure projects. These projects accounted for 83.5 percent or P157.8 billion of total RELs.