Philippines: FCDU loans up 14.7% as of end-March

MANILA, Philippines – Foreign currency loans extended by local banks continued to grow as of end-March as disbursements exceeded principal repayments, the Bangko Sentral ng Pilipinas (BSP) said over the weekend.

BSP Governor Amando Tetangco Jr. said outstanding loans granted by foreign currency deposit units (FCDUs) of banks reached $14.35 billion as of end-March, 14.7 percent higher than the $12.51 billion level posted in end-December last year.

The latest figure was also up by 19.66 percent from the $11.99 billion recorded as of end-March 2016.

FCDU refers to units of a local bank or of a local branch of a foreign bank authorized by the BSP to engage in foreign currency-denominated transactions.

According to BSP data, gross disbursements increased 13.5 percent as of end-March, with about 87.6 percent of loan releases having short-term maturities (or a term of up to one year).

On the other hand, loan repayments edged up only 0.1 percent, resulting in net disbursements of $1.8 billion.

Tetangco said the maturity mix of the loan portfolio remained biased towards medium-to long-term debt – or those payable over a term of more than one year – which represented 71 percent of the total.

The bulk, or 64.3 percent of the loans went to resident borrowers while the remaining 35.7 percent went to non-residents.

Major beneficiaries of the loans to resident borrowers are the merchandise and service exporters ($3.4 billion); towing, tanker, trucking and forwarding ($2.6 billion); public utility firms ($1.4 billion); management or holding and stock brokerage (about $800 million); and producers or manufacturers, including oil companies (about $500 million).

Meanwhile, FCDU deposit liabilities increased 3.9 percent to $37.3 billion in the first quarter from $35.9 billion recorded in end-2016. This was also 7.6 percent higher than the end-March 2016 level of $34.66 billion.

About 97.3 percent of the deposits were held by residents.

FCDU deposits represent additional source of foreign exchange liquidity for the economy helping the country survive external shocks.

The overall loans-to-deposit ratio increased to 38.4 percent from 34.9 percent the previous quarter and 34.6 percent the same period last year, as the loan portfolio expanded faster than FCDU deposits.

Source: http://www.philstar.com/business/2017/07/03/1715699/fcdu-loans-14.7-end-march