Borrowing in foreign currencies by domestic industries drove a notable quarter-on-quarter increase in foreign currency deposit unit (FCDU) loans, which rose to $16.31 billion in the second quarter of 2026. This marks a 5.6 percent expansion from the $15.44 billion recorded in the previous quarter, signaling strong credit demand among key economic sectors operating in foreign trade and essential local industries.
FCDUs are specialized bank units authorized by the Bangko Sentral ng Pilipinas to manage foreign currency transactions for local institutions and foreign bank branches. These entities provide crucial access to foreign currencies, enabling local businesses, importers, and exporters to conduct international transactions and fund critical operations. Beyond servicing immediate commercial needs, FCDUs serve a vital broader function for the national economy. They act as a secondary source of foreign exchange reserves, helping to maintain overall liquidity and support the country’s economic stability alongside the central bank’s official reserves.
Local borrowing dominated the landscape during the period, with Philippine-based companies accounting for $11.65 billion, or 71.5 percent, of total outstanding FCDU loans. The remaining balance was issued to non-resident entities. Among local borrowers, businesses in transportation, services, and industrial sectors led the demand with $3.07 billion, closely followed by merchandise and service exporters with $2.85 billion. Power generation companies also secured significant funding, borrowing $1.86 billion.
In terms of loan structure, borrowers continued to favor longer payment terms. Medium- to long-term loans with maturities exceeding one year made up 73.3 percent of the total portfolio, though this was a slight reduction from the 77.1 percent share seen in the previous quarter. Disbursement activity remained active, as banks released $11.99 billion in new loans during the second quarter while collecting $11.20 billion in repayments.
Despite the recent quarter-on-quarter growth, total FCDU loans were lower on an annual basis, contracting by 2.4 percent compared to the same period in 2025. Concurrently, overall foreign currency deposits held within the banking system totaled $60.11 billion at the end of June 2026, registering a modest 0.9 percent decline from $60.67 billion recorded a year prior.
