Loans obtained from the banks’ foreign currency deposit units (FCDU) stood at $15.4 billion as at end-June this year, $66 million or by 0.4 percent lower than the end-March when this aggregated $15.5 billion, the Bangko Sentral ng Pilipinas (BSP) said on Friday.
FCDU funds are treated as the country’s secondary source of foreign currency reserves.
According to the BSP, there were more principal repayments than loan takeouts during the period.
It traced the decline in FCDU loans to rising borrowing costs, more conservative bank lending standards due to reduced tolerance for risk and less desirable borrowers’ profile, foreign exchange volatility, and availability of other sources of dollar funding.
Year-on-year, outstanding FCDU loans decreased by about $317 million or by 2 percent from the end-June 2022 level of $15.7 billion.
As of end-June 2023, the maturity profile of the FCDU loan portfolio remained predominantly medium- to long-term [or those payable over a term of more than one (1) year], which comprised 78.3 percent of total, slightly lower than 78.4 percent from the previous quarter.
FCDU loans granted to residents comprised 61.3 percent or $9.4 billion of total outstanding FCDU loans, of which majority went to the following sector/industries: power generation companies ($2.4 billion or 25.9 percent); merchandise and service exporters ($2.3 billion or 24.4 percent); and towing, tanker, trucking, forwarding, personal and other industries ($1.3 billion or 13.7 percent).
Gross disbursements in the second quarter of 2023 reached $14.4 billion but were 15.6 percent lower than the previous quarter’s $17.0 billion mainly due to the decrease in funding requirements of a foreign bank branch affiliate.
Similarly, loan repayments in the reference quarter of $14.4 billion were 16.8 percent lower than previous quarter’s $17.4 billion. These resulted in overall net principal repayment.
FCDU deposit liabilities reached an all-time high of $49 billion as of end-June 2023, higher by about $260 million (or by 0.5 percent) from the end-March 2023 level of $48.7 billion.
The bulk of these deposits ($47.7 billion or 97.4 percent) continued to be owned by residents, essentially constituting an additional buffer to the country’s gross international reserves.
Year-on-year, FCDU deposit liabilities increased by $2.4 billion (or by 5.1 percent) from the end-June 2022 level of $46.6 billion.
