FCDU loans slip 1.7% in Q1

MANILA, Philippines - Foreign currency loans extended by local banks slipped 1.7 percent in the first quarter as borrowers shifted to peso borrowings to avoid foreign exchange risks, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

Data showed outstanding foreign currency deposit unit (FCDU) loans amounted to $11.99 billion in end-March, $203 million lower than the $12.19 billion level recorded in end-December as principal repayments exceeded disbursements.

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.

The BSP pointed out the FCDU loan portfolio slightly contracted in the first quarter due to attractive peso borrowing rates, encouraging shift from foreign exchange to peso financial to avoid exposure to foreign exchange risks.

Loans to resident borrowers contracted 2.3 percent to $8.4 billion in end-March from $8.6 billion in end-December. These loans accounted for 70.8 percent of total outstanding FCDU loans.

Major beneficiaries of the loans include public utility firms with $1.2 billion; merchandise and service exporters with $3 billion; towing, tanker, trucking, forwarding, personal & other individuals with $2.3 billion; producers/manufacturers, including oil companies with $700 million; and management/holding and stock brokerage with $300 million.

The rest of the loans amounting to $900 million went to other residents including government agencies or enterprises.

Gross disbursements from January to March this year plunged 40.6 percent to $9.4 billion from $15.8 billion.

Data showed the bulk or 70 percent of the loan releases amounting to $8.39 billion had medium to long-term maturities payable over a term of more than one year while short-term loans maturing within one year cornered a 30 percent share at $3.6 billion.

FCDU deposit liabilities went up 6.8 percent to $34.7 billion in end-March from $32.4 billion in end-December.

The BSP said about 97.2 percent of the deposits were held by residents, which essentially constitute additional buffer to the country’s gross international reserves (GIR).

The loans-to-deposit ratio decreased to 34.6 percent in the first quarter from 37.6 percent in the fourth quarter of last year as a consequence of the lower rate of expansion of loans at 1.7 percent and increase in deposits at 6.8 percent.

Last year, FCDU loans went up by 3.7 percent to $12.19 billion in end-December from $11.8 billion in end-September as disbursements exceeded principal repayments.