Foreign currency loans down 10% to $4.62 billion

MANILA, Philippines - Foreign currency loans granted by banks fell 10 percent in the second quarter of this year from the previous quarter as borrowers turned to peso loans to avoid foreign exchange risks, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

BSP officer-in-charge Nestor Espenilla Jr. said in a statement that outstanding loans granted by Foreign Currency Deposit Units (FCDUs) of banks amounted to $4.62 billion as of end-June or $521 million lower than the $5.14 billion recorded as of end-March.

Espenilla pointed out that principal repayments outpaced loan releases by $384 million while the central bank also booked negative adjustments worth $137 million.

“The decline was a manifestation of continued aversion to foreign exchange risk by borrowers who turned to peso loans for their financing needs,” the BSP said.

Data showed that the peso loan portfolio of banks increased by $1.48 billion, or P70 billion, during the second quarter of the year.

Year-on-year, the BSP said FCDU loans went up by $56 million to $4.6 billion as of end-June this year from $4.57 billion a year ago due mainly to net loan releases (excess of loan disbursements over principal repayments).

The increase, however, was partially offset by audit adjustments.

According to the central bank, decreases were noted in the second quarter for both short-term (ST) and medium and long-term (MLT) loans, although the maturity mix remained biased towards MLT loans.

MLT loans with original payment terms of more than one year represented 60 percent of the total portfolio while ST loans that have original tenors of up to one year accounted for the remaining 40 percent.

Loan releases during the second quarter amounted to $1.47 billion from $1.45 billion. About 85.3 percent or $1.3 billion had short term maturities while 14.7 percent or $217 million were medium-term to long-term in nature.

Repayments, likewise, increased to $1.9 billion in the second quarter from $1.6 billion in the first quarter.

The BSP said FCDU deposit liabilities rose anew by $611 million to reach a 15-year high of $21.8 billion as of end-June from $21.2 billion as of end-March. This was the highest level recorded since 1994.