Forex loans rise to $16.3 billion in Q2

MANILA, Philippines — Banks’ foreign currency loans rose by 5.6 percent to $16.31 billion in the second quarter from $15.44 billion in the previous quarter, driven mainly by stronger borrowing by exporters and other industries, the Bangko Sentral ng Pilipinas said.

These borrowings are known as foreign currency deposit unit (FCDU) loans, or loans denominated in foreign currencies and extended through banks authorized to conduct foreign currency transactions.

Outstanding FCDU loans also increased by 2.4 percent from $15.93 billion a year earlier.

Of the total loans as of end-June, $11.65 billion or 71.5 percent were extended to residents, while the remainder went to non-resident borrowers.

Among Philippine-based borrowers, companies engaged in towing, tanker, trucking, forwarding, personal and other industries accounted for the biggest share at $3.07 billion or 26.3 percent of resident loans.

Merchandise and service exporters followed with $2.85 billion or 24.5 percent, while power generation companies accounted for $1.86 billion or 16 percent.

Most FCDU loans continued to have longer repayment periods. Medium- to long-term loans, or those with maturities of more than one year, represented 73.3 percent of total outstanding loans. But it was slightly lower than the 77.1-percent share recorded in the previous quarter.

Banks disbursed $11.99 billion in FCDU loans during the second quarter, while collections or loan repayments reached $11.2 billion over the same period.

Meanwhile, foreign currency deposits in the banking system stood at $60.11 billion as of end-June, down by 0.9 percent from $60.67 billion in the same period last year.

FCDUs are units of local banks or local branches of foreign banks authorized by the BSP to conduct transactions in foreign currencies.

FCDU loans help finance activities that require foreign exchange, including imports, export operations, power projects and other business transactions denominated in foreign currencies.