According to the latest media advisory from the Bangko Sentral ng Pilipinas (BSP), outstanding loans granted by Foreign Currency Deposit Units (FCDU) of banks have now reached US$15.67 billion as of the end of September this year, recording a decrease of US$44 million or by 0.3 per cent from the end-June 2022 level of US$15.71 billion.
FCDU refers to a unit of a local bank or branch of a foreign bank authorized by the BSP to engage in foreign currency-denominated transactions, pursuant to Republic Act No. 6426 or the “Foreign Currency Deposit Act of the Philippines,” as amended.
The same BSP media advisory noted that the decrease in FCDU loans may be attributed to:
- Gradual move in easing credit parameters and net tightening of overall credit standards of lender banks resulting in unchanged and/or deliberate lending operations and credit activity amid uncertainty in the economic outlook; and
- Borrowers’ reduced demand for FCDU loans in light of foreign exchange volatility and rising borrowing costs.
Year-on-year, outstanding FCDU loans decreased by US$164 million (or by 1.0 per cent) from the end-September 2021 level of US$15.8 billion.
As of end-September 2022, the maturity profile of the FCDU loan portfolio remained predominantly medium- to long-term debt [or those payable over a term of more than one (1) year], which comprised 78.5 per cent of the total.
FCDU loans granted to residents comprised 63.7 per cent of total outstanding FCDU loans. Of the US$10.0 billion outstanding loans to residents, majority of which went to the following sectors/industries:
- power generation companies (US$2.7 billion or 27.4 per cent);
- merchandise and service exporters (US$2.4 billion or 24.4 per cent); and
- management/holding and stock brokerage (US$1.2 billion or 12.3 per cent)
Gross disbursements and loan repayments
Gross disbursements in the third quarter of 2022 reached US$14.6 billion and were 6.6 per cent lower than the previous quarter’s figure mainly due to a decrease in funding requirements of a foreign bank branch affiliate.
Similarly, loan repayments in the same quarter totalled US$14.6 billion, an 8.0 per cent decrease from the previous quarter’s figure.
These resulted in overall net disbursement.
FCDU deposit liabilities stood at US$45.8 billion as of end-September 2022, lower by US$838 million (or by 1.8 per cent) from the end-June 2022 level of US$46.6 billion.
The bulk of these deposits (97.3 per cent) continue to be owned by residents, essentially constituting an additional buffer to the country’s gross international reserves. Year-on-year,
FCDU deposit liabilities decreased by US$102 million (or by 0.2 per cent) from the end-September 2021 level of US$45.9 billion.