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Banks’ FCDU loans reached $15b as of June

Outstanding loans granted by foreign currency deposit units (FCDU) of banks reached $15.4 billion in the second quarter, down $66 million or 0.4 percent from $15.5 billion in the first quarter, as principal repayments exceeded disbursements, the Bangko Sentral ng Pilipinas said Friday.

“The decline in FCDU loans may be attributed to rising borrowing costs, lender banks’ tightened credit standards due to reduced tolerance for risk and less desirable borrowers’ profile, foreign exchange volatility and availability of other sources of funding,” the BSP said in a statement.

Outstanding FCDU loans decreased year-on-year by about $317 million or 2 percent from the end-June 2022 level of $15.7 billion.

Data showed that 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 year, which comprised 78.3 percent of total.  This was 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 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, 15.6 percent lower than the previous quarter’s $17 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.

Meanwhile, 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.

FCDU deposit liabilities went up by $2.4 billion year-on-year, or by 5.1 percent, from the end-June 2022 level of $46.6 billion.

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