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FCDU Resources Set Another Record High

10.16.2006

As of end-June 2006, the total assets of the Philippine Foreign Currency Deposit Unit (FCDU) System reached $21.6 billion, exhibiting a 1.9 percent year-on-year growth.  This was the highest recorded post-crisis asset level (vs. $20.5 billion at end-year 1997).  The bulk of these assets (96.2 percent or $20.8 billion) were still held by universal/commercial banks (U/KBs). The balance was accounted for by thrift banks (TBs) at 3.8 percent or $0.8 billion.

 Net Income After Tax (NIAT) for the first half of 2006 reached $372 million.  This was 24.4 percent higher than the $299 million earnings posted in the same period last year.  The improvement was attributed to the simultaneous increase in net interest income (3.2 percent to $265 million) and non-interest income (50.6 percent to $162 million).  Complementing these was the 18.6 percent decline in operating expenses to $50 million. Consequently, the annualized return on assets (ROA) stood better at 3.8 percent as against the 3.2 percent ratio in the same period last year. U/KBs accounted for 95.2 percent of the system’s reported earnings while TBs contributed the balance of 4.8 percent.

Deposit liabilities continued to be the main source of funding, accounting for a hefty 80.9 percent of the total FCDU resources.  These were valued at $17.5 billion, 11.2 percent higher than the $15.7 million posted a year ago.

Meanwhile, asset preference shifted in favor of marketable securities.  The proportion of assets held in this type of securities (net) rose to 35.6 percent from 28.5 percent a year ago.  In contrast, the share of investments held to maturity (net) declined to 16.0 percent from 22.8 percent a year ago.  This development was attributed to banks’ compliance with the BSP prescribed accounting guidelines for investments in debt and equity securities as provided for under  Circular No. 476 dated 16 February 2005. 

Investments were also preferred over loans as indicated by the decrease in share of loans, net (exclusive of interbank loans) to total assets to 12.3 percent from 16.1 percent a year ago. 

Major credit beneficiaries of FCDUs were: the Manufacturing Sector with 35.0 percent share (or $1.0 billion); the Electricity, Gas and Water Sector with 19.6 percent share (or $0.6 billion) and the Transportation, Storage and Communication Sector with 12.9 percent share (or $0.4 billion).  Altogether, the exposure to these three (3) industries accounted for 67.5 percent of the total FCDU loans for the semester.

FCDUs likewise posted enhanced loan and asset quality for the period.  Non-performing loans (NPLs) and non-performing assets (NPAs) ratios dropped to 1.8 percent (from 3.2 percent a year ago) and to 0.7 percent (from 1.2 percent), respectively.  This improvement was traced to the 46.2 percent reduction in NPLs, which subsequently led to the 44.8 percent contraction in NPAs.  Moreover, NPL and NPA coverage ratios strengthened to 160.4 percent (from 104.9 percent) and 153.3 percent (from 102.8 percent), respectively.

View Table 1  |  Table 2

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