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Philippine OBUs' Performance

02.22.2007

As of end-December 2006, total assets (net of due to/from head office/branches-abroad) of the 7 offshore banking units (OBUs) operating in the country peaked to US$3.7 billion, the highest level reached so far since 1997.  This was also higher by 63.1 percent than end-2005’s level of US$2.3 billion. 

OBUs shifted asset portfolio preference to loans and discounts from investments in bonds and other securities.  The former soared by 186.0 percent to US$1.6 billion at end-December 2006 and held a 42.8 percent share (up from 24.1 percent last year of gross assets.  On the other hand, investments in bonds and other securities were maintained at US$1.3 billion and comprised 36.4 percent (down from 56.9 percent) of gross assets.

Lendings to banks grew by 52.7 percent to US$0.6 billion, of which   95.2 percent was lent to non-resident banks.  The remaining   4.8 percent was granted to banks in the Philippines. 

Meantime, credit exposures to residents posted a 7.7 percent year-on-year growth and were concentrated in 3 main economic activities.  These were the electricity, gas and water sector at 39.0 percent of total loans to residents or US$61 million (up from 20.0 percent or US$29 million), followed by the transportation, storage and communications sector at 21.7 percent or US$34 million (up from 20.7 percent or US$30 million) and the manufacturing sector at 6.5 percent or US$10 million (down from 18.7 percent or US$27 million).  Combined, these sectors comprised 67.2 percent (up from 59.4 percent) of the total lendings to residents. 

OBUs relied more on banks outside the Philippines for funding than from their head office/branches as their due to non-resident banks account soared in 2006 by 69.3 percent to US$2.2 billion and comprised 60.0 percent of total liabilities. Due to head office/branches, which used to be the main source of funding, provided only 14.4 percent (or US$530 million) of total funds.  

OBUs sustained profitable operations, posting net income after tax of US$4 million.  This was lower than 2005’s US$10 million bottom line figure, with rising operating expenses in 2006.

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