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FCDU Loans Dropped in Last Quarter of 2006

04.12.2007

As of end-December 2006, outstanding loans granted by Foreign Currency Deposit Units (FCDUs) of banks amounted to US$3.5 billion, down by 12.5 percent from the end-September 2006 level of US$4.0 billion. On a  year-on-year basis, the FCDU loan portfolio dropped by 14 percent as total loan repayments outpaced new loans granted.

FCDU refers to that unit of a local bank or local branch of a foreign bank authorized by the Bangko Sentral to engage in foreign currency- denominated transactions such as accepting deposits and lending in foreign currency.

The contraction in the stock of FCDU loans in the last quarter of 2006 resulted principally from net loan repayments of about US$493 million.  Loan disbursements amounted to US$1.2 billion, of which around 78 percent carried short-term maturities. On the other hand, repayments totaled US$1.7 billion, of which US$1.1 billion pertained to short-term accounts, including repayments of oil companies (30.1 percent). 

On a year-on-year basis, FCDU loan releases declined from US$5.0 billion in 2005 to US$4.3 billion in 2006.  With principal repayments of US$4.9 billion, an overall net repayment of US$620 million was posted in 2006.

More than 89 percent of outstanding FCDU loans went to Philippine residents, with exporters and public utility firms as the major beneficiaries, followed by producers/manufacturers, including oil companies.

Meanwhile, FCDU   deposit   liabilities, which stood at US$18.8 billion by December 2006, recorded  a growth of 3 percent quarter-on-quarter and 14 percent on  a year-on-year basis.  The bulk of these deposits (95 percent) were owned by residents.

The overall FCDU loans-to-deposits ratio (which relates the current period’s loan portfolio to the level of FCDU deposits two quarters back) declined  to 19.8 percent in December 2006 from 23.6 percent in September 2006 and 26 percent as of end-2005.  This was the consequence of both the contraction in outstanding loans and the expansion in deposit liabilities.

Please refer to attached table for details.

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