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FCDU Resources Reach All Time High

05.08.2007

As of end-December 2006, the total assets of the Philippine Foreign Currency Deposit Unit (FCDU) System reached $23.6 billion, exhibiting a 13.8 percent year-on-year growth.  This was the highest recorded asset level surpassing the prior peak of $21.7 billion at end-year 1997.  The bulk of these assets (95.9 percent or $22.6 billion) were still held by universal/commercial banks (U/KBs). The balance was accounted for by thrift banks (TBs) at 4.1 percent or $1.0 billion.

Net Income After Tax (NIAT) for the year 2006 reached $777 million.  This was 25.0 percent higher than the $622 million earnings posted in 2005.  The improvement was attributed to the simultaneous increase in net interest income (8.6 percent to $568 million) and non-interest income (44.6 percent to $348 million).  Complementing these was the 5.4 percent decline in operating expenses to $126 million. Consequently, the return on assets (ROA) stood better at 3.5 percent as against the 3.1 percent ratio last year. U/KBs accounted for 96.3 percent of the system’s reported earnings while TBs contributed the balance of 3.7 percent.

Deposit liabilities continued to be the main source of funding, accounting for a hefty 79.6 percent of the total FCDU resources.  These were valued at $18.8 billion, 14.1 percent higher than the $16.5 million posted last year.

Meanwhile, asset preference shifted in favor of marketable securities.  The proportion of assets held in this type of securities (net) rose to 35.7 percent from 32.9 percent last year.  In contrast, the share of investments held to maturity (net) declined to 12.1 percent from 14.6 percent last year.   

Investments were also preferred over loans as indicated by the decrease in share of loans, net (exclusive of interbank loans) to total assets to 11.2 percent from 12.7 percent last year. 

Major credit beneficiaries of FCDUs were: the Manufacturing Sector with 32.5 percent share (or $0.9 billion); the Electricity, Gas and Water Sector with 19.5 percent share (or $0.6 billion) and the Transportation, Storage and Communication Sector with 11.7 percent share (or $0.3 billion).  Altogether, the exposure to these three (3) industries accounted for 63.7 percent of the total FCDU loans for the semester.

FCDUs likewise posted enhanced loan and asset quality for the period.  Both non-performing loans (NPLs) and non-performing assets (NPAs) ratios dropped to 1.0 percent (from 1.8 percent last year) and to 0.4 percent (from 0.7 percent), respectively.  This improvement was traced to the 33.8 percent reduction in NPLs, which subsequently led to the 32.0 percent contraction in NPAs.  Moreover, NPL and NPA coverage ratios strengthened to 187.0 percent (from 155.1 percent) and 174.4 percent (from 148.5 percent), respectively.

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