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FCDU Loans Further Dip in First Quarter

07.05.2007

As of end-March 2007, outstanding loans granted by Foreign Currency Deposit Units (FCDUs) of banks amounted to US$3.1 billion, down by US$398 million or 11.4 percent from the end-2006 level of US$3.5 billion. Year-on-year, the FCDU loan portfolio dropped by US$1.0 billion (or by 26 percent) as total loan repayments outpaced new loans granted.

 An FCDU is 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.

Compared with the previous quarter, loan releases and principal repayments were higher by 24 percent and 9.5 percent, respectively.  However, transactions resulted in an overall net repayment of US$361 million, pulling down the outstanding loan portfolio. Note that prepayments by the Bangko Sentral on its outstanding FCDU loans amounted to US$512 million without which,  the  stock  of  FCDU loan portfolio would have risen by US$114 million.

Over 78 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$19.0 billion by end-March 2007, recorded  a slight 1 percent increase from the end-2006 level of US$18.8 billion.  The bulk of these deposits (95 percent) were owned by residents, including overseas Filipino workers and other foreign exchange earners.

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 16.9 percent in March 2007 from 19.8 percent in December 2006 and 26 percent a year ago in view of decrease in loans vis-à-vis expansion in deposits.

Please refer to attached table for details.

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