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FCDU Loans Up 6 Percent in Second Quarter

09.27.2007

As of end-June 2007, outstanding loans granted by Foreign Currency Deposit Units (FCDUs) of banks stood at US$3.3 billion, reflecting an expansion of US$177 million or 5.8 percent from the end-March level of US$3.1 billion. Year-on-year, however, the  FCDU   loan  portfolio  recorded   a  decline   of   US$606 million   (or 15.7 percent) as new loans granted were outpaced by loan repayments.

 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.

New loans granted during the period exceeded the previous quarter’s level by more than US$313 million, while loan payments  declined by US$233 million.

Over 55 percent of the FCDU loan portfolio had short-term maturities (that is, original payment terms of less than one year) reflecting borrowers’ short-term need for financing.

In terms of borrower profile, commodity/service exporters accounted for 26 percent of the total loan portfolio,   followed  by   public utility firms with a 15 percent share. The share to total FCDU loans of private sector borrowings dramatically rose to 94 percent by June from 88 percent in March 2007. Prepayments made by public sector entities including the Bangko Sentral ng Pilipinas cut down by half the public sector’s share in the FCDU loan portfolio to only 6 percent as of end-June 2007. About 76 percent of outstanding FCDU loans went to Philippine residents.

Meanwhile,   FCDU  deposit    liabilities   recorded   an   expansion of  2 percent or US$411 million to reach US$19.4 billion by end-June 2007. The bulk (95 percent) of these deposits were owned by residents, including overseas Filipino workers and other foreign exchange earners. With loans rising faster than deposit liabilities, the overall FCDU loans-to-deposits ratio (which relates the current period’s loan portfolio to the level of FCDU deposits two quarters back) improved to 17.3 percent as of end-June 2007 from 16.9 percent a quarter ago.

Please refer to the attached table for details.

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