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FCDU Loans Further Rise in Last Quarter of 2007

04.03.2008

As of end-2007, outstanding loans granted by Foreign Currency Deposit Units   (FCDUs)  of   banks   stood   at   US$3.8 billion, up by  US$299 million   (or 8.5 percent)   from  the end-September  level    of  US$3.5 billion. FCDU loans also rose by 8.5 percent in the previous quarter.

Year-on-year, FCDU loans grew  by 10.2 percent (or US$354 million) from US$3.5 billion at end-2006,  as new loans exceeded repayments. The continuing appreciation of the peso against the U.S. dollar attracted more FCDU borrowings. Outstanding peso loans from commercial, thrift and rural banks posted a bigger growth of 10.9 percent during the same period.

 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.

About 60 percent of the FCDU loan portfolio had medium to long-term maturities (that is, original payment terms of more than one year). A rising trend in the percentage of MLT borrowings was observed over the past two quarters reflecting creditor banks’ ample liquidity and growing confidence to extend longer term money to qualified clients.

Public utility firms accounted for 22 percent of the total loan portfolio, followed by commodity and service exporters (21 percent), and producers/manufacturers including oil companies (20 percent). The private sector absorbed 96 percent of the portfolio, from 95 percent in September. About 83 percent of outstanding FCDU loans went to Philippine residents. 

FCDU   deposit    liabilities fell by 4 percent by end-November to settle at US$19 billion from US$19.9 billion in September. The bulk (94 percent) of these deposits were held by residents, including overseas Filipino workers. With the bigger expansion in FCDU loans compared to deposits, the overall loans-to-deposits ratio (which relates the current period’s loan portfolio to the level of FCDU deposits two quarters back) improved to 20.1 percent as of end- 2007 from 18.6 percent a quarter ago.

Please refer to the attached table for details.

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