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FCDU Loans Increased 6 Percent in Third Quarter


As of end-September 2008, outstanding loans granted by Foreign Currency Deposit Units (FCDUs) of banks stood at  US$4.9 billion, up by US$287 million  (or 6 percent)  from  the end-June level of  US$4.6 billion.  The expansion resulted from the overall net availment (excess of new loan availments over principal repayments) of US$300 million in medium/long-term loans by both residents and non-residents.
An FCDU is that unit of a local bank or a 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.

Year-on-year,  the portfolio of FCDU  loans grew by 37.5 percent (or US$1.3 billion) from the US$3.5 billion level in September 2007, likewise largely reflecting the overall net loan availment during the 12-month period.

Outstanding loans with medium to long-term maturities (that is, payable over a term of more than one year) comprised about 59 percent of total, while the 41 percent balance had short-term tenors, or original maturities of up to one year.

Loans to commodity and service exporters comprised 24 percent of the total FCDU portfolio, followed by public utility firms (22 percent), and producers/manufacturers, including oil companies (16 percent).

Private sector borrowers (including non-residents) accounted for the bulk (98 percent) of outstanding loans, while the public sector absorbed the 2 percent balance. Loans to Philippine residents comprised 78 percent of the total portfolio.

FCDU deposit liabilities, which represent the principal funding source of FCDUs, rose to US$20.6 billion in September or by 0.4 percent (US$85 million) from the end-June level of US$20.5 billion. The bulk (98 percent) of these deposits were owned by residents.

A change in the procedure for computing the loans-to-deposits ratio was adopted starting with the FCDU report for the third quarter of 2008. Previously, the ratio, which relates the percentage of FCDU liabilities that is channeled to loans, was computed on a lagged basis, and related the current quarter’s outstanding loans to the level of deposits two quarters back. The new procedure uses the same reporting cut-off date for loans and deposits in line with BSP Circular No. 613 dated 18 June 2008. The loans-to-deposits ratio for the third quarter was computed at 23.8 percent under the new system and 25.2 percent under the old system.

Please refer to the attached table for details.






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