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Status of the Philippine Foreign Currency Deposit System - as of 31 December 2003

05.28.2004

Total assets of the FCDU system stood at US$17,069.0 million, 2.7 percent higher than the level of US$16,622.5 million as of end-December 2002. This level, however, was still 16.9 percent lower than the peak of US$20,528.0 million posted at end-year 1997.

The FCDU system posted net income after tax of US$666.3 million as of end-year 2003, an improvement of US$133.0 million or 24.9 percent from last year’s US$533.3 million. This upturn can be attributed to: a) increase in non-interest income by US$81.9 million or 25.3 percent to US$406.0 million; b) increase in net interest income by US$14.6 million or 3.7 percent to US$404.7 million; and c) decrease in operating expenses by US$35.5 million or 21.2 percent.

As business enterprises shy away from borrowings, asset preference veered from regular lending to interbank loans receivable (IBL), marketable securities and long-term investments. Loans, net (exclusive of IBL) decreased by 26.0 percent to US$3,474.5 million from US$4,697.7 million at end-year 2002. On the other hand, the IBL and marketable securities component of liquid assets both grew by 24.9 percent to US$3,707.8 million and 35.9 percent to US$1,760.1 million, respectively. Likewise, investments, net rose by 28.9 percent to US$6,474.7 million from US$5,022.7 million.

FCDUs also shifted their liquid asset components to relatively higher yield IBL and marketable securities from due from BSP and other banks, which fell from last year by 48.0 percent to US$1,104.0 million. Overall, liquid assets rose by 2.9 percent to US$6,571.9 million but this was surpassed by the 4.3 percent growth rate in deposit liabilities. As a result, liquid assets to deposits ratio was slightly lower at 49.0 percent from 49.6 percent.

By economic activity, the Manufacturing industry continued to be the biggest beneficiary of credit at US$853.3 million or 22.8 percent (down from 24.5 percent last year) of loans, gross (exclusive of IBL). This was followed by the Electricity, Gas and Water sector at US$683.7 million or 18.3 percent (up from 15.1 percent last year) and by the Transportation, Storage and Communication sector at US$453.5 million or 12.1 percent (up from 9.9 percent). These 3 industry sectors accounted for 53.2 percent of total FCDU lendings.

Major source of funding came from deposit liabilities, which as of end-year December 2003 stood at US$13,421.4 million or 79.8 percent of total liabilities. Deposit liabilities grew by US$557.5 million or by 4.3 percent from last year of US$12,863.9 million.

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