Foreign currency loans down as of March
FOREIGN CURRENCY loans extended by local banks dropped at end-March as muted economic activity amid the pandemic resulted in a decline in working capital requirements.
Outstanding loans granted by the foreign currency deposit units (FCDU) of banks inched down by 1.9% to $16.337 billion as of March from $16.652 billion at end-December 2020.
FCDU loans also fell by 10.58% from the $18.271 billion seen as of March 2020.
As of March 2021, the maturity profile of FCDU loans was mostly medium- to long-term debt, or those payable in more than a year, representing 79.1% of the total.
FCDUs are BSP-approved bank units that perform transactions involving foreign currencies, such as accepting deposits and handing out loans.
The lower FCDU loans may be attributed to the economy remaining in recession, which translated to lower capital requirements among borrowers, the central bank said.
Banks’ reluctance to lend and the availability of other funding sources may have also caused the decline in foreign currency loans at the end of the first quarter, the BSP added.
The economy remained in recession in the first quarter as
gross domestic product (GDP) contracted by 4.2%. Last year, the economy shrank by a record 9.6%.
Metro Manila and its surrounding provinces were placed under strict lockdown in March as infections surged anew. Restrictions were gradually eased starting April.
Central bank data showed about two-thirds (67.7%) of FCDU loans as of March or $11.066 billion were extended to Philippine residents, with 63.8% of this or $10.42 billion going to private entities.
Among industries, the largest chunk of loans went to power generation companies (27.1%), followed by merchandise and service exporters (21.7%) and public utility firms (11.4%).
Meanwhile, the remaining 32.3% of FCDU loans or $5.271 billion went to non-resident borrowers.
By source, local banks extended 88.1% or $14.387 billion of the FCDU loans recorded as of March, while $1.949 billion or 11.9% were from foreign bank branches and subsidiaries.
At end-March, gross loan disbursements increased by 13.5% to $15.8 billion from the endDecember 2020 level due to the increase in the funding requirements of an affiliate of a branch of a foreign bank.
Meanwhile, FCDU deposit liabilities slipped by 1.2% to $44.508 billion in the same period due to the appreciation of the peso during the period.
The overall FCDU loans-todeposit ratio stood at 36.7% as of March, down from the 37% logged as of December 2020 and the 42.4% seen a year earlier. —