FCDU lending declines

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    Benjamin Diokno, Bangko Sentral ng Pilipinas Governor, said that as of end-September 2020, outstanding loans granted by Foreign Currency Deposit Units (FCDU) of banks stood at $17.3 billion, lower by $702 million from the end-June 2020 level of $18.0 billion as principal repayments exceeded disbursements.

    The decline in FCDU lending may be due to borrowing firms’ lower working capital requirements and lending banks’ tightening of credit standards attributed largely to less favorable economic outlook, as the ongoing health crisis brought about by the COVID-19 pandemic continued to constrain domestic economic activity.

    Year-on-year, FCDU loans decreased by $554 million, or by 3.1 percent, from the end-September 2019 level of $17.8 billion.

    As of end-September 2020, the maturity profile of the FCDU loan portfolio remained predominantly medium- to long-term debt, which represented 79.6 percent of total, higher than the 77.5 percent level as of end-September 2019.

    Of the total 65.0 percent outstanding loans to residents, 40.4 percent went to the following resident industries: power generation companies; merchandise and service exporters; and public utility firms.

    Gross disbursements in the third quarter of 2020 reached $12.2 billion and were 8.6 percent higher than the previous quarter’s figure due to the increase in funding requirements of an affiliate of a branch of a foreign bank. Similarly, loan repayments were higher by 11.9 percent, thus, resulting in overall net repayments.

    FCDU deposit liabilities stood at $46.0 billion as of end-September 2020, higher by $2.4 billion from the end-June 2020 level of $43.6 billion.

    The bulk of these deposits continue to be owned by residents, essentially constituting an additional buffer to the country’s gross international reserves.

    Year-on-year, FCDU deposit liabilities increased by $4.8 billion from the end-September 2019 level of $41.1 billion.