THE Bangko Sentral ng Pilipinas (BSP) reported on Wednesday that dollar loans extended by local banks’ Foreign Currency Deposit Units (FCDU) continued to decline in the first three months of the year, reflecting low lending appetite and timid economic activity during the period.
According to data from the BSP, FCDU loans hit $16.3 billion in the first quarter of the year, down 1.9 percent from the $16.7 billion level in end-December of last year as principal repayments exceeded disbursements.
Compared to the first quarter of 2020, meanwhile, outstanding FCDU loans decreased by $1.9 billion or by 10.6 percent from the end-March 2020 level of $18.3 billion.
The decline in FCDU loans was attributed to the continued contraction of the economy during the quarter, which translated to lower working capital requirements among borrowers and the lender banks’ continued lower appetite to lend. The BSP said lower dollar loans could have also indicated availability of other sources of funding for firms.
The BSP also reported that the maturity profile of the FCDU loan portfolio remained predominantly medium- to long-term debt, or those payable over a term of more than one year.
These loans represented 79.1 percent of total, slightly lower than the 79.5 percent level as of end-March 2020.
Of the total 67.7 percent outstanding loans to residents, 60.2 percent went to the following resident industries: power generation companies (27.1 percent); merchandise and service exporters (21.7 percent); and public utility firms (11.4 percent).
The BSP also reported that gross disbursements in the first quarter of 2021 reached $15.8 billion and were 13.5 percent higher than the previous quarter’s figure. The increase, however, was attributed only to funding requirements of an affiliate of one branch of a foreign bank.
Loan repayments were also higher by 10.6 percent, thus, resulting in overall net repayments.
FCDU deposit liabilities stood at $44.5 billion as of end-March 2021, lower by 1.2 percent from the end-December 2020 level of $45.1 billion.
“The quarter-on-quarter decline in FCDU deposits may be attributed to the sustained strength of the peso,” the BSP said.
About 97.2 percent of these deposits are owned by residents. This essentially constitutes an additional buffer to the country’s gross international reserves, the BSP said.