Loans granted by banks’ foreign currency deposit units (FCDUs) amounted to $15.501 billion for the first nine months of 2023, one percent lower compared to same period in 2022 of $15.665 billion.

FCDUs are units of local banks or branches of foreign banks authorized by the BSP to transact in foreign-currency denominated deposits, and to invest and buy foreign exchange.

Based on Bangko Sentral ng Pilipinas (BSP) data, on a quarter-on-quarter basis, FCDU loans slightly increased by 0.7 percent from end-June 2023’s $15.392 billion due to higher disbursements exceeding principal repayments.

Gross disbursements in the third quarter of 2023 totaled $17.1 billion which was 18.8 percent higher than the previous quarter’s $14.4 billion.

Meanwhile, loan repayments in the third quarter reached $17 billion, up by 17.4 percent from the previous quarter or $14.4 billion. These resulted in overall net disbursement, said the BSP.

Of the $15.501 billion loans, $12.032 billion are medium and long-term loans while $3.469 billion are short-term loans. The maturity profile of the FCDU loan portfolio remained predominantly medium- to long-term or those payable over a term of more than one year, which comprised 77.6 percent of total.

Meanwhile, FCDU loans granted to residents amounted to $9.396 billion, down by 5.8 percent from same time last year of $9.976 billion.

Philippine resident borrowers accounted for  60.6 percent of total outstanding FCDU loans, of which majority went to the following sector/industries: power generation companies with $2.4 billion or 25.3 percent; merchandise and service exporters with $2.3 billion or 24.5 percent; and towing, tanker, trucking, forwarding, personal and other industries with $1.3 billion or 13.5 percent.

As of end-September, FCDU deposit liabilities reached an all-time high of $51.799 billion, up by $2.8 billion or by 5.7 percent from the end-June of $48.987 billion.

The BSP said bulk of these deposits or $50.4 billion or about 97.3 percent continued to be owned by residents and “essentially constituting an additional buffer to the country’s gross international reserves.

On a year-on-year basis, FCDU deposit liabilities increased by $6 billion or by 13.2 percent from same period in 2022 level of $45.775 billion.

The BSP in a report reviewing the first six months fo 2023, said banks’ FCDU operations continued to show strong performance.

“This was reflected in the growth of assets, loans, deposits, and net profits. Investment and lending activities, which were mostly residents’ transactions, continued despite monetary policy tightening, providing credit support to key economic sectors of the country,” said the BSP.

Deposits, which were mostly held by domestic clients, also hit a record high, it noted. Relatedly, other borrowing sources, such as bills payable, expanded as banks managed their funding costs amid a high-interest rate environment.

“In view of banks’ efforts, the results of operations remained profitable as interest income from loans and investments increased at a double-digit rate, balancing out borrowing costs,” said the BSP.