Forex loans down as borrowers shift to local currency

MANILA, Philippines – Foreign currency loans extended by local banks retreated more than three percent in end September as more borrowers shifted to peso loans, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

BSP Governor Amando Tetangco Jr. said outstanding foreign currency deposit unit (FCDU) loans reached $11.8 billion in end September, $375 million lower compared to $12.1 billion in end June this year.

The amount was also $330 million lower compared to the end-September 2013 level of $12.08 billion.

“Repayments exceeded disbursements,” Tetangco said.

FCDU refers to units of a local bank or of a local branch of a foreign bank authorized by the BSP to engage in foreign currency-denominated transactions.

Tetangco said FCDU loans granted in the third quarter to all types of debtors except to producers or manufacturers declined.

Tetangco said peso loans grew five percent to P4.6 trillion from P4.3 trillion. “Some borrowers may have shifted to domestic financing,” he said.

Data showed loans to resident borrowers represented 71 percent of the total outstanding FCDU loans in end September.

Major beneficiaries of FCDU loans include public utility firms with 17 percent followed by producers or manufacturers including oil companies with 6.8 percent; merchandise and service exporters with 23 percent; management and stock brokerage with seven percent; towing, tanker, forwarding, personal and other individuals with 13 percent as well as government agencies with four percent.

The BSP said gross disbursements jumped 21 percent to $15.8 billion in end September from $13 billion in end June.

About 94 percent of the total loan releases had short term maturities and were largely for working capital and other short-term funding requirements.

Data showed the 70 percent of the total FCDU loans in end September were payable in more than one year or had medium to long term maturity period while 30 percent were due in less than one year or short term.