Banks’ forex loans flat at $12.2B in 2015


The value of foreign currency denominated loans in 2015 was virtually unchanged from a year earlier due to foreign exchange adjustments that offset disbursements made last year, the central bank reported.

According to data released by the Bangko Sentral ng Pilipinas (BSP) on Friday, loans of local banks’ foreign currency deposit units (FCDU) totaled $12.194 billion in 2015, an increase of just 0.1 percent from the $12.181 billion FCDU loans recorded in 2014.

The BSP said there was a “modest growth of $0.01 billion” in FCDU loans as the net disbursements of only $74 million were offset by negative adjustments amounting to $61 million on foreign exchange movements and reclassification of accounts.

In terms of quarterly movement, however, the BSP said FDCU loans grew at a strong 3.7 percent pace in the fourth quarter of 2015, resulting in $12.2 billion FCDU loans for the whole year compared to $11.8 billion as of end-September 2015.

BSP Governor Amando Tetangco Jr. said the expansion of the foreign-denominated loans in the fourth quarter was attributed to the “positive business sentiment arising from strong macroeconomic fundamentals, as well as the 6.3 percent [gross domestic product]growth of the country in the fourth quarter of 2015.”

FCDUs are subsidiaries or affiliates of local banks that handles deals in foreign denominations. These FCDUs take care of the banks’ foreign currency financing, which is needed by firms that import goods or have expenses, payments and other services in dollar denominations.

70 percent or $8.6 billion worth of outstanding foreign loans went mostly to merchandise and service exporters (22.2 percent share or $2.7 billion), other trucking and forwarding individuals (21.2 percent or $2.6 billion), public utility firms (9.8 percent or $1.2 billion), manufacturers including oil firms (8.3 percent or $1 billion), and holding and stock brokerage firms (3.9 percent or $500 million).

The BSP said the balance of $3.6 billion foreign denominated loans went to other beneficiaries such as government agencies and other enterprises.

The bulk of the outstanding loans in 2015—or 69.6 percent of the total—are classified as medium- to long-term loans that are payable in more than one year, while the rest were short-term accounts that needs to be settled within one year.

While foreign currency loans hardly moved, FCDU deposit liabilities, or foreign currency deposits to local banks improved to $32.4 billion last year from $31.8 billion in 2014.

The BSP said the bulk of the foreign currency deposits were held by local borrowers, and provided an additional buffer to the country’s gross international reserves last year.

The foreign currency loans-to-deposits ratio in 2015 decreased to 37.6 percent from 38.3 percent in 2014 as deposits increased by 2.06 percent to $32.44 billion from $31.78 billion a year earlier.


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