Loans extended by banks’ foreign currency deposit units (FCDUs) rose 21 percent to $12.08 billion in the third squarter of 2014 from $9.96 billion last year.
The substantial increase in mostly dollar loans reflected optimism by investors as they snap up cheap (low interest) loans from very liquid banks.
On a quarterly basis, FCDU loans rose 4.3 percent or $499 million from $11.58 billion recorded at the end of June 2014.
“The expansion of the FCDU loan portfolio may attributed to the relatively low interest rate environment, high liquidity position of banks and positive business sentiment arising from strong macroeconomic fundamentals, which contributed to the 5.3 percent GDP [gross domestic product]growth of the country in the third quarter of 2014,” the central bank said.
The BSP said these loans were made up mostly of medium- to long-term loans, or those payable over a term of more than one year, and represented 62.7 percent of the total, which funded various projects. Short-term accounts, or those with original maturities of up to one year, comprised the 37.3 percent balance of the loan portfolio.
Resident borrowers represented 69.7 percent or $8.42 billion of the total FCDU loans extended, while the remaining 30.3 percent or $3.67 billion went to non-resident borrowers.
Outstanding loans to private sector represented 99.4 percent of total with the 0.6 percent balance went to the public sector, benefiting public utility firms, producers/manufacturers, including oil companies, and merchandise and service exporters.
Meanwhile, gross disbursements during the period decreased by 4.6 percent to $13.6 billion from the previous quarter’s $14.2 billion.
Deposit liabilities stood at $30.51 billion by the third quarter, were up by 2.2 percent or $661 million from $29.85 billion in the second quarter of 2014.
“The bulk of the deposits continued to be held by residents and essentially constitute additional foreign exchange buffer to the country’s international reserves,” the BSP said.
On the other hand, the loans-to-deposit ratio increased to 39.6 percent in September from 38.8 percent in the second quarter in view of the larger rate of increase of loans vis-a-vis deposit liabilities.