Local banks’ dollar loans up in Q1 to $11.4B

Foreign currency loans extended by local banks rose by nearly a tenth in the first quarter, indicating local businesses’ continued willingness to deal in dollars given the peso’s relative stability.

Data released by the Bangko Sentral ng Pilipinas (BSP) showed an increase in outstanding loans of foreign currency deposit units (FCDU) of local banks, with the bulk of the disbursements going to firms in the productive sectors of the economy.

“The rising trend in outstanding FCDU loans observed … may be attributed to the low interest rate environment, broadly stable exchange rate, high liquidity position of banks, and positive business sentiment arising from strong macroeconomic fundamentals,” BSP Deputy Governor Diwa C. Guinigundo said in a statement.

Outstanding FCDU loans at the end of the first quarter stood at $11.4 billion, up by $927 million or 8.9 percent higher than end-December’s level, data from the regulator showed.

Loan disbursements grew by 16 percent, outpacing the 12.2 percent increase in repayments, resulting in net loan disbursements of $984 million.

The maturity profile of outstanding FCDU loans is as follows: Medium- to long-term loans [or those payable over a term of more than one year] represented 58.5 percent of total, which funded various projects.  Short-term accounts that mature in less than a year comprised the 41.5-percent balance of the loan portfolio.

Outstanding loans to Filipino borrowers represented 73.5 percent of the total.

These loans went to public utility firms (20.8 percent), oil companies (17.7 percent) and exporters (10.6 percent).

The 24.3-percent balance went to foreigners and government firms or agencies.

Deposit liabilities rose to $27.4 billion in the January to March period, or by 5.9 percent from $25.9 billion in December 2013.

Resident accounts continued to comprise the bulk of deposits at 97.1 percent.

The loans-to-deposit ratio increased from 40.3 percent to 41.5 percent in the first quarter of 2014 as a consequence of the expansion in both loans and deposits.