Foreign currency loans extended by local banks shrank in the third quarter of 2014 following the volatility in the peso’s value against the dollar and the slowdown in external trade during the period.
Latest documents from the central bank showed that loans extended by foreign currency deposit units (FCDU) of local banks fell in the July-to-September period of the year from the previous quarter. In the April to June, FCDU loans were up by a tenth quarter-on-quarter.
Still, outstanding loans at the end of September were higher year-on-year due to lower interest rates.
Gross foreign exchange loan disbursements in the third quarter of last year decreased to $13.6 billion or 4.6-percent lower than disbursements in the previous three-month period. Bulk of these loans were short-term credits.
In September 2014, exports rose 15.7 percent but the country’s import bill fell 2.6 percent, government data showed. The drop in imports was a result mainly of congestion at the country’s main cargo ports, located in the City of Manila, which implemented a daytime ban on trucks earlier in the year. This slowed the flow of freight in and out of the Manila port area.
Despite the decrease in disbursements, outstanding loans at the end of September were up 4.3 percent to $12.1 billion.
Loans to resident borrowers (mainly the private sector) represented 81.6 percent ($8.1 billion) of the total portfolio, with the following sectors as major beneficiaries: Public utility firms (21.3 percent); merchandise and service exporters (15.4 percent), and producers/manufacturers, including oil companies (14.7 percent).