Banks’ dollar lending slightly up

Dollar loans granted by local banks rose slightly by the end of December 2017, as companies in the transport sector borrowed in foreign currency to finance their acquisition of capital equipment, data from the Bangko Sentral ng Pilipinas revealed.

In a statement, BSP Governor Nestor Espenilla Jr. said the foreign currency deposit units (FCDUs) of Philippine banks had lent out a total of $15.4 billion as of the end of the fourth quarter of last year, up 2.5 percent or $382 million from the end-September 2017 level of $15 billion, as disbursements exceeded principal repayments.

Year-on-year, a growth in the portfolio of $2.9 billion was noted as disbursements outpaced repayments.

The maturity mix of the loan portfolio remained biased toward medium- to long-term debt or those payable over a term of more than one year, which represented 75.9 percent of total.

The bulk of outstanding loans went to the following resident industries: towing, tanker, trucking and forwarding (23.5 percent); merchandise and service exporters (21.4 percent); public utility firms (11.1 percent); producers/manufacturers, including oil companies (4.3 percent).

Gross disbursements during the reference quarter reached $15.8 billion and were 9.7 percent higher than the previous quarter’s figure. Loan repayments were likewise higher by 15.0 percent but still lower than disbursements, resulting in overall net disbursements of $380 million.

FCDU deposit liabilities likewise grew by $142 million to $39.2 billion from last quarter’s $39.1 billion level, with the bulk (97.4 percent) continuing to be held by residents.

The overall loan-to-deposit ratio improved to 39.2 percent from 38.4 percent a quarter ago with the larger expansion in loan portfolio vis-a-vis FCDU deposits.

Market watchers expect the popularity of dollar-denominated loans—which charge lower interest rates compared to peso-denominated obligations—to plateau in the coming months due to the prevailing volatility in the local currency. —DAXIM L. LUCAS