Philippine borrowers took out more dollar-denominated loans from local banks in the fourth quarter of 2019 to meet their rising short term cash needs, according to the Bangko Sentral ng Pilipinas (BSP).
Loans granted by banks’ foreign currency deposit units rose by $212 million or 1.2 percent by the end of 2019 to a total of $18 billion, from the $17.8 billion recorded at the end of the previous quarter as disbursements exceeded principal repayments.
Year-on-year, these dollar loans from local banks increased by $1.4 billion — or by 8.7 percent — from the end-December 2018 level of $16.6 billion, the central bank said, explaining that “the growth in loans may be attributed to borrowing firms’ higher working capital requirements.”
As of end-December 2019, the maturity profile of the banks’ dollar loan portfolio remained predominantly medium- to long-term debt, or those payable over a term of more than one year, which represented 79.4 percent of total, higher than the 75 percent level as of end-December 2018.
The central bank said that the bulk of outstanding loans went to the following industries: power generation companies (17.8 percent); merchandise and service exporters (14 percent); public utility firms (8.1 percent); towing, tanker, trucking, forwarding, personal and other industries (5.9 percent); and producers or manufacturers, including oil companies (5.2 percent).
Gross disbursements in the fourth quarter of 2019 reached $13.3 billion and were 23.5 percent lower than third quarter figures due to the decrease in funding requirements of an affiliate of a branch of a foreign bank.
Similarly, loan repayments were lower by 22.9 percent, thus, resulting in overall net disbursements.
The deposit liabilities of banks’ dollar-denominated books stood at $41.1 billion as of end-December 2019, basically unchanged from end-September 2019.
The central bank said that 97.4 percent of these deposits continue to be held by residents, essentially constituting an additional buffer to the country’s gross international reserves.
Year-on-year, banks’ dollar deposit liabilities increased by $1.2 billion or by 3 percent from the end-December 2018 level of $39.9 billion.