FCDU loans down 5% to $4.66B in first quarter

Outstanding loans of foreign currency deposit units (FCDUs) dropped by five percent during the first quarter of the year, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

According to the BSP, FCDU loans granted by commercial and thrift banks amounted to $4.66 billion, down by $223 million from the end-December level of $4.832 billion.

BSP Governor Rafael Buenaventura said the decline was a result of repayments amounting to $832 million which outpaced disbursements of $607 million.

Buenaventura said FCDU deposit liabilities expanded by $908 million or about seven percent to reach $14.33 billion during the three-month period.

"The overall loans-to-deposit ratio remained essentially unchanged at 37 percent at the close of the quarter," Buenaventura said.

The BSP said private sector accounts represented the bulk – 65 percent – of the total portfolio. Exporters and public utility firms accounted for a combined 45- percent share.

In terms of maturity, Buenaventura said medium and long-term loans accounted for 73 percent of the total. This represented loans with payment terms of one year or longer.

The BSP reported that in 2003, FCDUs raked in huge profits, the first time in five years that the system actually generated income as investments shifted away from corporate loans to high-yielding sovereign bonds.

The BSP said the FCDU system reported a 24.9-percent increase in net income as of the end of 2003, reaching $666.3 million.

According to the BSP, the total assets of the entire FCDU system increased by 2.7 percent in 2003 and reached $17.069 billion compared to $16.622 billion in 2002.

The BSP said the increase in the FCDU income resulted from the 25.3 percent increase in non-interest income that reached $81.9 million and the 3.7 percent increase in net interest income combined with the decline in operating expenses.

The BSP reported that for 2003, the operating expense of the FCDU system dipped by 21.3 percent, cutting down costs and allowing for a higher increase in income.

The BSP said available, data indicate that business enterprises shied away from borrowings and much of the preference has been for interbank loans rather than regular lending. The system also prefers marketable securities and long-term investments.

"FCDUs took advantage of the volatility in the bond market, particularly sovereigns," said BSP deputy governor Alberto V. Reyes. "The National Government was the biggest beneficiary because a significant portion of its sovereign bonds were funded from FCDU deposits."

As a result, the BSP reported a 26-percent decline in dollar loans, excluding interbank loans (IBLs), reaching only $3.474 billion compared to $4.697 billion in 2002.

On the other hand, the BSP said the IBL and marketable securities component of liquid assets both grew by 24.9 percent to $3.707 billion and by 35.9 percent to $1.76 billion, respectively.