Forex loans granted by banks down 5%

MANILA, Philippines - Foreign currency loans granted by banks declined by five percent in the first quarter of the year — reflecting the general drop in the country’s imports.

Data from the Bangko Sentral ng Pilipinas (BSP) showed that as of end-March 2009, outstanding loans granted by Foreign Currency Deposit Units (FCDUs) of banks amounted to $5.1 billion.

According to the BSP, this showed a $286 million (or five percent) decline from the end-December level of $5.4 billion.

According to the BSP, principal repayments outpaced loan releases by $163 million during the period and this was the first time since the second quarter of 2007.

The BSP also reported negative adjustments of $123 million which resulted in the reduction of the loan portfolio.

Year-on-year, however, the BSP said FCDU loans increased by $764 million, or 17 percent from the $4.4 billion level in March 2008, due mainly to net loan releases (excess of loan disbursements over principal repayments).

The BSP said declines were recorded in the first quarter for both short-term (ST) and medium and long-term (MLT) loans, although the maturity mix remained biased towards MLT loans.

According to the first quarter report of the BSP, MLT loans represented 60 percent of the total portfolio. These were accounts with original payment terms of more than one year, while ST loans have original tenors of up to one year.

Loan releases during the quarter amounted to $1.4 billion, of which $1.1 billion (73 percent) were in favor of residents classified as follows: exporters (32 percent), oil companies (14 percent), manufacturers (11 percent), and others (16 percent).

The BSP said the balance of new loans granted equivalent to $400 million were in favor of non-residents, mainly financial institutions. About 97 percent of the new loans had short-term maturities.

On the other hand, the BSP said FCDU deposit liabilities rose anew to reach $21.2 billion, up by $765 million from $20.4 billion in end-December 2008. The bulk (97 percent) of these deposits was held by residents.