Foreign Currency Deposit Unit (FCDU) lending in the Philippines saw significant growth in the first quarter of 2024.
Outstanding loans reached $16.1 billion by the end of March, marking a $911 million increase, or 6%, from the $15.2 billion recorded at the end of December 2023, according to recent data.
Year-on-year, FCDU loans increased by $614 million, or 4%, from the $15.5 billion noted at the end of March 2023.
The maturity profile of the FCDU loan portfolio remained largely medium- to long-term, with loans payable over more than one year making up 79.1% of the total, slightly up from 78.6% in the previous quarter.
FCDU loans granted to residents stood at $9.7 billion, or 60.6% of the total outstanding loans.
The majority of these loans were allocated to merchandise and service exporters ($2.4 billion or 24.4%), power generation companies ($2.2 billion or 22.4%), and towing, tanker, trucking, forwarding, personal, and other industries ($1.7 billion or 17.8%).
Gross disbursements in Q1 2024 reached $19.2 billion, up 6.4% from $18.0 billion in the previous quarter. This increase was primarily due to heightened funding requirements of a foreign bank branch affiliate.
Conversely, loan repayments in the reference quarter totaled $18.2 billion, slightly lower by 0.8% compared to the $18.4 billion in the previous quarter, resulting in an overall net disbursement.
FCDU deposit liabilities hit an all-time high of $58.6 billion as of the end of March 2024, an increase of $4.2 billion, or 7.7%, from the $54.4 billion recorded at the end of December 2023.
This growth is mainly attributed to a rise in FCDU time certificates of deposits owned by private corporations and resident individuals, aligning with the increase in remittances from overseas Filipinos.
The majority of these deposits ($57.4 billion or 97.9%) are held by residents, providing an additional buffer to the country’s gross international reserves.
Year-on-year, FCDU deposit liabilities rose by $9.9 billion, or 20.3%, from $48.7 billion at the end of March 2023.
The robust growth in FCDU lending and deposits highlights the dynamic nature of the Philippine financial sector and the increasing reliance on foreign currency transactions to support economic activities and financial stability.
