FCDU lending increases in Q1 2022

Outstanding loans granted by Foreign Currency Deposit Units (FCDU) of banks stood at US$16.0 billion as of end-March 2022, recording a slight increase of US$251 million (or by 1.6 percent) from the end of previous quarter’s outstanding FCDU loan level of US$15.7 billion as disbursements exceeded principal repayments.

Outstanding FCDU loans recorded an increase during the first quarter of 2022 reversing from its downward trend for the last seven consecutive quarters since the onset of the pandemic amid signs of economic recovery in recent quarters.

The increase in FCDU loans may be attributed to: (a) net increase in demand for business loans attributed to the improvement in firms’ economic growth outlook; and (b) firms’ higher financing requirements for inventory and accounts receivable.

Year-on-year, outstanding FCDU loans decreased by US$372 million (or by 2.3 percent) from the end-March 2021 level of US$16.3 billion.

As of end-March 2022, the maturity profile of the FCDU loan portfolio remained predominantly medium- to long-term debt [or those payable over a term of more than one (1) year], which represented 79.1 percent of total, the same level as of end-March 2021.

Of the total 66.2 percent outstanding loans to residents, 53.9 percent went to the following resident industries: power generation companies (17.4 percent); merchandise and service exporters (14.9 percent); and management/holding and stock brokerage (8.5 percent); public utility firms (6.6 percent); and producers, manufacturers/oil companies (6.4 percent).

Gross disbursements in the first quarter of 2022 reached US$14.7 billion and were 6.6 percent lower than the previous quarter’s figure mainly due to decrease in funding requirements of an affiliate of a branch of a foreign bank.

Similarly, loan repayments in the first quarter of 2022 totaled US$14.4 billion, an 8.5 percent decrease from the previous quarter’s figure. These resulted in overall net disbursements.

FCDU deposit liabilities stood at US$46.3 billion as of end-March 2022, higher by US$213 million (or by 0.5 percent) from the end-December 2021 level of US$46.1 billion.

The bulk of these deposits (97.2 percent) continued to be owned by residents, essentially constituting an additional buffer to the country’s gross international reserves.

Year-on-year, FCDU deposit liabilities increased by US$1.8 billion (or by 4.0 percent) from the end-March 2021 level of US$44.5 billion.