FOREIGN CURRENCY loans granted by Philippine banks surged as the year opened to outpace the increase in dollar deposits, which helped export firms recover during the first quarter, central bank data showed.

Local banks handed out $14.349 billion in total loans under their foreign currency deposit units (FCDUs) as of end-March, which jumped by a fifth from the $11.991 billion that was lent out during the same period in 2016, according to the Bangko Sentral ng Pilipinas (BSP).

The amount is also higher than the $12.51 billion in borrowings extended in 2016.

FCDUs are bank units duly authorized by the central bank to conduct transactions involving foreign currencies, mainly by accepting deposits and handing out loans.

Merchandise and service exporters were the biggest borrowers during the first quarter as they got hold of $3.446 billion. Exports rebounded between January to March to post an 18.3% increase year-on-year, reversing an 8.4% contraction seen during the same period in 2016.

Firms engaged in towing, tanker, trucking and forwarding also secured $2.6 billion in loans from January-March, followed by public utility firms with $1.397 billion.

Bulk of the foreign currency loans were secured by Filipinos which amounted to $9.219 billion held mostly by local businesses, 9.2% higher than the $8.441 billion incurred a year ago. Meanwhile, foreigners borrowed $5.129 billion, up by 44.5% from $3.55 billion.

By source, local commercial banks lent $12.432 billion, while thrift banks approved $39 million. Foreign banks operating in the Philippines also granted $1.877 billion, according to the central bank.

Despite the surge in foreign currency-denominated loans, bulk of the dues stood manageable with 71.3% of the total are set to mature in more than a year, amounting to $10.228 billion. Only $4.121 billion came in short-term loan arrangements.

Loans released during the quarter rose by 13.5%, with majority of the amount due in one year or less.

On the other hand, dollar deposits grew by a softer 7.7% to hit $37.333 billion in March from $34.663 billion a year ago, mostly held by residents.

As a result, the total loans-to-deposits ratio went up to 38.4% from 34.9% as of end-December and 34.6% in March 2016.

A bigger stash of foreign currency deposits stood as additional buffers versus external shocks, and stands to support the BSP’s gross international reserves.

The BSP has updated its rules on foreign currency exchange to make it easier for investors and individuals to get hold of these denominations.

Among the adjustments include raising the limit for over-the-counter dollar purchases to $500,000 for individuals and $1 million for corporates, allowing person-to-person dollar transactions, and lifting the need for a private firm to secure BSP approval before incurring loans under a bank’s FCDU to simplify access to financing. — Melissa Luz T. Lopez

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