FOREIGN CURRENCY loans disbursed by local banks inched up in the second quarter, backed by firms’ higher working capital requirements and lower interest rates.

Outstanding loans by foreign currency deposit units (FCDU) of banks hit $17.5 billion as of end-June, up by 4% from the end-March level of $16.8 billion, data released by the Bangko Sentral ng Pilipinas (BSP) late Monday showed.

This is also an increase of 11.6% from the $15.7 billion seen in the same period a year ago.

“The growth in loans may be attributed to borrowing firms’ higher working capital requirements as well as banks’ lower interest rates,” the central bank said in a statement.

FCDUs are central bank-approved bank units which performs transactions involving foreign currencies, mainly by accepting deposits and handing out loans.

Data from the central bank showed the largest chunk of loans went to towing, tanker, trucking and forwarding (23.7%). This was followed by merchandise and service exporters (16.4%); public utility firms (8.3%); and producers/manufacturers, including oil companies (4.3%)

Gross loans disbursed in the second quarter amounted to $16.7 billion, up 6.5% from the end-March total. According to the BSP, the increase was “due to borrowing firms’ higher working capital requirements and availment of loan by a government corporation in the power sector.”

Meanwhile, loan repayments also inched up by 3.5%, resulting in overall net disbursements, the central bank said.

Majority or 78.1% of the outstanding foreign currency loans had medium- to long-term maturities, or those payable over a term of more than one year. This share went up from the 75.6% seen at end-June 2018.

According to the central bank, the overall loans-to-deposit ratio hit 42.3%, higher than the 42% logged in the first quarter as well as the 41.3% ratio seen in June 2018. — Luz Wendy T. Noble