Foreign currency deposits hit $24b

by Roderick T. dela Cruz
Manila Standard
http://www.manilastandardtoday.com/insideBusiness.htm?f=2010/july/3/business2.isx&d=2010/july/3

Bank deposits denominated in the US dollar and other foreign currencies hit a record level of $24.062 billion as of the first quarter of 2010, Bangko Sentral reported Friday.

The figure was up 13.7 percent from just $21.168 billion year-on-year and 6.4 percent higher from $22.617 billion in the fourth quarter of 2009.

About 98 percent of the deposits came from Filipino depositors, and the balance from non-residents, Bangko Sentral said.

Outstanding loans granted by foreign currency deposit units of banks, however, fell 6 percent year-on-year and 2.3 percent quarter-on-quarter as of end-March, as many companies and individuals decided to repay their short-term loans, instead of obtaining new ones.

With the contraction in FCDU loans and expansion in deposits, the overall loans-to-deposits ratio declined to 19.8 percent in the first quarter from 21.5 percent in the fourth quarter.

Bangko Sentral said the outstanding loans granted by FCDUs of banks fell $115 million to $4.8 billion as of end-March from $4.9 billion in December.

It attributed the decline to higher loan repayments, which in effect reduced “the potential risk to FCDU borrowers posed by adverse foreign exchange movements.”

An FCDU is a unit of a local bank or a branch of a foreign bank granted with a license by Bangko Sentral to receive foreign currency-denominated deposits or extend foreign currency loans.

Foreign currency loans dipped $311 million or 6 percent from $5.1-billion level in March 2009 as a result of the transfer of certain FCDU loans to an offshore branch of a foreign bank that had the effect of reducing the FCDU loan portfolio.

Outstanding loans with medium and long-term maturities that are payable over a term of more than one year accounted for 64 percent of total foreign currency loans.