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Manila Bulletin devider Business devider Banking & Finance devider Weak demand pulls down foreign currency loans at end-March 2025

Weak demand pulls down foreign currency loans at end-March 2025

Published Jul 1, 2025 03:20 pm

At A Glance

  • Foreign currency-denominated bank loans slightly dropped in the first three months of 2025 as demand for both short and long-term loans weakened, and both residents and non-residents borrowed less during the quarter.
Foreign currency-denominated bank loans in the country posted a slight decrease in the first three months of the year, driven by weakened demand for both short and long-term borrowing from residents and non-residents alike.
According to data from the Bangko Sentral ng Pilipinas (BSP), foreign currency deposit unit (FCDU) loans totaled $15.78 billion in January to March, a 0.2 percent decline from $15.82 billion in the previous quarter. Year-on-year, it dropped 1.8 percent from $16.07 billion recorded at end-March 2024.
FCDU loans are extended by FCDU units of local banks or local branches of foreign banks authorized by the BSP to conduct foreign currency transactions.
“FCDU loans support economic activities that require foreign exchange, such as importers, businesses, and individuals with foreign currency payables or needs,” the BSP explained in a statement late Monday, June 30.
During the January-March period, 77.2 percent of FCDU loans had medium-to long-term maturities (longer than one year), a marginal increase from 77.1 percent in the preceding quarter. However, the value of these loans declined to $12.18 billion at end-March from $12.2 billion at end-December.
Conversely, short-term loans registered an increase, reaching $3.6 billion in the first quarter, up from $3.35 billion previously.
Of the total outstanding FCDU loans, $9.91 billion was granted to Philippine-based borrowers, with the remainder extended to non-residents.
The top Philippine-based borrowers were merchandise and service exporters, accounting for $2.44 billion (24.6 percent). They were followed by the towing, tanker, trucking, forwarding, personal, and other industries with $2.11 billion (21.3 percent), and power generation companies with $1.90 billion (19.1 percent).
The BSP noted that as of end-March, outstanding FCDU loans reflected $7.66 billion in new loan releases and $7.72 billion in loan payments during the quarter.
“Meanwhile, the reduction in FCDU loans came alongside the rise in deposits in foreign currencies,” the BSP added.
Deposits to FCDUs reached a record high of $58.92 billion as of end-March 2025, marking a 0.5 percent increase from $58.61 billion in the same period last year.

Related Tags

Bangko Sentral ng Pilipinas (BSP) foreign currency differential adjustment (FCDA)
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