FCDU lending declines further in Q3 2021

Outstanding loans granted by Foreign Currency Deposit Units (FCDU) of banks stood at US$15.8 billion as of end-September 2021, lower by US$337 million (or by 2.1 percent) than the end-June 2021 level of US$16.2 billion as principal repayments exceeded disbursements.

The decline in FCDU loans may be attributed to: (a) lender banks’ tightened credit standards resulting in a slowdown in their lending operations and credit activity; and (b) availability of other sources of funding.

Year-on-year, outstanding FCDU loans decreased by US$1.4 billion (or by 8.3 percent) from the end-September 2020 level of US$17.3 billion.

As of end-September 2021, 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 78.5 percent of total, slightly lower than the 79.7 percent level as of end-September 2020.

Of the total 67.5 percent outstanding loans to residents, 61.1 percent went to the following resident industries: power generation companies (27.1 percent); merchandise and service exporters (22.3 percent); and public utility firms (11.7 percent).

Gross disbursements in the third quarter of 2021 reached US$13.0 billion and were 7.3 percent lower than the previous quarter’s figure mainly due to the decrease in funding requirements of an affiliate of a branch of a foreign bank. Similarly, loan repayments were lower by 6.0 percent. These resulted in overall net repayments.

FCDU deposit liabilities stood at US$45.876 billion as of end-September 2021, higher by US$232 million (or by 0.5 percent) from the end-June 2021 level of US$45.644 billion.

The bulk of these deposits (97.1 percent) continue to be owned by residents, essentially constituting an additional buffer to the country’s gross international reserves.

Year-on-year, FCDU deposit liabilities decreased by US$75 million (or by 0.5 percent) from the end-September 2020 level of US$45.952 billion.