FCDU lending decreases slightly in Q2 2022

Outstanding loans granted by Foreign Currency Deposit Units (FCDU) of banks stood at US$15.7 billion as of end-June 2022, recording a decrease of US$255 million (or by 1.6 percent) from the end-March 2022 level of US$16.0 billion as principal repayments exceeded disbursements.

Outstanding FCDU loans recorded another decline during the second quarter of 2022 following an increase in the first quarter of 2022 since the onset of the pandemic.

The decrease in FCDU loans may be attributed to: (a) net tightening of overall credit standards of lender banks as a result of uncertainty in the economic outlook; and (b) borrowers’ reduced demand for FCDU loans in light of foreign exchange volatility and rising borrowing costs.

Year-on-year, outstanding FCDU loans decreased by US$457 million (or by 2.8 percent) from the end-June 2021 level of US$16.2 billion.

As of end-June 2022, 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 comprised 79.1 percent of total, similar to the previous quarter.

Of the US$10.1 billion outstanding loans to residents, 63.3 percent went to the following sector/industries: power generation companies (US$2.8 billion or 27.7 percent); merchandise and service exporters (US$2.3 billion or 22.7 percent); and management/holding and stock brokerage (US$1.3 billion or 12.9 percent).

Gross disbursements in the second quarter of 2022 reached US$15.7 billion and were 7.0 percent higher than the previous quarter’s figure mainly due to increase in funding requirements of a foreign bank branch affiliate.

Similarly, loan repayments in the second quarter of 2022 totaled US$15.9 billion, a 10.4 percent increase from the previous quarter’s figure. These resulted in overall net repayments.

FCDU deposit liabilities stood at US$46.6 billion as of end-June 2022, higher by US$306 million (or by 0.7 percent) from the end-March 2022 level of US$46.3 billion.

The bulk of these deposits (96.9 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 increased by US$968 million (or by 2.1 percent) from the end-June 2021 level of US$45.6 billion.