FCDU Loans Dip Slightly to USD15.78 B in Q1 2025

Foreign-denominated loans from Philippine banks slightly declined to US$15.78 billion (PHP 899.5 billion) in the first quarter of 2025, down 0.2 percent from the previous quarter, according to the Bangko Sentral ng Pilipinas.

These loans, known as foreign currency deposit unit (FCDU) loans, are crucial for importers, exporters, and companies with foreign currency obligations.

The year-on-year contraction was steeper at 1.8 percent, reflecting muted foreign currency borrowing by local firms.

FCDU loans are issued by banks authorized to transact in foreign currencies, providing financing for foreign trade and capital projects.

Despite the marginal drop, medium- to long-term loans—those with maturities over one year—increased slightly to 77.2 percent of total FCDU loans.

Philippine-based borrowers accounted for US$9.91 billion, with exporters receiving the largest share at US$2.44 billion, or 24.6 percent.

Other significant borrowers included logistics and transport services at US$2.11 billion (21.3 percent) and power generation firms at US$1.90 billion (19.1 percent).

In the same quarter, banks granted US$7.66 billion in new loans and received US$7.72 billion in repayments.

The modest decrease in loans coincided with record-high foreign currency deposits, which reached US$58.92 billion (PHP 3.36 trillion), up 0.5 percent year-on-year.

This rise in deposits indicates strong dollar holdings, which support liquidity and the stability of the foreign exchange market.

While the decrease in borrowing may reflect cautious business sentiment, the growth in deposits suggests resilience in the banking sector’s foreign currency position.

For the average Filipino, FCDU loans are essential in keeping import prices manageable and in financing export-oriented industries that generate jobs.

As global interest rates and currency markets remain volatile, BSP’s oversight of FCDU lending ensures balanced risk exposure in the financial system.

Maintaining a healthy FCDU loan-to-deposit ratio is critical for managing the country’s foreign currency obligations and overall economic resilience.