FCDU loans ease to USD 15.44 billion

Foreign currency deposit unit loans slipped in the first quarter of 2026 as repayments slightly outpaced new borrowings, but the market remained a key source of dollar funding for exporters, logistics firms, power companies, and other businesses with foreign exchange needs.

The Bangko Sentral ng Pilipinas reported that FCDU loans fell by 0.8 percent to USD 15.44 billion as of end-March 2026 from USD 15.56 billion in the previous quarter, a decline of USD 122.25 million.

The modest drop matters because FCDU lending helps finance trade, energy, transport, manufacturing, and other sectors that depend on foreign currency to buy inputs, settle obligations, and support operations.

For the public, steady access to this kind of financing can help keep supply chains moving, support power generation, and sustain business activity tied to jobs and consumer services.

Philippine-based borrowers accounted for USD 10.44 billion, or 67.6 percent, of total outstanding FCDU loans, while the balance went to nonresidents.

The biggest local borrowers were merchandise and service exporters with USD 2.75 billion, or 26.4 percent; towing, tanker, trucking, forwarding, personal, and other industries with USD 2.51 billion, or 24.0 percent; and power generation companies with USD 1.85 billion, or 17.7 percent.

Most FCDU loans remained medium- to long-term, giving borrowers more time to repay their foreign-currency obligations.

Loans with maturities of more than one year made up 77.1 percent of the total, lower than 79.2 percent in the previous quarter.

The BSP’s data table showed medium- and long-term loans at USD 11.910 billion as of March 31, down from USD 12.318 billion as of Dec. 31, 2025, and USD 12.182 billion as of March 31, 2025.

Short-term loans stood at USD 3.529 billion, or 22.9 percent, compared with USD 3.243 billion, or 20.8 percent, in the previous quarter and USD 3.600 billion, or 22.8 percent, a year earlier.

The weighted average interest rate was 4.1427 percent for short-term loans and 5.0402 percent for medium- and long-term loans.

The decline in outstanding loans reflected USD 8.25 billion in new loans and USD 8.36 billion in loan payments during the quarter.

By borrower, Philippine residents’ FCDU loans rose to USD 10.443 billion, or 67.6 percent, from USD 10.391 billion, or 66.8 percent, in the previous quarter and USD 9.909 billion, or 62.8 percent, a year earlier.

All loans to Philippine residents were booked by private borrowers, with public-sector borrowings at zero across the March 2026, December 2025, and March 2025 reporting periods.

Within the resident borrower segment, public utilities accounted for USD 0.471 billion, or 3.0 percent, while producers and manufacturers, including oil companies, accounted for USD 1.101 billion, or 7.1 percent.

Exporters held USD 2.753 billion, or 17.8 percent, of total outstanding loans as of end-March 2026, higher than USD 2.663 billion, or 17.1 percent, in the previous quarter and USD 2.439 billion, or 15.5 percent, a year earlier.

Nonresident borrowings fell to USD 4.996 billion, or 32.4 percent, from USD 5.170 billion, or 33.2 percent, in the previous quarter and USD 5.872 billion, or 37.2 percent, a year earlier.

Local banks continued to account for most FCDU lending, with USD 12.891 billion, or 83.5 percent, of outstanding loans as of March 31.

Of this amount, commercial banks held USD 12.867 billion, or 83.3 percent, while thrift banks accounted for USD 0.024 billion, or 0.2 percent.

Foreign bank branches and subsidiaries accounted for USD 2.548 billion, or 16.5 percent, of outstanding loans.

Foreign bank branches held USD 2.162 billion, or 14.0 percent, while subsidiaries accounted for USD 0.386 billion, or 2.5 percent.

FCDU deposit liabilities increased to a preliminary USD 60.769 billion as of end-March from USD 59.828 billion at the end of 2025 and USD 58.919 billion a year earlier.

With deposits rising and loans easing, the overall loans-to-deposits ratio fell to 25.4 percent from 26.0 percent in the previous quarter and 26.8 percent a year earlier.

This suggests banks maintained ample foreign-currency liquidity relative to outstanding loans, a buffer that can help support borrowers needing dollar or other foreign-currency funding.

FCDU loans are foreign currency-denominated loans extended by FCDUs of local banks or local branches of foreign banks authorized by the BSP to engage in foreign currency transactions.

The BSP said these loans support economic activities that require foreign exchange, such as importers, businesses, and individuals with foreign currency transactions.

The figures were based on IOS Form 4 reports, the consolidated report on loans granted by FCDUs and expanded FCDUs, and balance sheets under the Financial Reporting Package starting 2008.

The BSP said the loans-to-deposits ratio was computed using the same report cut-off date for loans and deposits in line with Circular No. 613 dated June 18, 2008, and that details may not add up due to rounding.