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Dollar loans by banks in the Philippines up more than 20% in '13

Philippine Daily Inquirer -- Dollar loans extended by banks in the Philippines rose by more than 20 percent at the end of last year, driven by strong demand for financing because of a booming local economy.

Central bank data released over the weekend showed that the bulk of the loans at the end of 2013 were either medium- or long-term in maturity, reflecting local banks' confidence in their clients' ability to pay back their obligations.

“An uptrend was consistently noted [throughout] the year, which may be attributed to more vibrant business activities arising from the overall positive sentiment due to strong macroeconomic fundamentals,” Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr. said.

Outstanding loans granted by Foreign Currency Deposit Units (FCDU) of banks stood at US$10.5 billion as of December — up by US$493 million, or 5 percent, from the end-September. Year-on-year, FCDU loans were up 20.6 percent.

The maturity profile of outstanding FCDU loans was as follows: medium- to long-term loans, or those payable over a term of more than one year, represented 62.4 percent of total, the BSP said.

The profile “reflected banks' confidence to lend longer-term funds,” it said.

Short-term accounts, or those with original maturities of no more than one year, comprised the 37.6-percent balance of the loan portfolio.

Most of the loans were also extended to local firms, the BSP said. Outstanding loans to resident borrowers represented 79.5 percent, or US$8.3 billion, of the total.

Industries that benefited the most were public utility firms, with 19.5 percent; manufacturers and oil companies, with 16.1 percent; and exporters, with 14.9 percent. The rest of the loans went to government agencies and other industries.

Gross disbursements during the fourth quarter of the year amounted to US$11.2 billion and were largely for working capital requirements to support business operations.

For 2013, total disbursements reached US$36.3 billion—more than double the US$17.1 billion recorded a year ago.

Loan repayments likewise grew from US$15.8 billion to US$34.5 billion. Transactions for the year resulted in an overall net disbursement of US$1.8 billion.

Demand for foreign-currency loans comes mainly from businesses with dollar-denominated expenses. These include importers that buy products from abroad, and exporters that source their raw materials overseas.

The expansion in loans came despite a decline in sources of funds, the BSP said. Deposit liabilities settled at US$25.9 billion by end-2013—down by 1 percent from the previous quarter. Year-on-year, deposits were up 2.9 percent.

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