FCDU Lending Decreases Slightly in Q3 2022

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Outstanding loans granted by Foreign Currency Deposit Units (FCDU) of banks stood at US$15.67 billion as of end-September 2022, recording a decrease of US$44 million or by 0.3 percent from the end-June 2022 level of US$15.71 billion. The decrease in FCDU loans may be attributed to: (a) gradual move in easing credit parameters and net tightening of overall credit standards of lender banks resulting in an unchanged or deliberate lending operations and credit activity amid 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$164 million (or by 1.0 percent) from the end-September 2021 level of US$15.8 billion.

As of end-September 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 78.5 percent of total.

FCDU loans granted to residents comprised 63.7 percent of total outstanding FCDU loans. Of the US$10.0 billion outstanding loans to residents, majority went to the following sector/industries: power generation companies (US$2.7 billion or 27.4 percent); merchandise and service exporters (US$2.4 billion or 24.4 percent); and management/holding and stock brokerage (US$1.2 billion or 12.3 percent).

Gross disbursements in the third quarter of 2022 reached US$14.6 billion and were 6.6 percent lower than the previous quarter’s figure mainly due to decrease in funding requirements of a foreign bank branch affiliate. Similarly, loan repayments in the same quarter totaled US$14.6 billion, an 8.0 percent decrease from the previous quarter’s figure. These resulted in overall net disbursement.

FCDU deposit liabilities stood at US$45.8 billion as of end-September 2022, lower by US$838 million (or by 1.8 percent) from the end-June 2022 level of US$46.6 billion. The bulk of these deposits (97.3 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$102 million (or by 0.2 percent) from the end-September 2021 level of US$45.9 billion.

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