MANILA, Philippines - Foreign-currency loans increased by more than a fifth in the second quarter on the back of continued market confidence in the local economy, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.
Loans extended by banks’ foreign currency deposit units (FCDU) jumped 23 percent to $7.768 billion as of June from previous year’s $6.314 billion, data from the BSP showed.
Compared with the first quarter, lending of FCDUs- which are branches or subsidiaries of foreign banks in the country- rose 7.3 percent from $7.240 billion.
More loans were granted “due to the stable macroeconomic conditions, low interest rate environment and strong consumer confidence” in the country, BSP Governor Amando Tetangco Jr. said in a statement.
Loans were channeled mainly to public utility firms, which accounted for 26.9 percent of the total, as well as merchandise and service exporters (22.5 percent) and manufacturers including oil companies (14.9 percent).
Filipinos accounted for the bulk of loan customers, BSP said. Residents were granted a total of $6.468 billion in foreign loans, 83.3 percent of the total and up 26.6 percent and 10.4 percent from previous year and quarter, respectively.
Most loans were also long-term in nature as data showed 61.5 percent of the total will be payable over a one-year term. The balance of 38.5 percent will have to be settled with 12 months or less.
With more lending, BSP hopes banks will be able to contribute to consumption growth and boost economic activity in the process.
The Philippine economy grew by 6.1 percent as of June, slightly faster than the government’s five- to six-percent target for the year.