Lending in foreign currencies granted by domestic banks in the first quarter accelerated as outstanding loans increased by six percent to $16.1 billion from $15.2 billion recorded last December, data from the Bangko Sentral ng Pilipinas (BSP) showed Friday.

The loans were facilitated through foreign currency deposit units (FCDUs) referring to units of foreign banks in the country that handle foreign currency-denominated transactions.

Through BSP’s more relaxed foreign exchange rules, FCDUs can process transactions between Filipino residents and investors more easily.

FCDUs posted gross disbursements of $19.2 billion in the first quarter, higher by 6.4 percent compared with the $18 billion last year.

However, loan repayments slightly declined by 0.8 percent to $18.2 billion from $18.4 billion.

FCDU loans granted to residents stood at $9.7 billion or 60.6 percent of the total outstanding.

Top borrowers

Top borrowers included those engaged in merchandise and service exports with $2.4 billion or 24.4 percent share, followed by power generation with $2.2 billion or 22.4 percent share. The others were firms offering towing, trucking, forwarding, and personal services with a combined $1.7 billion or 17.8 percent share.

Year-on-year, outstanding FCDU loans increased by $614 million or 4 percent from $15.5 billion recorded in the first quarter of 2023.

Meanwhile, FCDU deposits rose to a record of $58.6 billion or 7.7 percent in the first quarter.

“This is mainly due to the hike in FCDU time certificate of deposits owned by private corporations and resident individuals which aligns with the uptick in the remittances from overseas Filipinos,” BSP said.

Year-on-year, FCDU deposit liabilities surged by 20.3 percent or $9.9 billion.

OFW remittances

Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said remittances from overseas Filipinos would continue to increase to support families back home amid inflation movements.

In April, personal remittances from overseas Filipinos grew by 3.1 percent to $2.86 billion from $2.77 billion recorded in the same month last year, the BSP said.

Specifically, cash remittances grew by 2.8 percent to $10.78 billion from 10.49 billion.

These results came after the Philippine Statistics Authority announced inflation in April hit 3.8 percent, marking an uptrend from 2.8 percent in January.