The Market Monitor Minding the Nation's Business
By Riza Lozada
Growth in local trade resulted in foreign- currency (forex) borrowings among local banks to grow 11.4 percent in the first quarter, the Bangko Sentral ng Pilipinas (BSP) reported over the weekend.
Loans granted to exporters grew by $310 million during the period, as stable macroeconomic fundamentals led to a positive business sentiment amid a strong 6.9-percent gross domestic product (GDP) growth during the first quarter of 2016, BSP Governor Amando M. Tetangco Jr. said.
Outstanding loans granted by foreign currency deposit units (FCDUs) of banks in the year to March stood at $12 billion, down by $203 million or 1.7 percent from the end-December 2015 level of $12.2 billion, as principal repayments exceeded disbursements. The slight contraction was also attributed to attractive peso borrowing rates.
Loans to resident borrowers contracted from $8.6 billion to $8.4 billion or by 2.3 percent and represented 70.4 percent of the total.
Among major beneficiaries were public utility firms ($1.2 billion, or 10 percent of total loans); producers and manufacturers, including oil companies ($700 million, or 5.8 percent); merchandise and service exporters ($3 billion, or 25.2 percent); management/holding and stock brokerage ($300 million, or 2.6 percent); and towing, tanker, trucking, forwarding, personal and other individuals ($2.3 billion, or 19.2 percent).
The $900-million balance, or 7.6 percent of loans to residents, went to other borrowers, including government agencies or enterprises. Gross disbursements during the quarter dropped by $6.4 billion from $15.8 billion to $9.4 billion, or by 40.6 percent.
The bulk of loan releases—$8.8 billion, or 93.6 percent—had short-term maturities. 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, representing 70 percent of the total, while short-term accounts or those with maturities of not over one year, comprised the 30 percent balance.
FCDU deposit liabilities, on the other hand, increased by $2.2 billion, or 6.8 percent from $32.4 billion in December 2015 to $34.7 billion in March 2016, with the bulk, or 97.2 percent, still held by residents, thereby essentially constituting additional buffer to the country’s gross international reserves.
The loans-to-deposit ratio decreased from 37.6 percent in December to 34.6 percent in the first quarter of 2016 as a consequence of the lower rate of expansion of loans, (1.7 percent) and increase in deposits (6.8 percent).
Meanwhile, the export sector has expressed to support the next administration’s economic program focused on developing the countryside and helping small and medium enterprises (MSMEs).
Philippine Exporters Confederation Inc. (Philexport) President Sergio Ortiz-Luis Jr. said a strong focus on MSMEs, ease of doing business, human capital, infrastructure development, and increased agricultural and rural enterprise productivity and rural tourism, are drivers of economic growth.
President Rodrigo R. Duterte’s proposed 10-point socioeconomic agenda include promoting science, technology and the creative arts to enhance innovation and creative capacity toward self-sustaining and inclusive development.