Banks’ foreign currency-denominated lending edged lower in the first quarter as corporate demand for dollar credit softened despite rising foreign currency deposits in the banking system.
Outstanding loans granted by foreign currency deposit units (FCDUs) slipped 0.8% to $15.44 billion in the first quarter of 2026, according to data released by the Bangko Sentral ng Pilipinas (BSP).
On a year-on-year basis, outstanding FCDU loans fell 2.2%.
The decline points to softer demand for dollar-denominated borrowing even as banks remained flush with foreign currency liquidity. FCDU deposit liabilities rose 1% during the quarter to $60.76 billion, from $59.82 billion in the previous quarter.
Local borrowers accounted for 67.6%, or $10.44 billion, of total outstanding FCDU loans, while non-residents accounted for the remaining 32.4%.
The BSP said the largest domestic borrowers were “merchandise and service exporters; firms engaged in towing, tanker, trucking, forwarding, personal, and other industries; and power generation companies.”
Most outstanding loans had medium- to long-term maturities of more than one year.
The BSP said FCDUs disbursed $8.25 billion in new loans during the quarter, which was more than offset by $8.36 billion in principal repayments, contributing to the overall decline in outstanding loan balances.
