Loans issued by banks through their Foreign Currency Deposit Units (FCDUs) declined in the third quarter of 2025, signaling increased caution among borrowers wary of exchange rate fluctuations.
Key Figures Show a Notable Decline
Data released by the Bangko Sentral ng Pilipinas (BSP) on Monday, December 29, 2025, revealed that FCDU loans amounted to US$13.13 billion from July to September. This marks a five percent decrease from the $15.93 billion recorded in the preceding quarter.
By the end of September 2025, the total stock of outstanding FCDU loans had contracted by 3.9 percent. This drop occurred even as deposits in foreign currencies grew by 5.7 percent to $60.73 billion, up from $57.46 billion.
Where Did the Loan Funds Go?
The central bank's detailed report showed that the majority of the funds, approximately 63.4 percent or $9.59 billion, were extended to borrowers within the Philippines. The remainder went to non-residents.
The distribution among key local industries was as follows:
- Merchandise and service exporters received 26.2 percent, equivalent to $2.51 billion.
- Towing, tanker, trucking, forwarding, personal, and other industries secured 21.4 percent, or about $2.05 billion.
- Power generation companies obtained 17.8 percent, totaling $1.71 billion.
The BSP also noted that a significant 79.8 percent of the loans were medium- to long-term obligations, with maturities extending beyond one year. During the quarter, new loans granted reached $9.77 billion, while loan payments summed to $10.56 billion.
Economist Points to Strategic Risk Aversion
Rizal Commercial Banking Corp. chief economist Michael Ricafort attributed the downturn to a conscious effort by borrowers to mitigate foreign exchange risks associated with dollar-denominated debt.
"The decline reflects borrowers’ efforts to avoid foreign exchange risks tied to dollar-denominated loans," Ricafort stated. He added that this trend is part of a broader strategic shift, noting, "Even the government reduced foreign/external borrowings and opted for more local/domestic borrowings in recent years, learning from the mistakes on forex risks in past crisis periods."
This analysis suggests a maturation in the Philippine financial landscape, where both corporate and government entities are prioritizing stability and learning from historical economic vulnerabilities.
