Foreign currency-denominated lending in the Philippines contracted in the third quarter of 2025, reflecting shifting corporate financing needs amidst global economic conditions.
Key Figures Show Quarterly and Annual Decline
According to the latest data, Foreign Currency Deposit Unit (FCDU) loans declined by 5.0 percent between July and September 2025. The total outstanding amount fell to US$15.13 billion, a decrease of US$802.09 million from the US$15.93 billion recorded in the previous quarter.
Looking at the year-on-year trend, the sector also saw a reduction. By the end of September 2025, FCDU loans were 3.9 percent lower compared to the same period in 2024.
Who Are the Major Borrowers?
The majority of these foreign currency loans, approximately 63.4 percent or US$9.59 billion, were granted to borrowers based within the Philippines. The remaining portion was extended to non-residents.
The top Philippine-based industries utilizing these loans were:
- Merchandise and Service Exporters, who borrowed US$2.51 billion, accounting for 26.2% of the local borrower share.
- Towing, Tanker, Trucking, Forwarding, Personal and Other Industries, with loans totaling US$2.05 billion or 21.4%.
- Power Generation Companies, which secured US$1.71 billion, representing 17.8% of loans to resident borrowers.
Most of these loans were structured for the medium to long term. Loans with maturities exceeding one year made up 79.8 percent of the total portfolio, a slight increase from 79.0 percent in the second quarter.
Contrasting Trend: Deposits Grow While Loans Shrink
This decline in lending activity occurred against a backdrop of growth in foreign currency holdings within the banking system. Deposits in foreign currencies actually grew by 5.7 percent year-on-year, reaching US$60.73 billion by end-September 2025, up from US$57.46 billion.
During the reference quarter, banks recorded US$9.77 billion in new FCDU loans. However, this was offset by US$10.56 billion in loan repayments, leading to the net decrease in outstanding debt.
Understanding FCDUs and the Silver Lining for OFWs
FCDU loans are foreign currency-denominated credits extended by authorized bank units. They are crucial for financing importation, other international business transactions, and the needs of individuals dealing in foreign exchange.
While the loan drop may signal corporate caution, a weaker Philippine peso presents a direct benefit to a key sector: overseas Filipino workers (OFWs) and their families. When the peso depreciates against the US dollar, each dollar remitted home converts into more pesos. This increases the household purchasing power of millions of Filipino families reliant on remittances, providing a vital cushion for the domestic economy even as corporate foreign borrowing eases.
