Manila: Loans extended by banks' foreign currency deposit units (FCDUs) slipped by 5 percent in the third quarter of 2025, a slowdown an economist attributed to growing risk aversion among borrowers. Data released by the Bangko Sentral ng Pilipinas (BSP) on Monday showed that FCDU loans totaled USD13.13 billion from July to September, down from USD15.93 billion in the previous quarter.

According to Philippines News Agency, around 63.4 percent of the funds were extended to Philippine borrowers at USD9.59 billion, while the remaining was extended to non-residents. Of the funds extended to local borrowers, 26.2 percent or USD2.51 billion went to merchandise and service exporters, 21.4 percent or about USD2.05 billion to towing, tanker, trucking, forwarding, personal and other industries, and 17.8 percent or USD1.71 billion to power generation firms.

The BSP reported that nearly 79.8 percent of the loans were medium- to long-term, with maturities exceeding one year. "As of end-September 2025, outstanding loans reflected USD9.77 billion in new loans and USD10.56 billion in loan payments made during the reference quarter," it said.

As of end-September this year, FCDU loans fell 3.9 percent "despite the 5.7 percent growth in deposits in foreign currencies, which reached USD60.73 billion from USD57.46 billion," the central bank report added. Rizal Commercial Banking Corporation chief economist Michael Ricafort said the decline reflects borrowers' efforts to avoid foreign exchange risks tied to dollar-denominated loans. "Even the government reduced foreign/external borrowings and more local/domestic borrowings in recent years," he said, adding: "learning from the mistakes on forex risks in past crisis periods."