Overdue loans at the nation's seven largest state-controlled commercial banks came to NT$328.5 billion at the end of last month, reaching an all-time high.
The amount also constitutes nearly half of Taiwan's total overdue loans, which is said to be in the neighborhood of NT$686.6 billion.
Chang Hua Commercial Bank (
Among the seven banks, the overdue loan ratios at four worsened last month, two improved and one remained the same.
In addition to Chang Hua, ratios at the Bank of Taiwan (
In explaining the rise in over due loan ratios, bank executives had no shortage of reasons.
They cited the recession in real estate market, the poor performance of traditional industries and the 921 earthquake's aftermath.
In addition, the bank executives said the transition period between the KMT and DPP administrations has meant many public works projects have been postponed.
And even though banks are aggressively writing down overdue loans -- some NT$11 billion last month -- the write-offs have hardly dented overdue loan ratios.
Chang Hua said its overdue loans at the end of last month came to NT$51 billion, or NT$2 billion more than what was on the books at the end of March. The increase came even as the bank wrote down NT$880 million in loans.
Meanwhile, the improving situation at First Commercial Bank (
"It has something to do with a recent examination report by the Bureau of Financial and Monetary Affairs (
"There is NT$1.2 billion in questionable loans that have all been listed as overdue by examiners. But Chang Hua executives originally did not treat them as overdue," the executive said. "Because the overdue loan amount increased by the NT$1.2 billion in questionable loans, the overdue loan ratio also significantly increased."
Now, the bank's overdue loan ratio at 6.49 percent is just slightly under the allowable ceiling of 6.50 percent set by the Ministry of Finance (
In order to cut down its ratio, Chang Hua Bank plans to hold a meeting of all its branch managers later this month. The purpose is for the managers to review the bank's loan collection methods and other ways of keeping customers' accounts in good standing, the bank executive said.
The overdue loan ratio at Hua Nan was 6.03 percent at the end of last month, the same level as in March. For First Commercial the ratio was 5.74 percent, down 0.05 percentage points.
Chang Hua Bank, Hua Nan and First Commercial have the highest overdue loan ratios among the seven state-controlled banks.
The lowest ratio among the group was the Bank of Taiwan with 2.35 percent, an increase of 0.08 percentage points over the previous month.
In the international banking industry, an overdue loan ratio of 1 percent is generally regarded as an acceptable level. Ratios of 3 percent or 4 percent and higher means the credit rating of a bank is likely to be adversely affected.
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