Taiwan's banks ended last year with an average non-performing loan (NPL) ratio of 4.33 percent, meeting the government's target of below 5.0 percent, official data showed yesterday.
The figure marked a sharp decline from a record high of 8.04 percent in the first quarter of 2002, the Bureau of Monetary Affairs said in a statement.
In value terms, NPLs at domestic banks totalled NT$630.6 billion (US$18.71 billion) at the end of last year, down NT$516.9 billion from the first quarter of 2002, it said.
Taking into account other problematic loans, the average NPL ratio of domestic banks stood at 6.09 percent as at the end of last year, down sharply from 11.74 percent in the first quarter of 2002.
The sustained NPL decline was attributable to a two-pronged strategy adopted by the finance ministry since 2002 which is aimed at bringing the NPL ratio for domestic banks down to below 5.0 percent by the end of last year.
A total of 37, or 74 percent, of domestic banks have successfully achieved the goal, the bureau said.
"We will continue to supervise banks with NPL ratios of over 5.0 percent in the hope that they would take positive measures to upgrade their asset quality," it added.
Under the bureau's policy, banks which were able to bring down NPL ratios to below 2.5 percent by the end of last year would be rewarded, including getting the green light to launch new financial services, easier approval on opening more branches in Taiwan and permission to open offices in China.
In contrast, banks with NPL figures above 5.0 percent by the end of last year would be barred from paying out earnings to shareholders and setting up overseas and domestic branches.
Banks with NPL figures above 15 percent by the end of last year would be forced to close some branch operations and be restricted from making investment and making loans.
RSS