Taiwan's bank lending rose 8.6 percent last month, its fastest pace in six years, as companies including Uni-President Enterprises Corp (統一企業) and Chi Mei Optoelectronics Corp (奇美電子) borrowed funds to expand.
Total lending by the financial institutions rose to NT$14.65 trillion (US$440 billion) in April, from NT$13.49 trillion a year earlier, the central bank said on its Web site. The increase is the biggest since an 8.65 percent gain in June 1998 and marked the eighth consecutive month of growth.
"The pace of loan growth will continue to accelerate in coming months on the strong momentum of economic growth," said Mei Chiang (蔣梅香), director of financial institutions ratings at Taiwan Ratings Corp (中華信評), 50 percent-owned by Standard & Poor's. "The across-the-board recovery helps fuel loan appetite from both consumers and institutions."
Record-low borrowing costs and expected economic growth are sustaining the demand for loans, as credit quality continues to improve. Taiwan banks' bad-loan ratio fell to 3.82 percent at the end of April, from 4.33 percent on Dec. 31, the Bureau of Monetary Affairs said earlier last week. Taiwan banks had NT$565.2 billion of overdue loans at the end of last month.
About 40 percent of Taiwan banks' loans have gone to private-sector companies and 20 percent to the government or government-owned businesses. The remaining 20 percent of loans went to individuals, four-fifths in the form of residential mortgages, Chiang said.
Chi Mei, Taiwan's second-largest maker of flat-panel screens used for computers and televisions, earlier this month hired 18 banks to arrange a loan of as much as NT$60 billion to increase production. Uni-President, which owns the franchise to run 7-Eleven Inc convenience stores in Taiwan, also said it was seeking a NT$7.5 billion credit.
Cathay United Bank (國泰世華銀行) increased lending by 7.7 percent to NT$578 billion in the first quarter from a year ago. Fubon Commercial Bank (富邦銀行) said net interest income, or income earned on loans after interest was paid on deposits, for the period rose 13 percent from a year ago.
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