Bureau of Monetary Affairs says NPL ratio has fallen

The ratio of bad loans, including loans under surveillance, fell slightly to 4.67 percent in August from 4.89 percent in June, according to statistics released by the Financial Supervisory Commission yesterday.

As of the end of August, banks had non-performing loans (NPLs) of around NT$711.3 billion, down from NT$740.5 billion in June and NT$886.1 billion last December, Jong Huey-jen (鍾慧貞), director-general of the commission's Bureau of Monetary Affairs, told a press conference yesterday.

More than 88 percent of local banks have aggressively written off their bad loans with their profits, which attributed to the ratio's decline, she said.

Jong, however, complained that six banks have an NPL ratio of over 10 percent, and said that the bureau would punish these banks by not allowing them to conduct certain business transactions.

Seven banks that have an NPL ratio of between 5 percent and 10 percent would be asked to submit a report to the bureau detailing how they would like to lower the ratio by the end of this year, she said.

Separately, the bureau said that the nation's 54 credit card issuers have released a total of 41.69 million cards before August with an average NPL ratio of 1.06 percent.

Disciplinary action, however, will be taken against three banks which failed to lower their credit-card NPL ratio below 8 percent and three banks whose credit-card NPL ratio leveled between 5 percent and 8 percent. Six more banks, whose ratio leveled between 3 percent and 5 percent, also face punishment.

In addition, the cash-card NPL ratio rose from July's 1.418 percent to 1.389 percent in August with a total of 35 card issuers granting NT$207.6 billion in small loans, according to the bureau's statistics.

Despite the low ratio, four banks: Fuhwa Bank (復華銀行), Hwatai Bank (華泰銀行), Bowa Bank (寶華銀行) -- formerly known as Pan Asia Bank (泛亞銀行) -- and Medium Business Bank of Taiwan (中小企銀) had failed to lower their NPL ratio below 3 percent. The four will be required to present a plan to improve their asset quality soon, the bureau said.