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ICBC president gives bad loans warning

The nation's banks are expected to accumulate NT$252.5 billion (US$7.71 billion) in non-performing loans (NPLs) this year, which will significantly dent profitability, Mckinney Tsai (蔡友才), president of the International Commercial Bank of China (中國國際商銀) said on Saturday.

Delivering a speech at a seminar sponsored by Taiwan ThinkTank, Tsai said that the bad loans will mainly come from credit card and cash-advance cards, as well as other forms of consumer loans.

Tsai said local banks' NPLs, or those loans for which payment of interest is three months overdue, began climbing rapidly from December of last year.

In the first five months of this year, credit and cash card NPLs increased by 1.12 percent and 5.4 percent respectively, he said.

The overdue loans have eaten into local banks' profits, which shrunk to NT$59.8 billion last year, down 60 percent from the previous year, Tsai said.

Citing statistics from the Bankers Association (銀行公會), Tsai said the 44 local banks had NT$88.2 billion in bad loans in the first five months of this year, two times more than their pre-tax profits of NT$35.4 billion during the same time period.

He predicted that by the end of this year bad loans from credit cards would increase to NT$100 billion, with those for cash cards hitting NT$69.8 billion and those for personal consumer loans reaching NT$82.7 billion.
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