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Banks improve bad loan figures: FSC

Banks' average non-performing loan (NPL) ratio dropped 0.11 percentage points month-on-month to 2.24 percent at the end of last month, the Financial Supervisory Commission's latest data showed yesterday.

Overall, asset quality in the banking sector improved slightly last month, the commission said in a statement.

Bad loans at the nation's 41 banks totaled NT$394.8 billion (US$12.03 billion) at the end of last month, a fall of NT$19.4 billion from July, the commission said.

Outstanding loans in the banking sector grew NT$8.1 million month-on-month to NT$17.66 trillion last month, it said.

The commission's latest data showed that 33 of the 41 local banks saw their NPL ratios drop to below 5 percent last month, with 26 banks' ratios being lower than 2.5 percent.

The commission said it would pay close attention to banks with a much higher bad loan ratio, such as Bank of Hualien District (花蓮中小企銀) which reported the highest NPL ratio of 43.19 percent at the end of last month.

That was followed by Chinfon Bank (慶豐銀行) with 20.71 percent, Chinese Bank (中華銀行) with 16.25 percent, Bowa Bank (寶華銀行) with 15.39 percent and Taitung Business Bank (台東區中小企銀) with 11.41 percent, the commission's data showed.

Yesterday's bad loan tallies also showed a continued improvement in the nation's unsecured consumer lending via credit cards and cash cards.

The bad loan ratio of credit cards continued to decrease to 2.12 percent last month, down 0.2 percentage points from a month ago and 0.67 percent lower from a year earlier, the commission said.

The number of cards in circulation last month continued to shrink to 36.58 million, a decline of 0.14 percent from the previous month and a drop of 8.37 percent from a year ago, it said.

The outstanding amount of revolving credit last month dropped NT$400 million or 0.13 percent from the previous month to NT$298.9 billion, the statistics showed. Compared to one year ago, the revolving credit level was 22.82 percent lower, it said.

The commission said card issuers with more than a 3 percent bad loan ratio -- such as Cosmos Bank (萬泰銀行), 3.13 percent, and Chinese Bank, 12.88 percent -- should adopt effective measures to improve their bad loan ratios.

Bad loan ratios on cash card lending last month, meanwhile, slid by 0.41 percentage points month-on-month to 7.07 percent, the commission's data showed. That was 1.39 percent lower from a year earlier.

The number of cash cards in circulation dropped by 2.25 percent month-on-month and 3.04 percent year-on-year to 1.74 million, while outstanding lending fell by 0.98 percent from a month ago and by 33.82 percent from a year earlier to NT$141.3 billion last month, it said.

Cash card issuers that need further regulatory monitoring are Cosmos Bank, 4.57 percent, Union Bank of Taiwan (聯邦銀行), 6.56 percent, Taishin International Bank (台新銀行), 9.73 percent, Chinese Bank, 14.74 percent, Bowa Bank, 29.6 percent, and Taitung Business Bank, 32.27 percent.

Many of Taiwan's banks have saw their profitability weakened last year in the wake of the bad consumer loans crisis. But the problem has gradually phased out this year, with Chinatrust Commercial Bank (中國信託商銀), the nation's largest credit card issuer, expecting to make a profit in its unsecured consumer loan business this year.

Charles Lo (羅聯福), chairman of Chinatrust Commercial Bank, said last week the bank's unsecured consumer lending had seen profit of NT$1 billion as of the end of last month and he expected to post a NT$1.5 billion profit for the year.
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