Fri, Oct 26, 2007 - Page 12 News List

FSC figures show banking sector asset quality inching upwards

By Joyce Huang  /  STAFF REPORTER

The local banking sector's asset quality inched up with its non-performing loan (NPL) ratio dropping 0.08 percentage points month-on-month to 2.16 percent last month, Financial Supervisory Commission statistics showed yesterday.

The nation's 39 banks had a total of NT$381.8 billion (US$11.75 billion) in bad loans by the end of last month -- a fall of NT$13 billion from August, the commission's data showed.

Twenty-six of the 39 domestic banks maintained an NPL ratio of less than 2.5 percent and the ratio for another eight banks ranged between 2.5 percent and 5 percent.

The remaining five banks had a much higher bad loan ratio, data showed.

The worst-performing of the five banks was Chinfon Bank (慶豐銀行), which reported the highest NPL ratio of 21.19 percent at the end of last month.

It was followed by Chinese Bank (中華銀行) with 16.19 percent, Bowa Bank (寶華銀行) with 15.27 percent, EnTie Commercial Bank (安泰銀行) with 6.15 percent and Cosmos Bank (萬泰銀行) with 5.45 percent.

"We'll continue to keep a close eye on these banks' bad-loan ratios," the commission's vice chairwoman Susan Chang (張秀蓮) said yesterday.

The NPL ratio for unsecured credit card and cash card loans both saw a slight improvement last month.

The nation's 42 credit card issuers had a total of NT$295 billion in consumer lending, 2.11 percent of which had turned sour last month -- down from August's 2.12 percent.

The bad loan ratio of cash card lending also declined 0.29 percent from the previous month to 6.78 percent last month, the commission said.

Among credit card issuers, three had an NPL ratio between 3 percent and 8 percent and are required by the commission to effectively tackle their problems while Chinese Bank, which reported a higher than 8 percent bad-loan ratio, has been forced to suspend card issuance.

The latter has long been allowed to invest in Chinese shares, as well as red-chip shares and H shares in the Hong Kong stock market.

He also downplayed concerns that the liberalization could open up the local inancial market to risks at a time when the Chinese and Hong Kong stock markets are overheated, saying that financial professionals have to calculate and bear the risks in investing in the two markets themselves.

Four out of the total of 21 cash-card issuers whose NPL ratio exceeded 8 percent, have also had to suspend issuance. They include ABN AMRO Bank, whichundertook Taitung Business Bank's 台東企銀) 35.07 percent in cash-card

bad loans, Bowa Bank with 20.45 percent, The Chinese Bank with 14.23 percent and Taishin International Bank (台新銀行) with 9.72 percent.

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