Banks’ average non-performing loan (NPL) ratio increased 0.18 percentage points month-on-month to 0.62 percent at the end of April, according to data released by the Financial Supervisory Commission (FSC) yesterday.
Overall, bad loans at the nation’s 37 banks totaled NT$136.4 billion (US$4.57 billion) at the end of April, an increase of NT$40 billion from the previous month, as lenders started to account for loan defaults by debt-ridden ProMOS Technologies Inc (茂德科技).
Based on the commission’s data, ProMOS, a Hsinchu-based computer memory chipmaker, owes more than NT$57 billion in syndicated loans to more than 20 domestic lenders, led by Bank of Taiwan (臺灣銀行).
The company has failed to repay its debts since the beginning of this year, so about NT$46.4 billion of the syndicated loans have been categorized as non-performing, the commission’s data showed.
The data also showed Cosmos Bank (萬泰銀行), the nation’s largest cash card issuer, maintained a non-performing ratio above the 2 percent threshold at 7.63 percent at the end of April.
However, the medium-sized bank, which has been mired in loan losses caused by Prince Motors Group (太子汽車), is expected to see significant improvement in its bad-loans ratio this month, following the sale of Prince Motors’ plant in Tucheng (土城), New Taipei City (新北市) to Cathay Life Insurance Co (國泰人壽) on May 22 for NT$4.39 billion.
Through the deal, Cosmos is expected to recover NT$3.9 billion debt from Prince Motors, which could lower its NPL ratio to as low as 2.9 percent this month, according to the commission’s estimate.