Domestic banks’ China-specific non-performing loan (NPL) ratio surged to 1.2 percent in April from 0.2 percent at the end of March, with the delinquent amount rising to NT$1.65 billion (US$50.59 million), the Financial Supervisory Commission’s (FSC) Banking Bureau said yesterday.
In March, state-run Taiwan Cooperative Financial Holding Co (合庫金控) was the only domestic bank to have bad debt on its books, the bureau said, adding that the delinquency amount was NT$273 million, dating back several years.
However, total non-performing loans in China increased markedly in April as four other state-run banks — First Commercial Bank (第一銀行), Land Bank of Taiwan (土地銀行), Chang Hwa Bank (彰化銀行) and Bank of Taiwan (台灣銀行) — began recording delinquent loans for the first time, the bureau said.
“The level of delinquency remains acceptable and are considered normal in light of China’s slowing economic growth,” Banking Bureau Deputy Director-General Jean Chiu (邱淑貞) said.
She said that the surge in bad debts was due to defaults of two syndicated loans.
One of them was an NT$1.8 billion loan to China Firstextile Holdings Ltd (中國褔斯特控股) that was led by Nomura Holdings Inc, and in which eight domestic banks had participated, Chiu said
The other was a NT$900 million loan extended to a Taiwanese machine tool company operating in China, she said.
“Although domestic banks have been cutting their exposure to China, we expect them to see higher delinquency rates there in the near future,” Chiu said.
Meanwhile, the domestic NPL ratio by Taiwanese banks increased to 0.28 percent in April from 0.26 percent in March, while the delinquency amount rose by NT$4.4 billion to NT$70.1 billion, with bad debt coverage ratio dropping 32.58 percent to 477.97 percent, commission data showed.
Separately, the commission’s latest statistics also showed that profits by domestic operations of Taiwanese banks rose 11.3 percent annually to NT$75.95 billion in the first four months.
However, earnings generated from their offshore banking units fell 13.4 percent annually to NT$24.87 billion during the four-month period, while those by their overseas branches dropped 3.3 percent to NT$11.06 billion.
Earnings by China-based bank branches in Taiwan fell 13 percent annually to NT$1.26 billion from January to April, data showed.
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