A number of smaller lenders are expected to face an additional round of mortgage stress tests and other precautionary measures as their default rates creep up, Financial Supervisory Commission Chairman Wellington Koo (顧立雄) said yesterday.
While banks are required to conduct routine stress tests, several smaller lenders would be required to show that they have the capacity to absorb rising mortgage defaults, Koo said on the sidelines of a forum on corporate governance in Taipei.
Koo made the comment after a number of credit-unions-turned-banks in May logged mortgage default rates exceeding 1 percent.
Photo: Wang Meng-lun, Taipei Times
The commission is to draft uniform parameters for the upcoming mortgage stress test, Koo said, adding that failed lenders would be barred from taking on more home loans and would see their loan loss provisions raised.
Meanwhile, as the TAIEX continued to reel yesterday from a global market sell-off prompted by the Turkish currency crisis, Koo downplayed Taiwan’s exposure to lira-based investments and assets.
Taiwan’s financial sector has limited exposure to Turkey and its currency, and European nations are expected the bear the brunt of the crisis, Koo said.
The local market is supported by solid fundamentals, and compared with other emerging markets, it has been more resilient against an ongoing flight of capital seeking to tap into accelerating economic growth in the US, he said.
As of the end of June, the nation’s exposure to Turkey was about NT$138.71 billion (US$4.5 billion), NT$17.36 billion of which is in bank loans, representing only 0.4341 percent of local banks’ combined net value and 0.029 percent of combined total assets, commission data showed.
Insurers have an exposure of NT$78.14 billion, about 0.33 percent of their combined assets under management.
Brokerage firms’ exposure was estimated at NT$5 million, while retail investors were holding about NT$78.14 billion in funds linked to Turkey, representing 0.33 percent of overall investments, the data showed.
Regarding the yuan’s 8 percent drop in the past three months, Koo said that no specific stress test against the Chinese currency’s tumble would be needed, because local financial institutions’ exposures to the yuan are already included in routine stress tests and are manageable, while China’s slowing economic growth does not automatically lead to instability in Taiwan’s financial market, he said.
Unlike Turkey, Beijing has ample foreign currency reserves to weather periods of volatility, he added.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to