The Chinese branches of Taiwanese banks reported zero nonperforming loans (NPLs) in January — the first time in more than 26 months, Financial Supervisory Commission data showed.
That came after CTBC Bank (中國信託銀行) wrote off NT$31 million (US$1.032 million) in bad debt in January, while the other banks did not see any increase in nonperforming loans, the data showed.
As a result, the Chinese branches’ combined NPL ratio slipped from 0.02 percent in December last year to zero, while their Taiwanese operations reported an NPL ratio of 0.24 percent, 0.2 percent for their offshore banking units and 0.23 percent for other overseas branches, the data showed.
“It seemed that the Chinese branches were more cautious about risk management, perhaps due to a slowdown in the Chinese economy and the [COVID-19] outbreak,” a commission official surnamed Chiu (邱) told the Taipei Times by telephone.
Banks also prefer cleaning up their loanbooks before the Lunar New Year, so they can allocate less for bad-debt provisioning and boost their profit performance, he added.
However, it would be too early to conclude that banks would tighten lending standards amid fears over the outbreak in China, Chiu said.
“If the NPL ratio stays at zero for three months, which is rare, we would believe that banks have adopted a stricter lending strategy amid the uncertainty,” he said.
The Chinese branches are not likely to slow their lending business, as the loans provide better interest income given higher interest rates in China, he said.
Aggregate lending by Chinese branches gained 4.9 percent sequentially to NT$184.5 billion in January, with seven banks approving more loans: Bank of Taiwan (台灣銀行), the Land Bank of Taiwan (土地銀行), Taiwan Cooperative Bank (合庫銀行), First Commercial Bank (第一銀行), Mega International Commercial Bank (兆豐銀行), Taiwan Business Bank (台灣企銀) and CTBC Bank, the data showed.
Chinese branches saw their aggregate pretax profit rise 35.1 percent from a year earlier to NT640 million in January, which could be attributed to higher fee income, lower provisioning for bad debt and higher investment returns, the data showed.
Meanwhile, the nation’s banks reported an annual decline of 6.7 percent in pretax profit to NT$34.91 billion as the Lunar New Year holiday led to fewer working days, the data showed.
‘ACCORDING TO PLAN’: A company official said that it has set up production sites worldwide to provide services and that its Wisconsin project was going smoothly Hon Hai Precision Industry Co’s (鴻海精密) smart manufacturing center in Wisconsin would begin trial manufacturing in the middle of this year, the company said yesterday, adding that it plans to build a research institute to develop key technologies to support growth over the next five years. Hon Hai, known internationally as Foxconn Technology Group (富士康科技集團), said in an annual report submitted to the Taiwan Stock Exchange that its planned Foxconn Institute for Research in Science and Technology would conduct research into artificial intelligence, next-generation communications, quantum computing, cybersecurity and nano semiconductors in Taiwan. Hon Hai is to make products at the center
STAYING AHEAD: Fitch said that TSMC remains technologically ahead of others, but Samsung is building a new chip fab, while China is investing in its domestic industry As escalating US-China tensions and COVID-19-related production disruptions force US technology supply chains to transform, Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) US$12 billion chip fabrication plant in Arizona would be key to spurring greater US production of core semiconductor components, Fitch Ratings said. “We view the US-TSMC alliance as a first step in building a more autonomous US technology supply chain, given high barriers to entry, specifically related to the significant capital and design capability required for leading-edge semiconductor manufacturing,” Fitch said in a statement on Tuesday. “By working with TSMC, US chipmakers will not face the financial burden of incremental investment
E Ink Holdings Inc (元太科技), the world’s sole supplier of e-paper displays for e-readers and shelf labels, posted its best quarterly net profit for the first quarter in nine years amid increased demand during a traditionally slow season. Net profit soared 80 percent to NT$787 million (US$26.23 million) in the quarter ended March 31, compared with NT$438 million a year earlier. That translated into earnings per share of NT$0.69, up from NT$0.39. E Ink posted lower royalty income of NT$371.23 million last quarter from NT$448.74 million a year earlier, a company financial statement showed. E Ink said that it expects royalty income to
DIVERSIFICATION: Although COVID-19 would push more companies to produce in emerging markets, DBS said that it was unlikely that firms would totally leave China Geopolitical tensions and supply disruptions are expected to accelerate the migration of manufacturing out of China, as concerns about the risk of production concentrated in one country increase, S&P Global Ratings said. Although its economic expansion might be weaker than previous levels due to the accelerated relocation of manufacturing, China’s economic growth would still be stronger than that of most other economies, the ratings agency said. “While absolute growth rates will moderate, we believe China’s economic performance will continue to be a key sovereign credit support,” S&P Global Ratings credit analyst Tan Kim Eng (陳錦榮) said in a statement on Thursday. “Its growth