The average non-performing loan (NPL) ratio for Taiwanese banks dropped by 0.05 percentage points month-on-month to 0.91 percent at the end of last month, the Financial Supervisory Commission’s latest data showed.
Overall, asset quality in the banking sector showed a steady improvement over the last three months, with the NPL ratio at 0.96 percent in May and at 1.02 percent in April, according to a report released on Thursday night.
On average, the NPL ration was 0.96 percent in the second quarter, down from 1.07 percent in the first quarter of this year and 1.15 percent in the fourth quarter of last year, the data showed.
The report indicated that bad loans at the nation’s 37 banks totaled NT$175.3 billion (US$5.47 billion) at the end of last month, a decrease of NT$8.5 billion from May’s NT$183.8 billion. It was also 35.39 percent lower than the NT$271.3 billion reported a year ago, according to the data.
Outstanding loans, however, grew NT$87.5 billion month-on-month to NT$19.18 trillion last month, the report said. That represented a rise of 6.24 percent from NT$18.06 trillion a year earlier.
With bank loans having increased every month since March when the figure was NT$18.61 trillion, the central bank earlier this month reminded commercial lenders on mortgage loan practices following the new regulations it announced last month to rein in rising real estate prices in major cities.
While the commission’s chief secretary Shiau Chang-ruey (蕭長瑞) confirmed on Thursday to Bloomberg Newswires that the commission had asked domestic banks to conduct stress tests for credit risk and submit the results by Sept. 15, the latest data showed that 36 of the 37 banks saw their NPL ratios drop to below 2.5 percent by the end of last month. Cosmos Bank Taiwan (萬泰銀行) reported the highest NPL ratio of 3.42 percent.
Meanwhile, the coverage ratio — loans covered by banks’ provisions and a gauge indicating the sufficiency of bad loan reserves — rose 4.9 percent to 113.38 percent as of June 30 from 108.48 percent on May 31 and 102.47 percent on April 30, according to the commission.
On average, the coverage ratio was 108.63 percent in the second quarter, up from 97.06 percent in the first quarter of this year and 90.50 percent in the final quarter of last year.
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