The nation’s banks need to win the business of clients based overseas if they intend to grow into regional players, Moody’s Investors Service yesterday said in Taipei.
All overseas branches of Taiwanese banks focus their services on Taiwanese firms, limiting their client pools and earnings, it said.
“It is not enough to only serve the domestic market,” Hong Kong-based senior credit officer at Moody’s Sally Yim (嚴溢敏) told a media briefing in Taipei.
Multinational banking giants like DBS Bank, Standard Chartered Bank, HSBC Bank and Citibank have made inroads into foreign markets in terms of retail and wholesale banking.
Taiwanese banks need to develop a successful strategy to make their effors in the overseas market serious and sustainable, Yim said.
Unfortunately, Taiwanese banks are competing for the same clients in foreign markets as they do in Taiwan, overcrowding the domestic market and depressing interest margins, she said.
Development restrictions imposed by foreign markets add to to difficulties experienced by banks trying to expand their overseas business, said Christine Kuo (郭書岑), another senior credit officer at Moody’s.
Countries like Thailand do not allow foreign investors to own a majority stake in banks there, and other foreign regulators try to protect their markets by limiting openings and slowing the review of new business applications, Kuo said.
The nation’s banks also need to improve their capital adequacy ratios before embarking on expansion, Yim said.
Consolidation among domestic financial institutions is both desirable and practical if the government demonstrates it has the resolve to help remove barriers, especially protest from unions, Yim said, as state-run banks account for more than 50 percent of the sector’s assets.
“We believe matches between state-run and private banks could generate better synergy judging from the former’s strength at corporate banking and the latter’s prowess at consumer banking,” she said.
The nation’s banks might see non-performing loans rise going forward as domestically listed companies in the TFT-LCD panel and solar-energy industries have reported losses since 2011 and more than half of them have reported insufficient earnings to cover their interest expenses for the past two years, a Moody’s report said.
Overall, the profitability of the banking industry is improving despite downside risks and low profit margins, Yim said.
Nvidia Corp CEO Jensen Huang (黃仁勳) is expected to miss the inauguration of US president-elect Donald Trump on Monday, bucking a trend among high-profile US technology leaders. Huang is visiting East Asia this week, as he typically does around the time of the Lunar New Year, a person familiar with the situation said. He has never previously attended a US presidential inauguration, said the person, who asked not to be identified, because the plans have not been announced. That makes Nvidia an exception among the most valuable technology companies, most of which are sending cofounders or CEOs to the event. That includes
TARIFF TRADE-OFF: Machinery exports to China dropped after Beijing ended its tariff reductions in June, while potential new tariffs fueled ‘front-loaded’ orders to the US The nation’s machinery exports to the US amounted to US$7.19 billion last year, surpassing the US$6.86 billion to China to become the largest export destination for the local machinery industry, the Taiwan Association of Machinery Industry (TAMI, 台灣機械公會) said in a report on Jan. 10. It came as some manufacturers brought forward or “front-loaded” US-bound shipments as required by customers ahead of potential tariffs imposed by the new US administration, the association said. During his campaign, US president-elect Donald Trump threatened tariffs of as high as 60 percent on Chinese goods and 10 percent to 20 percent on imports from other countries.
Taiwanese manufacturers have a chance to play a key role in the humanoid robot supply chain, Tongtai Machine and Tool Co (東台精機) chairman Yen Jui-hsiung (嚴瑞雄) said yesterday. That is because Taiwanese companies are capable of making key parts needed for humanoid robots to move, such as harmonic drives and planetary gearboxes, Yen said. This ability to produce these key elements could help Taiwanese manufacturers “become part of the US supply chain,” he added. Yen made the remarks a day after Nvidia Corp cofounder and chief executive officer Jensen Huang (黃仁勳) said his company and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) are jointly
MARKET SHIFTS: Exports to the US soared more than 120 percent to almost one quarter, while ASEAN has steadily increased to 18.5 percent on rising tech sales The proportion of Taiwan’s exports directed to China, including Hong Kong, declined by more than 12 percentage points last year compared with its peak in 2020, the Ministry of Finance said on Thursday last week. The decrease reflects the ongoing restructuring of global supply chains, driven by escalating trade tensions between Beijing and Washington. Data compiled by the ministry showed China and Hong Kong accounted for 31.7 percent of Taiwan’s total outbound sales last year, a drop of 12.2 percentage points from a high of 43.9 percent in 2020. In addition to increasing trade conflicts between China and the US, the ministry said
RSS