Pretax earnings by domestic banks in the first eight months of this year were up by 2.7 percent annually to NT$220.15 billion (US$7.23 billion), helped by a nearly four-fold gain in contributions from Chinese branches, the Financial Supervisory Commission said on Tuesday.
Pretax earnings from banks’ Chinese branches surged 394.3 percent in the January-to-August period to NT$2.31 billion as lenders benefitted from lowered general provision charges amid improving asset quality in the country, it said.
The gain was also helped by China’s stabilizing currency strength and economic expansion momentum, it said.
The windfall from banks’ Chinese operations reverses a decline that began in the second half of 2014, when market turmoil led to rising loan delinquencies.
From January to August, offshore banking units of domestic banks saw combined pretax earnings rise 3.6 percent annually to NT$52.44 billion, with other overseas branches seeing pretax earnings gain 38.5 percent annually to NT$20.7 billion.
However, earnings from banks’ branches in Taiwan fell 2.4 percent to NT$144.69 billion, with the loan-to-deposit ratios — a measure loan earnings — dropping to a new low record of 72.7 percent, commission data showed.
As of the end of August, Taiwanese banks saw their combined loan books expanded NT$213.5 billion from July, but the sequential gain was outpaced by a NT$379.5 billion increase in deposits during the same period, the commission said.
August also marked the first time that idle deposits surpassed the NT$10 trillion mark, the data showed.
Meanwhile, new loans to small and medium-sized enterprises (SME) totalled NT$186.4 billion as of the end of August, accounting for 77.67 percent of the commission’s target of NT$240 billion for this year.
State-run lenders First Commercial Bank (第一銀行), Taiwan Cooperative Bank (合作金庫銀行) and Hua Nan Commercial Bank (華南銀行) led their private peers in extending the loans, the commission said.
Banks in Taiwan have also lent much more than expected under the government-initiated “five plus two” innovation program aimed at upgrading nation’s industrial sector, the commission said.
In a written report to the Legislative Yuan, the commission said outstanding loans to companies in the “five plus two” industries totaled NT$4.86 trillion at the end of August, up NT$401.6 billion from the end of September last year.
The “five” industries are the Internet of Things, “smart” machinery, biotechnology, “green” energy and national defense; the “two” are the circular economy and new agriculture.
The NT$401.6 billion far exceeds the commission’s goal of NT$180 billion between October last year and December this year.
About NT$288 billion of the additional loans, or 72 percent, was contributed by nine government-invested banks, the Ministry of Finance said, bringing their total share of the NT$4.86 trillion in loans to about 60 percent.
Additional reporting by CNA
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