Even though the central bank has kept benchmark interest rates unchanged for 10 straight quarters, local banks’ loan books in January expanded by a record-high total of NT$300.6 billion (US$9.74 billion), Financial Supervisory Commission data released on Tuesday showed.
As of the end of January, lending by the nation’s 37 local banks totaled NT$28.84 trillion, the data showed.
The public sector in January borrowed NT$163.4 billion, accounting for 54.35 percent of all loans, while the private sector borrowed NT$128.5 billion, the data showed.
The public sector, which rarely takes out loans totaling more than NT$100 billion in a single month, needed the funds to pay employees’ salaries, as well as their year-end bonuses before the Lunar New Year holiday, Banking Bureau Deputy Director Wang Li-chun (王立群) told a news conference.
The public sector usually has less cash flow than corporations, so it took out the loans and is to repay soon, Wang said, adding that the debtors include the central and local governments.
While the central bank kept benchmark interest rates unchanged in December last year, local banks’ combined lending has continued to expand for 23 straight months since March 2017, the data showed.
Reducing interest rates is widely considered to be a policy that increases bank lending, as lower interest rates makes borrowing cheaper and could increase demand for loans.
Local banks in January booked a combined NT$70.4 billion in nonperforming loans, a monthly increase of NT$2 billion, but the nonperforming loans ratio remained at 0.24 percent, flat from a month earlier, the commission said.
The Shanghai branch of Bank of Taiwan (台灣銀行) reported a problematic loan of NT$135 million because the debtor, a materials factory in Kunshan, China, made no payments, Wang said.
The problem drove the branch’s nonperforming loans ratio to 0.58 percent, the highest of all local lenders’ Chinese branches, the commission said.
Driven by the growth in lending and overseas investment, local banks reported combined pretax profits of NT$37.41 billion for January, an increase of 12 percent year on year, it said.
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