The combined net profit of the nation’s financial sector is expected to hit a record NT$600 billion (US$19.67 billion) for the whole of this year, Financial Supervisory Commission Chairman Wellington Koo (顧立雄) said yesterday.
That indicates that companies in the local financial sector, banks in particular, still have solid financial strength, despite recent reports by local media saying that two syndicated loans might go sour, Koo said.
TWO SYNDICATED LOANS
Eleven banks have a combined exposure of NT$5.1 billion to a syndicated loan to China Energy Reserve and Chemicals Group Co Ltd’s (中國國儲能源) Shanghai unit, the Chinese-language Economic Daily News reported last week.
As the Shanghai unit has made zero interest or principal payments since October last year, the loan would be considered to be non-performing if the unit does not make a payment next month, the report said.
As international prices for natural gas have continued to fall, the Shanghai-based company has had lower-than-expected investment returns on its acquisition of an oil field in Canada, and was unable to make the repayments, Koo said.
As the oil filed is still valuable, local banks are likely to be able to get their money back, Koo said, adding that the Shanghai unit is also guaranteed by its parent company.
As for a syndicated loan to Singapore-based hard-drive component maker MMI Holdings Ltd, Koo said that the loan should be fine given that the company’s operations remain normal.
Koo urged local banks to particularly monitor their lending to Chinese companies, because their information disclosure does not always meet international standards.
On a positive note, some banks have continued reducing their exposure to China, he said.
Last year, the combined profit of Taiwan’s financial sector declined 2.89 percent annually to NT$523.3 billion due to foreign-exchange losses and a deterioration in global stock markets, commission data showed.
For the first 10 months of this year, local banks reported combined pretax profits of NT$314.98 billion, up 7.4 percent from a year earlier, while insurance companies saw their combined pretax profits rise 43 percent to NT$187.9 billion over the same period, the data showed.
The securities and futures industry reported combined pretax profits of NT$47.46 billion for the January-to-October period, it showed.
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