Local banks’ combined exposure to China in the first quarter dropped for the third consecutive quarter, to NT$1.62 trillion (US$53.86 billion), as they trimmed investment and loan positions amid the COVID-19 pandemic, Financial Supervisory Commission (FSC) data showed.
Their exposure fell 1 percent from the previous quarter, compared with a 4.9 percent decline to NT$1.64 trillion at the end of December last year and a dip of 2.1 percent to NT$1.73 trillion at the end of September, the data showed.
“Exposure has been declining since the second quarter last year, as lenders’ clients did not need as much funding as before after trimming investment in China amid the US-China trade war and shifting to other markets,” a commission official said by telephone.
Even though trade disputes eased in the first quarter as governments were busy fighting the virus, the pandemic also weakened banks’ lending momentum as big investments were postponed and production at factories was delayed, the official said.
The ratio of overall Chinese exposure to banks’ combined net worth fell to 45 percent in the first quarter, compared with 46 percent in the fourth quarter of last year.
The commission uses the ratio to gauge whether the banks have solid risk control in China.
It was 49 percent, 50 percent and 51 percent in the first three quarters of last year respectively, the data showed.
Among the nation’s 33 banks, 14 banks slashed their exposure to China in the first quarter, with the state-run First Commercial Bank (第一銀行) making the biggest cut at NT$15.7 billion, followed by Mega International Commercial Bank (兆豐銀行) at NT$8.4 billion and Cathay United Bank’s (國泰世華銀行) reduction of NT$7.4 billion, the FSC data showed.
First Commercial Bank’s exposure-to-net-worth ratio fell to 32 percent from 40 percent at the end of last year, the commission data showed.
Among the 19 banks with rising exposure, Taipei Fubon Commercial Bank’s (台北富邦銀行) rose the most at NT$9.4 billion, followed by Shanghai Commercial and Savings Bank’s (SCSB, 上海商業儲蓄銀行) NT$6.2 billion, Bank of Taiwan’s (臺灣銀行) NT$5.7 billion, Bank SinoPac’s (永豐銀行) NT$5.2 billion and Shin Kong Commercial Bank’s (新光銀行) gain of NT$4.2 billion, the data showed.
SCSB attributed the higher exposure to fewer debtors paying their loans in the quarter, while Shin Kong Bank said that it was the result of increased investment.
Fubon Bank’s ratio rose from 70 percent a quarter earlier to 75 percent, the highest overall, followed by CTBC Bank Co’s (中國信託銀行) 70 percent and Bank SinoPac’s 63 percent, the data showed.
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