The combined pretax profit of the nation’s major banks in April returned to annual growth of 0.5 percent at NT$30.44 billion (US$1.02 billion), after contracting 16.9 percent year-on-year in the first quarter, due to higher investment gains as global financial markets stabilized, Financial Supervisory Commission (FSC) data showed.
Profit at offshore banking units rose 42.4 percent from a year earlier to NT$10.49 billion, while branches in China rose 35.3 percent annually to NT$440 million as investment returns improved, the data showed.
However, the growth was largely offset by falling profit at domestic operations, which fell 6.1 percent to NT$18.11 billion, and overseas branches, which declined 57.8 percent to NT$1.4 billion, the data showed.
Overseas branches lost growth momentum after foreign central banks in March slashed benchmark interest rates, causing interest income to shrink, Banking Bureau Deputy Director-General Huang Kuang-hsi (黃光熙) told a news conference in New Taipei City on Thursday.
For example, the Hong Kong Monetary Authority lowered its base interest rate to 0.86 percent, compared with 2.75 percent a year earlier.
The overseas branches set aside loan-loss provisions of NT$1.74 billion last month, which also eroded profit, as some banks have had loans sour after foreign debtors collapsed, commission data showed.
CTBC Bank (中國信託銀行) had been negotiating with Singapore oil trader Hin Leong Trading Pte (興隆貿易), which it lent US$90 million, over repaying the debt, only for Hin Leong file for bankruptcy protection in April.
The worst case would be that CTBC would book the total loan amount as losses, company data showed.
Taipei Fubon Commercial Bank (台北富邦銀行), which has NT$880 million in exposure to Singapore-based Agritrade International Pte, recognized the loans as problematic after the commodity firm defaulted on its debt, Fubon data showed.
“By comparison, banks’ domestic operations had a mixed performance, with improvement in investment gains and interest income offset by higher provisions and weakening net handling fees income,” Huang said.
Overall, banks’ combined pretax profit retreated 12.8 percent from a year earlier to NT$111.38 billion in the first four months of this year, the FSC data showed.
The average bad loan ratio was 0.24 percent at the end of April, flat from a month earlier, while the bad debt coverage ratio was 571.84 percent, up 2.01 percentage points from a month earlier, the data showed.
Among the nation’s 36 banks, EnTie Commercial Bank’s (安泰商業銀行) bad loan ratio was the highest at 0.84 percent, followed by O-Bank Co Ltd’s (王道商業銀行) 0.76 percent and DBS Bank Taiwan’s (星展台灣) 0.56 percent, the data showed.
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