The combined exposure of the nation’s 15 financial conglomerates to overseas markets decelerated in the first quarter due to shrinking deposits, increased nonperforming loans and investment losses amid the COVID-19 pandemic, Financial Supervisory Commission (FSC) data showed.
Combined exposure rose 2.1 percent quarter-on-quarter to NT$20.05 trillion (US$673.68 billion) as of the end of March, slower than a quarterly rise of 5.7 percent in the fourth quarter last year, the data showed.
Exposure is the combination of a companies’ deposits, lending and investment, according to the regulator.
Companies continued increasing lending to overseas markets in the first three months, with combined lending gaining 4 percent quarterly to NT$3.61 trillion, while recognized nonperforming loans expanded 5.8 percent quarterly to NT$48.88 billion, the data showed.
Loans offered to the US, the UK, Hong Kong, Canada and Mexico advanced, while those to China, Australia, Japan and South Korea declined, the data showed.
“Banks reducing lending to most Asian markets except for Hong Kong might be attributed to the fact that most Asian countries were affected earlier by the coronavirus outbreak than their Western peers,” an FSC official said.
Given that the spread of the virus escalated in the West in late March, banks are expected to adopt an agile strategy and adjust their lending in those markets, the official said.
The 15 financial conglomerates reported combined investment losses of NT$79.89 billion for the first quarter, data showed.
That is compared with a NT$197 billion gain a quarter earlier, as the monetary valuation of assets plunged along with global financial markets in March, the data showed.
Their investment performance was worst in China, the US and Japan, with losses of NT$22 billion, NT$14 billion and NT$5 billion respectively, the data showed.
It was the second-largest investment loss in a single quarter to the NT$147.1 billion lost in the fourth quarter of 2018, when the global equity market tumbled amid US-China trade tensions, the data showed.
Deposits by the companies’ banking units shrank 7.9 percent quarter-on-quarter to NT$1.28 trillion, the data showed.
The conglomerates’ exposure to Japan dropped the most, falling by NT$47.5 billion to NT$631 billion, while in China the decrease was NT$21.8 billion to NT$2.6 trillion and in Australia was it was a dip of NT$673 billion to NT$21.5 trillion, the data showed.
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