CTBC Financial Holding Co (中信金控) would improve the management of overseas lending in the wake of loan losses at its foreign branches amid the COVID-19 pandemic, spokeswoman Chiu Ya-ling (邱雅玲) told an investors’ conference yesterday.
The decision came after CTBC Bank (中信銀行) saw some of its loans to debtors in Japan and some Southeast Asian countries, including Singapore, sour, which caused the bank’s net profit to fall 11.8 percent year-on-year to NT$13.47 billion (US$456 million) in the first half of this year.
The company would implement new measures to enhance risk management and post-lending management as well as to monitor debtors more closely to curb further loan losses, Chiu said.
CTBC Bank had lent US$90 million to Singaporean oil trader Hin Leong Trading Pte Ltd (興隆貿易), which filed for bankruptcy protection in April, when oil prices plummeted amid falling demand due to the pandemic.
Staff at the Singapore branch should have noticed the risk earlier, issued internal warnings and reported to the head office in Taipei, Chiu said.
The bank plans to provide its employees with more training on risk assessment, she said.
As CTBC Bank has more overseas branches than its local peers, it has been more vulnerable to lockdowns, rate cuts and slowing investment momentum in different regions of the world, Chiu said.
The bank’s branches in China, Vietnam and India reported increasing profit last quarter, as China’s outbreak slowed and economic growth in Vietnam and India remained high, she added.
Overall, the lender’s loans denominated in foreign currencies dropped 3.8 percent from a year earlier to NT$1.02 trillion in the first half of the year, Chiu said, adding that the outlook remains weak, as the pandemic has not been brought under control abroad.
By comparison, lending to domestic clients rose during the same period, with loans denominated in New Taiwan dollars growing 3.3 percent annually to NT$569 billion, mortgages rising 8.4 percent to NT$718 billion and consumer loans without collateral advancing 36.4 percent to NT$163 billion, the bank said.
The bank expects domestic loans to continue rising in the second half of this year on the back of a slowing outbreak and increasing investment by returning Taiwanese companies, Chiu said.
The bank’s net interest margin slid to 1.44 percent as of the end of June, compared with 1.49 percent a quarter earlier and 1.5 percent a year earlier, due to the central bank’s rate cuts in March, she said.
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