The nation’s 16 financial holding companies last quarter cut their combined lending to China to NT$671.34 billion (US$22.73 billion) from NT$698.26 billion in the first quarter, down 9.2 percent from NT$739.71 billion a year earlier, data released on Saturday by the Financial Supervisory Commission showed.
The Chinese-language Liberty Times (the Taipei Times’ sister newspaper) yesterday reported that last quarter’s figures marked the fourth consecutive quarter of decline and were the lowest ever.
The drop was mainly due to concerns over US-China trade tensions and the COVID-19 pandemic, the commission said, adding that China’s high credit risk has significantly reduced Taiwanese financial firms’ willingness to lend to riskier companies there.
The financial holding companies’ combined foreign lending last quarter fell to NT$3.54 trillion, compared with NT$3.56 trillion in the first quarter and NT$3.58 trillion a year earlier, the data showed.
Lending to China has been on a downward trend and accounted for 18.96 percent of total foreign lending last quarter, which was the lowest on record, the commission said.
The ratio was 19.6 percent in the first quarter and 21.2 percent in the second quarter of last year, it said.
The world economy and capital markets faced serious turbulence in the second quarter, as the global spread of COVID-19 intensified, making it difficult for Taiwanese financial firms to grasp the situation in overseas markets, the commission said.
Many financial holding companies last quarter shifted their China lending business to focus mainly on syndicated loans to diversify risks, it added.
Compared with the second quarter of last year, Taiwanese financial firms’ lending to China had fallen by NT$68.4 billion as of the end of June, the data showed.
As their overall China lending remained as high as NT$600 billion to NT$700 billion, the reduction was still moderate and within a reasonable range, the Liberty Times quoted Banking Bureau officials as saying.
The financial holding companies’ combined foreign exposure — including foreign investment, and corporate and interbank lending — totaled NT$20.42 trillion in the second quarter, the data showed.
Last quarter, China remained the second-largest market for Taiwanese financial holding companies in terms of exposure, at NT$2.55 trillion, following the US, but ahead of the UK, France, Hong Kong, Australia and Japan, the commission said.
However, exposure to China last quarter was down 2.3 percent from NT$2.61 trillion in the previous quarter, representing an annual fall of 3.41 percent from NT$2.64 trillion, the data showed.
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