CTBC Bank (中信銀行) yesterday said that its overseas units’ profit momentum continued to slow last quarter, due to bad loans amid the COVID-19 pandemic, but it remains upbeat for next year in light of positive steps in vaccine development.
The bank’s Japanese subsidiary, Tokyo Star Bank Ltd, reported that net profit plummeted 85 percent year-on-year to NT$197 million (US$6.84 million) in the third quarter, as net fee income halved to NT$290 million and bad loans increased 4.8 times from a year earlier, company data showed.
Tokyo Star has been seeing bad loans since the second quarter, after loans to some Japanese hotels and airlines turned sour, said Chiu Ya-ling (邱雅玲), spokeswoman for CTBC Financial Holding Co (中信金控), the parent firm of CTBC Bank.
Photo: Lee Ching-hui, Taipei Times
“Before the pandemic, the bank had expected to benefit from the Tokyo 2020 Olympic Games. However, the pandemic forced the postponement of the Olympics and undercut its clients’ business,” Chiu told an investors’ conference in Taipei.
Tokyo Star posted cumulative profits of NT$19 million in the first three quarters of the year, making it the fourth-largest profit generator among CTBC Bank’s overseas units, Chiu said.
The bank’s branches in China, Vietnam and India reported double-digit percentage gains in profit last quarter due to supply chain adjustments, while profit at other overseas branches fell due to lockdown measures, political tensions or cautious lending strategies, she said.
Overseas branches’ combined net fee income declined 25 percent annually to NT$406 million last quarter, as their combined lending dropped 2.3 percent to NT$574 billion as of the end of September, the data showed.
Their non-performing loan ratio rose to 1.12 percent as of the end of September, compared with 0.48 percent for CTBC Banks’ domestic corporate lending and 0.08 percent for the bank’s personal lending, the data showed.
Overall, combined profit generated by its overseas units made up less than 20 percent of CTBC Bank’s total profit for the first three quarters, compared with 30 percent last year, Chiu said.
“We will not change our focus on overseas development, despite headwinds this year,” Chiu said. “We are optimistic for their business next year as COVID-19 vaccines will likely be available, and we will be more cautious on risk management to resolve the bad loan issue.”
CTBC Bank reported net profit of NT$7.9 billion for the third quarter, down 20 percent from a year earlier, due to lower interest income, and declines in its investment gains and foreign exchange incomes.
The bank’s net interest margin, a gauge of a bank’s profitability, is expected to stabilize this quarter after falling to 1.4 percent last quarter, from 1.44 percent a quarter earlier, and to average 1.42 percent for the whole of this year, Chiu said.
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