Non-performing construction loans at local banks as of the end of October doubled from a month earlier to NT$6.1 billion (US$213.9 million), the highest in the past seven years, while the non-performing loan (NPL) ratio surged to 0.23 percent, Financial Supervisory Commission (FSC) data showed.
The growth could be attributed to state-run Taiwan Business Bank (TBB, 台灣企銀) recognizing as problematic its loans to a construction company operated by Chang Kang-wei (張綱維), the commission told a news conference in New Taipei City on Thursday.
Chang, the former chairman of Far Eastern Air Transport (遠東航空), the financially troubled airline which suspended flights in December last year, also operated a number of construction companies, including one based in the city’s Tamsui District (淡水).
TBB wrote off NT$1.72 billion, or 52 percent of its total loans of NT$3.27 billion, to the Tamsui construction firm, which could not repay its loans, as its business was affected after Chang was charged with fraud by the Taipei District Prosecutors’ Office at the end of July, TBB data showed.
TBB plans to take legal action to recover the money, so it decided to write off the other 48 percent of the loan, or NT$1.55 billion, the bank told an investors’ conference yesterday.
TBB’s NPL ratio on all types of loans rose by 23 basis points from a month earlier to 0.65 percent as of the end of October, but the bank forecast that the ratio for last month would decline, as it has written off half of its bad debt.
Construction loans by local banks, indicative of the confidence of the construction sector, grew to a record NT$2.69 trillion as of the end of October, up 1.52 percent month-on-month and 11.7 percent from the end of last year, FSC data showed.
However, the NPL ratio on construction loans also rose from 0.09 percent at the end of last year to 0.23 percent at the end of October, the highest in the past 27 months, the data showed.
Meanwhile, housing loans by local banks rose 6.2 percent from the end of last year to NT$7.85 trillion as of the end of October, commission data showed.
Non-performing housing loans totaled NT$10.6 billion as of the end of October, slightly down from NT$12 billion at the end of last year, the data showed.
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