Mon, Feb 05, 2024 page12

• Financial firms' exposure to China falls 11.96%

  DERISKING: Financial firms have cut back their risk to NT$1.05 trillion amid challenges to China’s debt-ridden real-estate market. Meanwhile, interbank loans are on the rise

  • Staff writer, with CNA
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  The exposure of the local financial industry to China fell 11.96 percent from a year earlier to NT$1.05 trillion (US$33.61 billion) at the end of last year amid concerns over the slowing Chinese economy, data compiled by the Financial Supervisory Commission on Thursday showed.

  Within the industry, Taiwanese banks’ exposure to China fell below NT$1 trillion to NT$961.0 billion, down 10.66 percent from a year earlier, the commission’s data showed.

  The data indicated that exposure accounted for 22.7 percent of the industry’s net worth, the lowest level in the 42 quarters since the commission started tallying such exposure to China in the third quarter of 2013.

  

  Pedestrians cross a road in the Lujiazui Financial District in Pudong, Shanghai, China, on Jan. 9.

  Photo: Bloomberg

  Local banks’ exposure to China — including lending, investments and interbank loans and deposits — moved lower as worries over China’s economic outlook prompted Taiwanese banks to scale back their funding to the Chinese market, Banking Bureau Deputy Director-General Roger Lin (林志吉) said.

  The IMF forecast on Friday that China’s economic growth would slow to 4.6 percent this year, down from 5.2 percent growth last year, and further moderate in the medium term, with growth of about 3.5 percent estimated for 2028.

  Many Taiwanese financial firms have turned cautious about the spiraling financial crisis in the Chinese property market, where debt-ridden property giant China Evergrande Group (恆大集團) has been ordered to liquidate by a court, Lin said.

  Last year, Taiwanese banks’ lending to investments in China totaled NT$244.44 billion, down 7.51 percent from a year earlier, and lending to China also fell 14.53 percent from a year earlier to NT$640.28 billion.

  Bucking the downturn, the local banks’ interbank loans to Chinese counterparts and bank deposits rose 22.42 percent from a year earlier to NT$76.29 billion.

  Meanwhile, local insurance companies’ investments in marketable securities in China fell 25.29 percent from a year earlier to NT$77.4 billion at the end of last year, accounting for only 0.24 percent of the sector’s total disposable funds, the commission said.

  The investments in Chinese securities were all made by Taiwanese life insurers, while property and casualty insurers owned no securities in China, it said.

  Last year, Taiwanese securities and futures brokerages cut their exposure to China by 10.28 percent to NT$12.94 billion, with securities firms’ exposure falling 12.91 percent to NT$9.998 billion while that of futures companies was the same as the previous year at NT$251 million, the commission said.

  The commission said the decline in exposure among securities firms largely reflects financial investment strategy adjustments.
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