Thu, Mar 05, 2020 page12

• Banks’ China units had zero nonperforming loans

  CAUTIOUS: While banks seemed to have been more prudent about managing risks at their Chinese branches, they are not likely to slow their lending in China, an official said

  • By Kao Shih-ching / Staff reporter
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  The Chinese branches of Taiwanese banks reported zero nonperforming loans (NPLs) in January — the first time in more than 26 months, Financial Supervisory Commission data showed.

  That came after CTBC Bank (中國信託銀行) wrote off NT$31 million (US$1.032 million) in bad debt in January, while the other banks did not see any increase in nonperforming loans, the data showed.

  As a result, the Chinese branches’ combined NPL ratio slipped from 0.02 percent in December last year to zero, while their Taiwanese operations reported an NPL ratio of 0.24 percent, 0.2 percent for their offshore banking units and 0.23 percent for other overseas branches, the data showed.

  “It seemed that the Chinese branches were more cautious about risk management, perhaps due to a slowdown in the Chinese economy and the [COVID-19] outbreak,” a commission official surnamed Chiu (邱) told the Taipei Times by telephone.

  Banks also prefer cleaning up their loanbooks before the Lunar New Year, so they can allocate less for bad-debt provisioning and boost their profit performance, he added.

  However, it would be too early to conclude that banks would tighten lending standards amid fears over the outbreak in China, Chiu said.

  “If the NPL ratio stays at zero for three months, which is rare, we would believe that banks have adopted a stricter lending strategy amid the uncertainty,” he said.

  The Chinese branches are not likely to slow their lending business, as the loans provide better interest income given higher interest rates in China, he said.

  Aggregate lending by Chinese branches gained 4.9 percent sequentially to NT$184.5 billion in January, with seven banks approving more loans: Bank of Taiwan (台灣銀行), the Land Bank of Taiwan (土地銀行), Taiwan Cooperative Bank (合庫銀行), First Commercial Bank (第一銀行), Mega International Commercial Bank (兆豐銀行), Taiwan Business Bank (台灣企銀) and CTBC Bank, the data showed.

  Chinese branches saw their aggregate pretax profit rise 35.1 percent from a year earlier to NT640 million in January, which could be attributed to higher fee income, lower provisioning for bad debt and higher investment returns, the data showed.

  Meanwhile, the nation’s banks reported an annual decline of 6.7 percent in pretax profit to NT$34.91 billion as the Lunar New Year holiday led to fewer working days, the data showed.
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