Profitability of local banks plummeted last month to less than one third of the level a year earlier, after they booked huge amounts of provisioning costs to cover mounting bad consumer loans, according to the Financial Supervisory Commission's latest data released yesterday.
As of last month, aggregate earnings of 42 banks amounted to NT$31.89 billion (US$976.7 million), down by 73.9 percent from NT$122.36 billion from a year ago, after NT$204.68 billion of reserves were made available to cover potential bad consumer debts, up from NT$173 billion over the same period, the data showed.
Losers
Jih Sun International Bank posted a loss of NT$12.25 billion, the biggest loss among all local lenders, followed by Taishin International Bank's (台新銀行) loss of NT$9 billion and Cosmos Bank's (萬泰銀行) NT$6.97 billion.
The most profitable bank was Mega International Commercial Bank (兆豐國際商銀) that generated cumulative earnings of NT$14.91 billion, followed by China Development Industrial Bank's (中華開發工銀) NT$13.35 billion and Chang Hwa Bank's (彰化銀行) NT$13.16 billion, the data showed.
NPL
The average non-performing loan (NPL) ratio dropped to 2.35 percent last month, down marginally from 2.39 percent in October, while the coverage ratio used to gauge the sufficiency of reserves to address bad debts also climbed to 51.29 percent from 50.54 percent.
Meanwhile, asset quality of credit and cash card lending appeared to continue its improvement with NPL ratio declining by 0.04 percentage points to 2.3 percent and by 0.91 percentage points to 5.99 percent.
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