Domestic banks saw first-quarter net profits from their Hong Kong branches shrink 25 percent on an annual basis to NT$4.8 billion (US$159.83 million), the first drop in the past four years, due to higher loan-loss provisions and lower interest income, Financial Supervisory Commission data showed.
Local banks’ branches in the financial hub saw interest income fall after the Hong Kong Monetary Authority in March lowered its base interest rate to 0.86 percent, compared with 2.75 percent a year earlier, the data showed.
Those branches set more loan-loss provisions out of concerns that some loans might turn sour due to the COVID-19 pandemic disrupting production and weakening market demand, Banking Bureau Chief Secretary Phil Tong (童政彰) said.
The branches saw wider valuation losses on their financial investments as the Hang Seng Index slid to a three-year low, a decline similar to those of major equity markets in Taiwan and the US, Tong said.
The Hang Seng yesterday extended the downtrend by closing down 0.74 percent to 22,961.47 points, as the passage of Hong Kong national security legislation spurred speculation about capital flight and prompted concerns that the law would jeopardize the territory’s status as an international financial center.
Hong Kong has been an important overseas market for local banks due to the territory’s advantages, including the lack of a limit on fund flows, clear regulations, a friendly tax system and low tax rates, Tong said.
Nineteen of the nation’s 35 banks have set up branches in Hong Kong, with the banks’ net profits in the territory accounting for half of their overseas net profits, Tong said.
“Local banks should keep close watch on the changes in Hong Kong’s political and economic situation, regulations and market sentiment. They should consider these factors when resetting their risk appetite,” Tong said.
There has not been a significant capital outflow from the territory, but in the first three months of this year, the banks’ combined deposits have dropped NT$29.5 billion to NT$1.13 trillion, Tong said.
By comparison, the banks’ lending rose NT$30.2 billion quarterly to NT$638 billion, Tong said, adding that the gain might be attributable to new loans granted to firms affected by the pandemic.
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reported record revenue of NT$416.975 billion (US$13.17 billion) for last month, putting the world’s largest contract chipmaker on track to set a record for quarterly revenue. Last month’s figure surpassed March’s record NT$415.19 billion and represented increases of 1.5 percent from April and 30.1 percent from a year earlier. For the first five months of the year, TSMC generated NT$1.96 trillion in revenue, up 30 percent year-on-year, it said in a statement. TSMC has forecast second-quarter revenue of between US$39 billion and US$40.2 billion, representing sequential growth of about 10 percent and year-on-year growth of about
Infineon Technologies AG is preparing to open its largest single investment, a 5 billion euro (US$5.8 billion) semiconductor factory built with the help of EU subsidies, as the bloc seeks to boost chip production. The power chip fab, which is an extension of the German company’s Dresden campus, is scheduled to open on July 2, Infineon chief operating officer Alexander Gorski said this week at the site. The project is a major recipient of EU Chips Act funds, receiving about 1 billion euros in subsidies. The new plant represents a rare success for the bloc’s flagship semiconductor law, which was drawn up during
PATENT PROBE: US lawmakers called for a ban on imports of chips made by TSMC if they are found to infringe on US patents, with a preliminary ruling expected soon Minister of Economic Affairs Kung Ming-hsin (龔明鑫) yesterday expressed confidence in Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) compliance with patent regulations after reports linked the company to a patent infringement lawsuit in the US. US Representative Ryan Zinke, and US senators Tim Sheehy, Roger Marshall and Bernie Moreno urged the US International Trade Commission in a May 22 letter to ban imports of chips made by TSMC if they are found to infringe on US patents, Axios reported on Wednesday. An administrative law judge is expected to issue a preliminary ruling this month, with the commission potentially making a final decision in
Taiwan remained the sixth-largest net creditor nation in the world last year, despite a fall of more than 10 percent in its net international investment position (NIIP) over the year, the central bank said yesterday. The NIIP is the difference between a country’s external financial assets and its external financial liabilities. Taiwan’s external financial assets hit US$3.27 trillion at the end of last year, up US$275.75 billion or 9.2 percent from a year earlier, the central bank said in its annual NIIP report. The growth largely reflected an increase in holdings of overseas marketable securities by residents in Taiwan, as well as a
RSS