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.
Ryanair, Transavia, Volotea and other low-cost airlines are feeling the financial pain from high jet fuel prices as a result of the Middle East war and are cutting flights. The closure of the Strait of Hormuz has taken a huge chunk of oil supplies off the market, sending the price of jet fuel soaring and triggering fears of shortages that could force airlines to cancel flights. Airlines are not waiting for a lack of supplies to react. “Travel alert: Airlines are cutting thousands of flights right now,” Travel Therapy host Karen Schaler said in an Instagram reel this past weekend.
MANAGING RISKS: Taiwan has secured LNG sufficient to cover 95 percent of electricity demand for next month, UBS said, describing the government’s approach as proactive UBS Group AG has raised its forecast for Taiwan’s economic growth this year to 8 percent, up from 6.9 percent previously, and said expansion could reach as high as 8.6 percent if external energy shocks are avoided. The upgrade reflects a stronger-than-expected first-quarter performance and sustained momentum in artificial intelligence (AI)-driven exports, which UBS said are providing a firm foundation for growth despite geopolitical and energy risks. Taiwan’s GDP expanded 13.69 percent year-on-year in the first quarter, the fastest growth since the second quarter of 1987, the Directorate-General of Budget, Accounting and Statistics (DGBAS) reported on Thursday. On a seasonally
The list of Asian stocks that benefit from business partnership with Nvidia Corp is getting longer, as the region further integrates into the artificial intelligence (AI) chip giant’s business ecosystem. Just in the past week, South Korea’s LG Electronics Inc, Taiwan’s Nanya Technology Corp (南亞科技), as well as China’s Huizhou Desay SV Automotive Co (德賽西威) and Pateo Connect Technology Shanghai Corp (博泰車聯) have become the latest to rally on news of tie-ups, supply-chain participation or product collaboration with the US chip designer. Asian suppliers account for about 90 percent of Nvidia’s production costs, up from about 65 percent last year, data compiled
The Fair Trade Commission’s (FTC) ongoing review of Grab Holdings Ltd’s US$600 million acquisition of Foodpanda Taiwan’s operations, announced on March 23, has taken on fresh urgency as industry experts warn that the transaction could embed significant Chinese cybersecurity vulnerabilities into Taiwan’s digital infrastructure through Grab’s deep ties to autonomous-driving firm WeRide (文遠知行). Less than 16 months after the FTC blocked Uber Eats’ direct attempt to acquire Foodpanda Taiwan — citing potential combined market shares of 80 to 90 percent — the emergence of Grab as the buyer has prompted questions about whether the same competitive harm is simply being rerouted
RSS