The overseas branches of local banks regained profit momentum last year with annual growth of 58 percent in their combined pretax profits, the first profit growth since the COVID-19 pandemic began on the back of reduced bad debts, the Financial Supervisory Commission said yesterday.
The combined pretax profits at overseas branches totaled NT$32.48 billion (US$1.17 billion) last year, up 58 percent from NT$20.53 billion in 2020, commission data showed.
Combined pretax profits plummeted 49 percent year-on-year in 2020 as the COVID-19 pandemic disrupted the businesses of corporate clients, causing some syndicated loans to turn sour and driving branches to recognize more non-performing loans, the data showed.
The situation stabilized last year, as foreign branches recognized fewer bad debts — they wrote off NT$4.6 billion, down by NT$13.1 billion from a year earlier, Banking Bureau Chief Secretary Phil Tong (童政彰) told a news conference.
The profits generated by overseas branches made up 9.6 percent of the overall profits of local banks last year, up from 6.6 percent a year earlier, the data showed.
Meanwhile, the domestic branches of local banks continued to contribute the most profits — their pretax profits expanded 15 percent year-on-year to NT$214.7 billion last year, accounting for 63.7 percent of overall profits.
By comparison, offshore banking units (OBU), the second-largest profit engine, reported an annual decline of 13.7 percent in pretax profits to NT$86 billion, 25 percent of overall profits, down from 32 percent a year earlier, the data showed.
The OBUs posted less investment gains and lower interest income last year, which was partially attributable to slower lending activities, Tong said.
Combined pretax profits of the Chinese branches of local banks, the least profitable sector, fell 33 percent year-on-year to NT$3.73 billion last year due to reduced investment gains and interest income, as well as rising bad debts, the data showed.
Overall, local banks registered a combined pretax profit of NT$336.9 billion last year, up 7.8 percent from a year earlier, the data showed.
CTBC Bank (中國信託銀行), Cathay United Bank (國泰世華銀行) and Taiwan Cooperative Bank (合庫銀行) were the three most lucrative banks.
CTBC reported a pretax profit of NT$34.38 billion, followed by Cathay’s NT$26.71 billion and Taiwan Cooperative Bank’s NT$21.57 billion, the data showed.
Pretax profit at Citibank Taiwan Ltd (花旗台灣), whose consumer banking business is to be acquired by DBS Bank Taiwan (星展台灣), was NT$6.13 billion, while DBS Bank’s pretax profit was NT$885 million, the data showed.
Rakuten International Commercial Bank Co (樂天國際商銀) and Line Bank Taiwan Ltd (連線商業銀行), the nation’s two Web-only banks, both reported a loss last year, but the banks had previously warned that it would take time for them to turn a profit.
Rakuten Bank reported a loss of NT$558 million, while Line Bank posted a loss of NT$1.73 billion, the data showed.
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