Combined deposits at local banks grew to a record NT$52.9 trillion (US$1.73 trillion) as of the end of February, as high interest rates encouraged people and businesses to deposit funds, Financial Supervisory Commission data showed on Tuesday.
Meanwhile, growth in combined lending slowed, putting a drag on banks’ profit momentum, the data showed.
Combined deposits rose by NT$332.5 billion in February, more than the average monthly increase of NT$308.3 billion last year, as life insurers, companies in the electrics sector and state-run corporations moved more funds into their savings accounts, the commission said, attributing the trend to the central bank hiking rates in five quarterly meetings in a row.
Photo: CNA
The central bank’s benchmark rate has increased by a total of 75 basis points since March last year, enticing people and businesses to shift to deposits as banks followed suit in raising interest rates, it said.
However, the rate increases also curbed the growth in lending, with local banks reporting a monthly increase of NT$82.2 billion in loans in February, compared with an average monthly increase of NT$248.3 billion last year, commission data showed.
Outstanding lending to private companies fell by NT$85.2 billion in February, as some corporate clients repaid their debts in advance to avoid higher interest payments and businesses became less interested in taking new loans, the commission said.
Local banks’ lending to corporate clients for investment purposes fell for the second consecutive month, indicating that companies remained conservative, as Taiwan’s economic outlook appeared clouded, the commission said.
The outlook might improve in the second quarter, it added.
In contrast, company loans for working capital increased in February, suggesting that local firms have demand for short-term funds, the commission said.
As deposits grew much more than lending, local banks’ aggregate loan-to-deposit ratio fell to 69.5 percent at the end of February, the second-lowest after 69.23 percent in December 2021, the commission said.
The ratio is commonly used to assess a bank’s liquidity by comparing its total loans with its total deposits, with a low ratio meaning banks have difficulties using account holders’ money to generate interest income.
However, local banks reported a combined pretax profit of NT$82.32 billion for the first two months of this year, the highest for the same period, as banks’ investment gains increased.
Semiconductor business between Taiwan and the US is a “win-win” model for both sides given the high level of complementarity, the government said yesterday responding to tariff threats from US President Donald Trump. Home to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), Taiwan is a key link in the global technology supply chain for companies such as Apple Inc and Nvidia Corp. Trump said on Monday he plans to impose tariffs on imported chips, pharmaceuticals and steel in an effort to get the producers to make them in the US. “Taiwan and the US semiconductor and other technology industries
SMALL AND EFFICIENT: The Chinese AI app’s initial success has spurred worries in the US that its tech giants’ massive AI spending needs re-evaluation, a market strategist said Chinese artificial intelligence (AI) start-up DeepSeek’s (深度求索) eponymous AI assistant rocketed to the top of Apple Inc’s iPhone download charts, stirring doubts in Silicon Valley about the strength of the US’ technological dominance. The app’s underlying AI model is widely seen as competitive with OpenAI and Meta Platforms Inc’s latest. Its claim that it cost much less to train and develop triggered share moves across Asia’s supply chain. Chinese tech firms linked to DeepSeek, such as Iflytek Co (科大訊飛), surged yesterday, while chipmaking tool makers like Advantest Corp slumped on the potential threat to demand for Nvidia Corp’s AI accelerators. US stock
The US Federal Reserve is expected to announce a pause in rate cuts on Wednesday, as policymakers look to continue tackling inflation under close and vocal scrutiny from US President Donald Trump. The Fed cut its key lending rate by a full percentage point in the final four months of last year and indicated it would move more cautiously going forward amid an uptick in inflation away from its long-term target of 2 percent. “I think they will do nothing, and I think they should do nothing,” Federal Reserve Bank of St Louis former president Jim Bullard said. “I think the
SUBSIDIES: The nominee for commerce secretary indicated the Trump administration wants to put its stamp on the plan, but not unravel it entirely US President Donald Trump’s pick to lead the agency in charge of a US$52 billion semiconductor subsidy program declined to give it unqualified support, raising questions about the disbursement of funds to companies like Intel Corp and Taiwan Semiconductor Manufacturing Co (台積電). “I can’t say that I can honor something I haven’t read,” Howard Lutnick, Trump’s nominee for commerce secretary, said of the binding CHIPS and Science Act awards in a confirmation hearing on Wednesday. “To the extent monies have been disbursed, I would commit to rigorously enforcing documents that have been signed by those companies to make sure we get
RSS