The ratio of the Bank of Taiwan’s exposure to China over its net worth has fallen sharply to 3.42 percent as the bank seeks to reduce its reliance on the Chinese market, it said.
Bank of Taiwan chairman Joseph Lyu (呂桔誠), who has led Taiwan’s largest lender since 2016, said in a recent media interview that the ratio had plunged from a peak of about 45 percent eight years earlier.
That drop occurred as many Taiwanese investors diversified away from China to lower risks amid escalating trade tensions and technology competition between Washington and Beijing, Lyu said.
Photo: CNA.
Bank of Taiwan’s figure echoed data released by the Financial Supervisory Commission (FSC) earlier this month, which showed that Taiwanese banks’ exposure to China regarding their net worth as a whole for the first quarter of this year fell NT$8.14 billion (US$252.75 million), or 0.85 percent, from a quarter earlier to NT$952.86 billion.
However, the local banking sector as a whole still had a relatively high ratio of exposure to China, even though it fell 0.6 percentage points from a quarter earlier to 22.1 percent in the first quarter of this year, the FSC data showed.
The sector’s total exposure to China and the ratio have fallen to new lows since the commission started the tallies in the third quarter of 2013, the commission said, citing concerns over China’s economy and risks in the Chinese property market as a cause.
As for the fall in the Bank of Taiwan’s exposure to China, which has pushed down its profits generated from China, including Hong Kong, Lyu said the bank has been keen to seek a balance in corporate banking, consumer banking and services to the public sector to make up for a possible fall in profit.
Once profits from its corporate banking operations drops, the bank would be able to turn its attention to consumer banking services, he said.
Lyu said he is upbeat about Taiwan’s economic growth for this year, although uncertainty over when the US Federal Reserve would cut interest rates, sticky inflation and geopolitical unease are expected to affect the pace of the recovery.
Taiwan would fare better economically this year as artificial intelligence development has created tremendous business opportunities for the local sector, but old economy industries still face challenges, he said.
At the same time, the Bank of Taiwan is seeking to extend its global reach by setting up outlets overseas, he said, adding that it opened a representative office in Arizona in 2022.
That office would help contract chipmaker Taiwan Semiconductor Manufacturing Co (台積電), which is building advanced wafer fabs in the US state, as well as the chipmaker’s suppliers, Lyu said.
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