Taiwan’s banks see profit fall in the first 2 months of 2015
Banks registered in Taiwan suffered a fall in profit for the first two months of this year after f i nancial authorities here imposed restrictions on the trading of a type of risky derivatives, according to the Financial Supervisory Commission ( FSC).
Statistics compiled by the FSC, the top financial regulator in Taiwan, showed that pretax profit posted by 39 banks operating in Taiwan totaled NT$52.57 billion (US$1.68 billion) for the two-month period, down from NT$54.77 billion recorded a year earlier.
The FSC said that the fall in pretax profit resulted from lower bottom lines for the banks' offshore banking units (OBUs). These OBUs' sales in target redemption forward (TRF), a kind of risky options perceived to have higher risks, had dropped in the first two months due to tighter government sales rules.
The FSC said that pretax profit posted by the banks' OBUs for the January-February period fell about 29 percent from a year earlier to NT$13.3 billion, which was the main reason for a decline in the banking sector's overall profitability.
As of the end of February, non- performing loans ( NPL) shouldered by the 39 banks hit NT$69.5 billion, up NT$2.1 billion from the end of January, the FSC said.
The commission said that the increase in bad loans largely reflected a move by loss-incurring touch panel maker Wintek Corp. to seek bankruptcy protection from a court. Due to the petition for bankruptcy protection, Wintek's due borrowing remained in the NPL category of its bank creditors.
As of the third quarter of last year, Wintek shouldered NT$53.50 billion in total loans.