Tai­wan’s banks see profit fall in the first 2 months of 2015

The China Post - - LOCAL -

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.

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