FSC reveals bank lending down as of end-April
Loans extended by banks registered in Taiwan as of the end of April fell as the local economy showed signs of weakening, according to the Financial Supervisory Commission (FSC).
The data compiled by the FSC, the top financial regulator in Taiwan, showed that outstanding loans extended by Taiwanese banks as of April fell NT$121.7 billion (US$3.93 billion) from a month earlier to NT$24.95 trillion. The magnitude of the monthly loan decline was the steepest in more than seven years.
The FSC attributed the decline to the fact that the local economy has been affected by falling global demand, which dragged down the country’s bilateral trade, causing fund demand in Taiwan to fall accordingly.
On May 22, the Directorate General of Budget, Accounting and Statistics lowered its forecast of Taiwan’s economic growth for 2015 to 3.28 percent from a previous estimate of a 3.78 percent, citing the weakness of both global and domestic demand.
The FSC said that a relatively stronger New Taiwan dollar in April also deterred Taiwanese firms’ overseas subsidiaries from securing foreign currency denominated loans from local banks’ offshore banking units (OBUs) in the month.
The commission said that the OBUs of these Taiwanese banks suffered a fall of NT$80 billion in lending to the local private sector in April from a month earlier due to falling fund needs under unfavor- able business conditions. The government agencies said that demand from the petrochemical sector, in particular, had been on a more visible decline.
Meanwhile, the FSC said that the aggregate amount of nonperforming loans (NPLs) booked by these Taiwanese banks totaled NT$65.2 billion as of the end of April, up NT$300 million from the end of March.
The accumulated NPLs resulting from the banks’ lending to China as of the end of April rose NT$283 million from a month earlier as a couple of Taiwanese firms operating in China failed to repay their loans, the FSC said.
But, the commission said that the loans have been guaranteed by these lenders’ parent companies in Taiwan, which have pledged collateral.
As of the end of April, the average NPL ratio of these Taiwanese banks stood at 0.26 percent, unchanged from a month earlier, the FSC said.
The NPL ratio regarding these banks’ lending to China as of the end of April was 0.27 percent and the FSC said that the level remained low.