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Taiwanese banks pre-tax net income rise 4.7% to $712.31m

Taiwanese banks pre-tax net income rise 4.7% to $712.31m

TAIPEI: Earnings by the nation’s 39 banks last month began to stabilize, with pre-tax net income growing 4.7 percent annually to NT$23.46 billion (US$712.31 million), recovering from a 10.4 percent year-on-year slump recorded in September, Financial Supervisory Commission (FSC) data showed yesterday.

The gains in earnings were primarily driven by banks’ operations abroad, with earnings of offshore banking units rising by 2.8 percent annually to NT$7.22 billion, while net income contribution from overseas and China-based units grew 2.8 percent and 37.5 percent year-on-year to NT$2.73 and NT$310 million respectively. Profits by domestic branches grew at an annual rate of 0.5 percent to NT$13.2 billion, commission data showed.

However, the loan-to-deposit ratios among banks last month tumbled to 74.4 percent, representing a five-year low.

According to the commission, banks are holding about NT$8.69 trillion worth of idle funds, as their total loan portfolio was tallied at around NT$25.28 trillion, against total deposits of NT$33.97 trillion.

“The market is flush with capital,” Banking Bureau Deputy Director-General Jean Chiu said regarding the slump in lending among domestic banks.

“The other factor is that the private sector’s demand for loans has been falling, with many firms repaying debts and reducing capital expenditures,” she said, adding that apart from net interests, banks have many other earnings sources, such as wealth management fees.

In light of the slump in lending, Chiu said that the commission hopes to see the nation’s banking sector seek more productive utilization of funds and step up overseas expansion efforts.

In related news, FSC Chairman William Tseng said that his counterparts in Vietnam have given the green light for Taiwanese banks and insurers to wholly acquire Vietnamese banks.

Previously, Vietnamese regulators had set the cap for stake acquisitions of banks at 30 percent.

Tseng made the remark on Wednesday after returning from a trip to Vietnam. He met with financial regulators and signed a memorandum of cooperation on banking during his trip.

Regarding the insurance industry, Tseng said that there is a possibility that Taiwanese insurers might be allowed to open branches in Vietnam in the future.

They are currently only allowed to set up representative offices there.

The Vietnamese government hopes that Taiwan’s financial companies can inject funds into Vietnamese infrastructure projects.