TAIPEI: Loans extended by Taiwanese-registered banks fell at the end of April as the economy showed signs of weakening, according to the Financial Supervisory Commission (FSC).
Data compiled by the commission, the nation’s top financial regulator, showed that outstanding loans extended by banks fell NT$121.7 billion (US$3.92 billion) at the end of April from a month earlier to NT$24.95 trillion. It was the steepest monthly loan decline in more than seven years.
The commission attributed the decline to the local economy being affected by falling global demand, which dragged down the nation’s bilateral trade, causing fund demand to fall accordingly.
On May 22, the Directorate-General of Budget, Accounting and Statistics lowered its forecast of the nation’s economic growth for the year to 3.28 percent from a previous estimate of a 3.78 percent, citing the weakness of both global and domestic demand.
The commission said that a relatively stronger New Taiwan dollar in April also deterred local firms’ overseas subsidiaries from securing foreign currency denominated loans from local banks’ offshore banking units in the month.
The commission said that the offshore banking units of these 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 unfavorable business conditions.
The government agencies said that demand from the petrochemical sector, in particular, had been in visible decline.
The commission also said that the aggregate amount of non-performing loans booked by these banks totaled NT$65.2 billion as of the end of April, up NT$300 million from the end of March.
The accumulated non-performing loans 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 commission said.
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 non-performing loans ratio of these banks stood at 0.26 percent, unchanged from a month earlier, the commission said.
The non-performing loans ratio regarding these banks’ lending to China as of the end of April was 0.27 percent and the commission said that the level remained low.
