Overdue loans ratios drop at six of Taiwan's seven big banks in November

December 29, 2004

Six of Taiwan's top seven banks reported reduced overdue loans ratios in November. The average overdue loans ratio at these big banks fell 0.08% to 3.58% from October to November, and their combined overdue loans dropped NTD 2.1 billion to NTD 240.3 billion.

The only one of these banks to post an increase in its overdue loans ratio was First Commercial Bank, which saw its ratio notch up 0.06% to 1.46%. However, this slight upturn should not worry the bank's executives too much. Together with Bank of Taiwan, whose ratio declined from 1.58% to 1.46% for a total of NTD 18.1 billion in overdue loans, First Commercial shares the honor of having the lowest overdue loans ratio of the big banks. Another consolation is that, at NTD 12.4 billion, it also has the lowest value of overdue loans on its books.

Land Bank of Taiwan's ratio fell from 3.62% to 3.56% for a value of NTD 45.6 billion, while the ratio at Taiwan Cooperative Bank went down from 3.79% to 3.69% to land at NTD 46.3 billion.

Hua Nan Commercial Bank's ratio dropped from 2.6% to 2.53% for a total of NTD 22.4 billion in overdue loans.

Chang Hwa Bank, with NTD 35 billion in overdue loans at the end of November, reported a decrease in its ratio from 3.98% to 3.97%.

Of the Big 7, Taiwan Business Bank, which has traditionally specialized on providing financing to small and medium enterprises, faces the biggest challenges in cutting its bad loans ratio. Despite a decline of 0.25%, its ratio still stood at 8.38%, the highest among these big banks. Also, at NTD 60.2 billion, its accounts are burdened by the greatest amount of overdue loans.

However, the bank says that it has succeeded in issuing corporate bonds which should allow it to cut its ratio to around 6% by the end of the year. It is also considering posting a loss this year in order to take a big bite out of its bad loans. This maneuver would further lower its ratio to under 5%.

Taiwan's banks have been putting their noses to the grindstone in order to clear bad loans since the Asian financial crisis of 1997-98 triggered financial problems at many local enterprises, causing numerous loan defaults. The government has introduced measures aimed at encouraging banks to write off overdue loans, and is actively promoting mergers in what is generally considered an overcrowded banking community.

(Central News Agency, United Daily News)

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