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Taiwan banks' China branches incur first losses

Taiwan banks' China branches incur first losses

Taipei, Oct. 10 (CNA) Taiwanese banks' branches operating in China incurred their first monthly losses in August since Taiwan's banking sector began extending its reach by setting up branches in the mainland in late December 2010, according to the Financial Supervisory Commission (FSC). The losses resulted from a sharp drop in the Chinese yuan in the month since the People's Bank of China (PBOC), the Chinese central bank, aggressively led its currency to depreciate against the U.S. dollar, the FSC said. In August, the local banking sector's branches in China posted NT$850 million (US$25.84 million) in losses, its first-ever losses, according to data compiled by the FSC. During that month, the PBOC cut the yuan's reference rate against the greenback to lower the yuan's value, which fell 2.73 percent against the U.S. dollar. In addition to a falling yuan, many Taiwanese banks' branches in China conducted less financial derivative business, which was also cited as a reason for their weaker bottom line that month, the FSC said. As for the banks' overall operations, including those in Taiwan, they remained profitable even if they were less so compared to a year ago. According to the FSC, Taiwanese banks posted NT$24.88 billion in pretax profit in August, down 5.8 percent from a year earlier. In the same month, their offshore banking units (OBUs), including those in China and other countries, witnessed a much sharper fall in their pretax profit - dropping 44.7 percent from a year ago to NT$4.48 billion. In particular, Taiwanese banks' branches operating in China swung to a loss after enjoying a NT$390 million profit recorded in the same month of last year, Taiwan's top financial regulator said. Looking at the first eight months of this year, Taiwanese banks posted NT$223.43 billion in pre-tax profit, down 4.7 percent from a year earlier, the data indicated. In the eight-month period, these banks' OBUs posted NT$54.57 billion in pretax profit, down 11.7 percent from a year earlier, while their branches in China suffered a sharper 30.5 percent year-on-year decline in pretax profit, which stood at NT$1.68 billion, the FSC said. Despite the fall in profit posted by their OBUs, the FSC said, these offshore operations remained one of the major sources of profit for many Taiwanese banks. The agency said that OBUs and other overseas operations even accounted for 40 percent of some large-sized Taiwanese banks' profits. (By Tsai Yi-chu and Frances Huang)


Updated : 2021-09-19 11:24 GMT+08:00