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Weaker economy slows down bank loan growth

Weaker economy slows down bank loan growth

Taipei, Oct. 10 (CNA) Loan growth has slumped badly this year, undermined by a weakening economic climate that has dramatically reduced demand for funds, according to the Financial Supervisory Commission (FSC). New loans made by Taiwan's banking sector in the first eight months of 2015 totaled only NT$409.2 billion (US$12.44 billion), less than half of the NT$925.4 billion in new loans issued during the same period of last year, FSC statistics showed. The weak loan demand reflected corporations' reluctance to borrow and invest amid an unfavorable economic environment and a desire by some companies to deleverage their balance sheets by repaying debt rather than taking more of it on, the FSC said. In mid-August, the government trimmed its forecast for Taiwan's 2015 economic growth to 1.56 percent from a previous estimate of 3.28 percent. Several economic think tanks now believe Taiwan's growth will likely fall below 1 percent because of falling global demand. As of the end of August, outstanding bank loans in Taiwan totaled NT$25.33 trillion, up NT$127.9 billion from the end of July, FSC data showed. In the eight-month period, outstanding bank loans to the private sector grew 1.61 percent from a year earlier, far below the 5.72 percent increase recorded during the same period last year, further signaling the economic slowdown's impact on fund demand, the FSC said. The commission said new loans extended to small and medium-sized enterprises during the eight months totaled NT$198.5 billion, accounting for 55.14 percent of the 2015 goal of NT$360 billion set by the government. The FSC said that as fund demand is likely to pick up in the fourth quarter, a traditional peak season for business operations, it remained optimistic that the NT$360 billion goal will be achieved. As of the end of August, outstanding non-performing loans (NPL) in the local banking sector totaled NT$64.5 billion, up NT$1.1 billion from a month earlier, with the average NPL ratio at 0.25 percent, little changed from the end of July, the FSC said. The FSC said the NPL ratio was below 2 percent for all 39 banks registered in Taiwan. (By Tsai Yi-chu and Frances Huang)


Updated : 2021-09-23 02:01 GMT+08:00