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Taiwan's banks start delivering the bacon

Taiwan’s banks start delivering the bacon

(Taiwan) - Following a poor 2001, many Taiwan banks are reporting strong first quarter earnings, benefiting from an aggressive monetary easing last year that has helped widen interest rate spreads and margins. First quarter pre-tax profits at state controlled First Commercial Bank, Taiwan's fourth largest bank by net assets, for example, have jumped 22.4 percent from 2001 to T$1.12 billion (US$32 million).

Profits at Taiwan's largest private bank, Chinatrust Commercial Bank, have climbed 76 percent to T$4.28 billion in its first quarter of the year.

Much balance sheet cleansing has been achieved by off-loading non-performing debt. For example First Commercial Bank disposed of T$13 billion in non-performing loans (NPLs) last month, with the Bank planning more such sales.

Industry wide, banks at December last had an overdue loan ratio of 7.48 percent, about US$31 billion, slightly down from 7.79 percent in the September quarter, but the first fall in a year.

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