Condition and Performance of Domestic Banks
Fourth Quarter 2007


Summary of Condition and Performance
Key Trend
Affected by the problem of US sub-prime mortgage, the
Although the domestic banks continue to suffer from a
global economy appeared a downward trend. Moreover, the
lower interest spread and fierce competition, benefited from
increasing oil price deteriorated the global economy, resulting
the fee income of wealth management, the sector’s net
in an unstable financial market. Nevertheless, supported by the
income before tax in 2007 grew dramatically compared with
continued expansion of external sector, the Taiwanese
2006. The major income components are tabulated as
domestic economic growth remained bullish. The solid growth
follows.
has been driven by surging external demand for electronic
Major income components
parts and components. Generally speaking, the external sector
NT$ billion
Jan.-Dec. Jan.-Dec. % Change
2006
2007
showed brilliant performance in the forth quarter of 2007, in
spite of spiraling prices for international oil and raw materials.
According to the statistics of Directorate-General of Budget,
Accounting and Statistics, Executive Yuan, the preliminary
real GDP growth rate was 6.39﹪in the forth quarter of 2007,
increasing
2.32
percentage
points
from
4.07
﹪ at the same quarter of previous year.
Aside from traditional deposit taking and lending, the
domestic banks have expanded into wealth management, asset
management, treasury, and trust business to diversify their
revenues in 2007. Benefited from the remarkable performance,
the banks developed sustainable income from fee-based
business. Fee income represented a large portion of total
Income
Net interest income
Net revenues other than
interest
Expense
Loan loss provision
Other expense
Net income
366.9
82.2
352.1
158.6
-4.0
92.9
187.3
269.1
-7.3
144.6
327.2
38.9
-22.8
22.1
21.6
Net Interest Margin（NIM） decreasing slightly
The NIM was NT$ 90.3 billion during this quarter,
slightly decreasing by NT$ 1.5 billion（-1.63%） compared
with the previous quarter . (Chart 1)
revenues in 2007. Meanwhile, supported by efforts to
strengthen risk controls, assets quality has improved
significantly and is expected to remain stable. The sector’s
ratio of loan loss provisions to problem loans kept an upward
Net Interest Margin
chart 1
in NTD billion
trend with the adequate capital. However, banks still needed to
120. 0
enhance their risk management to keep pace with a highly
110. 0
competitive banking environment.
100. 0
90. 0
80. 0
70. 0
01
02
03
All data were on the quarter base
04
05
06
07
Deposits increased
chart 2
Total deposits as of the forth quarter’s end of 2007 were
NT$21,136.6 billion, increasing by NT$ 316.0 billion
compared with the preceding quarter. It was mainly due to
Deposits
in NTD billion
22, 000
21, 000
20, 000
19, 000
18, 000
the increase in time deposits and foreign currency deposits.
17, 000
The annual growth rate of total deposits decreased 3.25
15, 000
percentage points from 5.04% as of the forth quarter’s end
13, 000
16, 000
14, 000
01
02
03
04
05
06
07
of 2006. (Chart 2)
All data as of month-end
Loans grew slightly
chart 3
Loans
The total loans were NT$ 17,915.1 billion at this
quarter’s end, increasing by NT$ 206.3 billion (1.16%)
compared with preceding quarter. The annual growth rate
was 3.20%, decreasing 1.78 percentage points from 4.98%
as of the same period of 2006. The decrease resulted from a
slowing growth in bank claims against the private
enterprises. (Chart 3)
in NTD billion
20, 000
19, 000
18, 000
17, 000
16, 000
15, 000
14, 000
13, 000
12, 000
01
Investments increased slightly
02
03
04
05
06
07
All data as of month-end
The total investments amounted to NT$3,779.8 billion,
increasing by NT$ 93.2 billion (2.53 %) compared with the
previous quarter, mainly due to an increasing purchase on
NCDs issued by CBC.
chart 4
Investments
(Chart 4)
in NTD billion
5, 000
4, 500
Asset quality kept an improved status
4, 000
3, 500
The average ratio of non-performing loans at this
3, 000
quarter went down by 0.33 percentage points to 1.83%.
2, 500
Supported by efforts to strengthen risk controls, the
2, 000
01
non-performing assets of the overall banking sector remained
02
03
04
05
06
07
All data as of month-end
improving and were kept at stable level. The average
provision coverage ratio was 67.00%, 8.49 percentage points
up from 58.51% as of previous quarter’s end. The sector’s
chart5
average provision coverage ratio was on an upward trend
with the strengthening capacity of risk management and
discipline. (Chart 5)
NPL ratio
%
16. 0
14. 0
12. 0
10. 0
8. 0
6. 0
4. 0
2. 0
01
02
03
all data as of month-end
04
05
06
07
Provision-to-loan ratio leveled off
chart 6
Provision-to-loan ratio
The provision-to-loan ratio was 1.17﹪, slightly leveled
off from 1.19﹪at the end of preceding quarter. It was due to
%
2. 50
2. 30
the slight decrease of loan loss provisions and increase of
loans. （Chart 6）
2. 10
1. 90
1. 70
1. 50
1. 30
1. 10
Liquidity Ratio increasing slightly
0. 90
0. 70
0. 50
01
The liquidity ratios of all domestic banks were over the
02
03
04
05
06
07
All data as of month-end
statutory minimum ratio (7%) in December 2007. The
average liquidity ratio was 18.78%, increasing by 2.61
percentage points from 16.17% in September 2007. Generally
speaking, the domestic banking sector had ample liquidity.
(Chart 7)
Liquidity Ratio
chart7
Average Capital Adequate Ratio increased
The average BIS capital adequacy ratio was 10.57% as of
the end of December 2007, increasing by 0.57 percentage
points from 10.00% at the end of September 2007. Taken as a
18. 0
17. 0
16. 0
15. 0
14. 0
13. 0
12. 0
11. 0
10. 0
01
whole, most of the domestic banks have adequate capital. The
average capital adequate ratio has been disclosed quarterly
%
22. 0
21. 0
20. 0
19. 0
02
03
04
05
06
07
All data were in terms of the average of the last month of quarters.
since the third quarter of 2006. The data disclosed was based
on unaudited basis.
(Chart 8)
chart 8
Capital Adequacy
Ratio
%
12.50
12.00
11.50
11.00
10.50
10.00
9.50
9.00
01
02
03
All data as of month-end
04
05
06
07
錯誤! 連結
無效。