Condition and Performance of Domestic Banks
Third Quarter 2006


Summary of Condition and Performance
Key Trend
In the third quarter of 2006, although the declining oil
The net revenues other than interest including the credit
price and improving international market conditions, Taiwan
card provisions showed a sharp decrease compared with the
was still plagued by the domestic political dispute, resulting
first nine months of 2005. Higher provisions against unsecured
in an adverse effect to the domestic economy. In addition,
consumer loans apparently hit profits. The major income
the private consumption caused by the negative impact of
components are tabulated as follows.
credit card and cash cards’ insolvency dragged the real
domestic
demand.
Nevertheless,
the
Major income components
continuous
NT$ billion
Jan.-Sep Jan.-Sep. % Change
2005
2006
economic expansion in key export markets helped to boost
Taiwan’s export-oriented economy. Fueled by the strong
international demand in consumer electronics, Taiwan’s
domestic
economy
still
remained
stable.
Moreover,
supported by the falling unemployment and firmer price
index, there would not be obvious deterioration in
consumption.
According
to
the
statistics
of
Directorate-General of Budget, Accounting and Statistics,
Executive Yuan, the preliminary real GDP growth rate was
Income
Net interest income
Net revenues other than
interest
Expense
Loan loss provision
Other expense
Net income
300.1
145.4
287.3
64.4
-4.3
-55.7
126.1
196.3
123.1
119.1
197.6
35.1
-5.6
0.7
-71.5
Net Interest Margin（NIM） decreasing
5.02﹪in third quarter , increasing by 0.78 percentage points
compared with the year-earlier period.
Due to the continuing write-offs and stable economic
conditions, the delinquencies of the unsecured consumer loan
The NIM was NT$92.2 billion during this quarter,
decreasing by NT$1.2 billion（-1.3%） compared with the
previous quarter due to a shrinking card lending market and
lower interest rates on restructured loans.（chart 1）
have declined. Moreover, most banks have adequate capital
buffers to cover write-offs. The average ratio of NPLs was
2.40﹪, 0.01 percentage points up from 2.39﹪as of the end of
previous quarter. The average provision coverage ratio was
43.93 ﹪ , 2.82 percentage points up from 41.11 ﹪ at the
chart 1
Net Interest Margin
previous quarter’s end. Generally speaking, the domestic
banks under a stable outlook still need to further enhance their
risk management to keep pace with future expansion into new
in NTD b illio n
120. 0
110. 0
100. 0
geographic and product markets. The annual growth rate of
90. 0
deposits, loans and investments went up continuously.
80. 0
70. 0
00
01
02
All data were on the quarter base
03
04
05
chart 2
Deposits increased slightly
Total deposits as of the third quarter’s end of 2006 were
NT$20,060.2 billion, increasing by NT$229.8 billion (1.16%)
Deposits
in NTD billion
22, 000
21, 000
20, 000
19, 000
18, 000
compared with the preceding quarter. The slight increase was
17, 000
mainly due to the increase in net foreign capital inflows. The
15, 000
annual growth rate of total deposits at this quarter was 6.03 %,
13, 000
16, 000
14, 000
01
0.99 percentage points down from 7.02% a year earlier.
02
03
04
05
All data as of month-end
(Chart 2)
Loans grew slightly
chart 3
Loans
The total loans were NT$ 16,873.0 billion at this
quarter’s end, increasing by NT$36.1 billion (0.21%)
compared with preceding quarter. The slower growth rate
in NTD billion
20, 000
19, 000
18, 000
17, 000
was mainly due to the shrinkage of consumer loan demand
16, 000
from the private sector. The annual growth rate of this
15, 000
quarter was 5.51%, 1.05 percentage points down from
13, 000
6.56% as of the previous year. (Chart 3)
Investments decreased slightly
14, 000
12, 000
01
02
03
04
05
All data as of month-end
The investments were classified to be in line with new
norms since the beginning of 2006 according to the
Statements of Financial Accounting Standards No.34
“Financial instruments ： Recognition and Measurement”
issued by the Accounting Research and Development
Foundation of the R.O.C. The total investments amounted to
chart 4
Investments
in NTD billion
5, 000
4, 500
4, 000
3, 500
3, 000
NT$3,741.9 billion, decreasing by NT$38.3 billion (-1.01 %)
2, 500
compared with the previous quarter. However, the annual
2, 000
00
01
02
03
04
05
growth rate of investment was 9.31%, increasing sharply by
All data as of month-end
8.17 percentage points from 1.14% as of the third quarter’s
end at previous year owing to the ample liquidity. (Chart 4)
Asset quality remained stable
chart5
Several banks had stung by the rising unsecured
consumer loan delinquencies. The average ratio of
non-performing loans at this quarter went by 0.01
NPL ratio
%
16. 0
14. 0
12. 0
percentage points up to 2.40 %. Nevertheless, most of banks
10. 0
have adequate capital buffers to cover write-offs. Therefore,
6. 0
8. 0
4. 0
the average provision coverage ratio was 43.93%, 2.82
percentage points increased from 41.11% as of previous
quarter, reaching the required target. (Chart 5)
2. 0
01
02
all data as of month-end
03
04
05
chart 6
Provision-to-loan ratio on a slight rising trend
Provision-to-loan ratio
%
2. 50
The provision-to-loan ratio was 1.17﹪, slightly up from
2. 30
1.13 ﹪ at the end of preceding quarter. The increased
2. 10
1. 90
1. 70
provision-to-loan ratio was mainly due to the increase of
1. 50
1. 30
loan loss provisions. It showed the prudential trend of credit
1. 10
policies. （Chart 6）
0. 90
0. 70
0. 50
00
01
02
03
04
05
All data as of month-end
Liquidity Ratio increasing slightly
The liquidity ratios of all domestic banks were over the
statutory minimum ratio (7%) in September 2006. The
average liquidity ratio was 19.26%, increasing by 1.01
chart 7
percentage points from 18.25 % in June 2006. As a whole, the
22. 0
domestic banking sector has satisfactory liquidity levels.
(Chart 7)
Average Capital Adequate Ratio decreased
Liquidity Ratio
%
21. 0
20. 0
19. 0
18. 0
17. 0
16. 0
15. 0
14. 0
13. 0
12. 0
11. 0
10. 0
00
01
02
03
04
05
The average BIS capital adequacy ratio was 9.91% as of
the end of September 2006, decreasing by 0.42 percentage
All data were in terms of the average of the last month
of quarters.
points from 10.33% at the end of June 2006. Taken as a
whole, most of the domestic banks have adequate
capitalization. The average BIS capital adequacy ratio will be
chart 8
Capital Adequacy Ratio
%
disclosed quarterly since the third quarter of this year. The
12.50
data disclosed at each first quarter and third quarter’s end
were based on unaudited basis.
(Chart 7)
12.00
11.50
11.00
10.50
10.00
9.50
9.00
99
00
All data as of month-end
01
02
03
04
05
錯誤! 連結
無效。