The offshore banking units (OBU) and overseas branches have become an increasingly important source of profits for Taiwanese banks, due to expanded loans and higher interest spread. Thanks to spike in U.S.-dollar loans for mainland Chinese and overseas enterprises, Mega Bank, for instance, is estimated to rake in over NT$10 billion of profits from overseas business in the first 10 months this year, a record high.
Mega Bank extended over US$100 million of syndicated loan in the form of financial lease yesterday (Nov. 22), with the premium for the interest rate reaching 200 base points (one base point equals 0.01 of a percentage point), similar to the interest rates for other U.S.-dollar syndicated loans extended the OBU of Mega Bank to mainland Chinese and other overseas enterprises this year and compared with premier of 100 base points for domestic syndicated loans.
Loans extended by the OBU of Mega Bank have grown 10% over last year’s level, an exceptional performance compared with the sluggish domestic syndicated-loan market. According to the statistics of the Financial Supervisory Commission (FSC), the OBU of Mega Bank had raked in pretax profits of NT$6.047 billion as of the end of September, 150% of the amount for entire 2011.
Mega Bank expressed that priority of the bank’s lending policy is to seek higher interest spread, rather than the amount of loans. The extension of loans in the form of financial lease is conducive to the increase of premium for interest rates.
In the first three quarters this year, the OBU and overseas branches of Mega Bank raked in profits of NT$6.047 billion and NT$3.463 billion, respectively. The combined profits in the first 10 months had topped NT$10 billion, according to the internal calculation of the bank.
