Overseas Taiwanese Banks Post Sizable Profits

Most of Taiwan's domestic banks posted promising profits last year and are confident of improving performance this year.

Last year the Bank of Taiwan's eight overseas branches raked in profits of over NT$100 million (US$3.33 million) each, with the Hong Kong branch gaining a record high of NT$800 million (US$26.67 million). This year the branches are expected to repeat or better such performance.

Likewise, Hua Nan Bank and Land Bank of Taiwan both estimate each of their overseas branches to score profits of more than NT$100 million (US$3.33 million) this year, with the former targeting profits of NT$150 million (US$5 million).

Last year each of First Bank's 10 overseas branches raked in profits of more than NT$100 million (US$3.33 million) and this year will likely repeat such results.

Insiders indicate that the major reason for such good performance by domestic banks' overseas branches is the higher profits from wider interest gaps. A senior official at Bank of Taiwan points out that overseas branches of the bank have deposit-to-loan interest gap ranging 1.2%-3.4%, higher than about 1.12% at home.

Hua Nan's overseas branches have the corresponding percentage average at 1.8%, with its London branch boasting the highest interest spread of 2.5% and the one in Hong Kong the lowest at 1.5%. Currently the bank has most of its overseas branches in China and Southeast Asia.

Interest Gap at Taiwan's Domestic Banks' Overseas Branches
City or nation	Gap (%)
China	Above 2.0
Singapore	0.9-1.4
Hong Kong	1.5-1.7
London	1.6-2.5
New York	1.95-2
Tokyo	2.0
Los Angeles	2.3
Canada	3.0
Phnom Penh (Cambodia)	10.0

Source: Taiwan's domestic banks