U.S. remains largest debtor to Taiwan's financial holding firms

Taipei, Aug. 5 (CNA) The United States remained the largest debtor of Taiwan's financial holding companies at the end of the second quarter of 2024 as those companies continued to invest in and extend loans to the U.S. market.

Taiwanese financial holding companies' exposure to the U.S. hit NT$9.84 trillion (US$300 billion) at the end of June, up NT$235.16 billion from the end of March, according to data from the Financial Supervisory Commission (FSC), Taiwan's top financial regulator.

The increase in exposure largely reflected growth in loans and investments as Taiwanese financial institutions were keen to put money in the U.S. amid a boom in equities and the appreciation of the U.S. dollar against the Taiwan dollar, the FSC said in a statement.

Improving loan quality and a decline in non-performing loan ratios also boosted the value of assets held by these financial institutions in the U.S. market, according to the FSC.

An anonymous FSC official was quoted by local media as saying that the U.S. market has been the top investment destination of foreign countries, and that Taiwanese financial holding companies have tended to allocate large amounts of funds to U.S. treasury bills.

At the end of the second quarter, the aggregate international claims of Taiwan's financial holding sector rose NT$647.45 billion from a quarter earlier to NT$28.02 trillion, the most since the FSC started quarterly tallies in the second quarter of 2015.

As of the end of June, the U.S. accounted for 35.1 percent of the total, according to the FSC.

Exposure to China was second highest at about NT$2.22 trillion at the end of June, up NT$8.78 billion from a quarter earlier.

That was about 7.9 percent of financial holding companies' total international exposure, the first time the figure ended up below 8 percent since the tallies began, FSC data indicated.

In the second quarter of 2015, the ratio was 24.63 percent, but Taiwan's financial holding companies have diversified their investments to other markets since then.

The United Kingdom was the third largest debtor of Taiwanese financial holding companies, with those companies' exposure to that market more than NT$1.3 trillion at the end of June, ahead of France (almost NT$1.3 trillion), Australia (NT$1.2 trillion), South Korea (NT$1.1 trillion) and Hong Kong (NT$1.02 trillion).

Next on the list was Japan, with exposure of NT$992.23 billion.

That was up NT$4.60 billion from the previous quarter, as local banks followed their clients in the semiconductor industry into the Japanese to support Taiwan Semiconductor Manufacturing Co.'s building of two advanced wafer fabs in Kumamoto.

At the end of June, the exposure of Taiwan's financial holding companies to the domestic market totaled nearly NT$4.47 trillion, accounting for 61.4 percent of their total exposure, the FSC said.