FSC closely monitors growing personal loans amid equity boom

Taipei, June 24 (CNA) The Financial Supervisory Commission (FSC), Taiwan's top financial regulator, is closely watching expanding personal credit as more and more retail investors borrow money to invest in the stock market and tap the current equity boom.

Speaking with reporters, Ku Kun-jung (古坤榮), deputy director of the FSC's Financial Examination Bureau, said Tuesday the bureau conducts regular reviews of the local banking sector and will continue monitoring lending activity.

Ku's comments came at a time when concerns have been raised over possible risks caused by retail investors using personal loans to buy stocks, and the fact that once the stock market faces volatility, borrowers could fail to repay their loans, pushing up the number of non-performing loans shouldered by banks.

Citing the latest review data, Ku said despite an increase in personal credit, the local system remains sound with no irregularities found.

According to the FSC, non-performing loans in the local banking sector totaled NT$68.49 billion (US$2.16 billion) as of April, down NT$395 million from a month earlier, with a NPL ratio of 0.15 percent, little changed from March but down 0.01 percentage points from a year earlier.

After rising 25.73 percent in 2025, the Taiex, the Taiwan Stock Exchange's benchmark index, has surged an additional 59 percent this year amid the AI frenzy.

A high-flying stock market has prompted many individual investors to enter the market, using borrowed money.

There is a commonly cited phenomenon of "four loans under one roof," that suggests many small investors have secured home mortgages, credit without collateral, car loans and stock margin loans and used those to make equity investments.

These individual investors rushed to place their borrowed funds on the stock market to chase prices out of a "fear of missing out," market analysts said.

Since the local financial crisis of 2005-2006, when banks scrambled to issue credit cards and debit cards, which led many individuals to borrow heavily but fail to repay their loans, the FSC has imposed a debt burden ratio (DBR). As a result, banks are prohibited from extending unsecured loans exceeding 22 times a borrower's average monthly income, Ku said.

As long as banks observe the DBR requirements, their risks will be controllable, he added.

Echoing Ku, Wang Yun-chung (王允中), deputy director of the FSC's Banking Bureau, said in addition to the DBR requirements, if banks find the borrowed money is used for purposes they and their borrowers have not agreed on, the bank can require borrowers to repay the loans ahead of schedule.

Compared with a year earlier, home mortgages grew NT$483.0 billion in May, with car loans up NT$17.5 billion and credit without collateral up NT$75.8 billion, with the growth largely reflecting improving economic fundamentals and no irregularities have been found, Wang noted.

The FSC will continue to review loan quality in the local banking system and urges banks to manage risks in lending, to maintain the stability of the financial market, he added.