The Banker's Taiwanese bank ranking shows that despite a sluggish economy, low interest rates and a fiercely competitive market, the average Top 25 bank increased its Tier 1 capital by 22.4%.
Taiwan's two largest banks, Bank of Taiwan (ranked in first place) and Mega International Commercial Bank (second), saw little change in Tier 1 capital. Bank of Taiwan's Tier 1 capital dropped 2% in US dollar terms to $5.08bn and Mega International Commercial Bank increased its Tier 1 capital by 1.9% to $4.37bn.
The big mover in the ranking was Chinatrust Commercial Bank, Taiwan's biggest credit card issuer, which took third place after a 67.4% increase in Tier 1 capital to $3.54bn. Other rapid climbers in the ranking included Shanghai Commercial & Savings Bank (up five places to seventh) and Standard Chartered Bank (Taiwan) (up six places to 16th).
Standard Chartered Bank more than doubled the size of its Tier 1 capital with a 127.7% increase, the largest percentage capital increase of any bank in this year's ranking.
Citibank Taiwan* (24th) is one of the Top 25's two new entrants, alongside Taichung Commercial Bank, which entered at 25th position having increased its Tier 1 capital by 93.6% in 2008 to $490m.
However, 2008 was generally a disappointing year for the Taiwanese banking sector. The average bank in the Top 25 registered only a slight annual increase in pre-tax profits of 1.5%. Meanwhile, the average Top 25 return on capital (this year's pre-tax profits divided by the bank's average Tier 1 capital over the past two years) was just 3.96%.
Bright lights
In a year when profits were generally subdued, Chinatrust Commercial Bank stood out with pre-tax profits of $440m. The bank also registered the Top 25's highest annual return on assets at 0.9% and the highest return on average capital of 15.58%. In July 2009, Chinatrust Commercial Bank added to its 74 existing overseas offices, opening a new regional office in Singapore. However, in August the bank's parent company, Chinatrust Financial Holding, was forced to revise its profits for the first half of 2009 downwards by 93% after it placed $124m into a provision account to compensate investors that bought structured notes, including issues from the collapsed Lehman Brothers.
Shanghai Commercial & Savings Bank also stood out in 2008, increasing its total assets by 79% to $32.8bn and moving up the ranking from 12th to seventh place. Shanghai Commercial & Savings Bank had the largest increase in total assets of any bank in the ranking, followed by Standard Chartered Bank (Taiwan) and E Sun Bank with increases in total assets of 50.4% and 32.2%, respectively. The average Top 25 bank had an annual increase in total assets of 13.5%.
E Sun Bank had the largest percentage increase in pre-tax profits, which rose 189.9% to $35m in 2008, followed by Taipei Fubon Bank, which increased its pre-tax profits by 93.4% to $242m. Land Bank of Taiwan also had a good year, increasing its pre-tax profits by 47.2% to $233m.
Taiwan Business Bank was the most cost efficient in the ranking, with a cost-to-income ratio of just 35.14% - compared with the Top 25 average of 64.51% - followed by Citibank Taiwan (at 39.47%) and Shanghai Commercial & Savings Bank (at 41.37%).
Cosmos Bank Taiwan (in which financial groups SAC Private Capital and GE Money hold major stakes) also had a good year following its recapitalisation, increasing its Tier 1 capital by 71.1% to $603m. At the end of 2008, the bank had the strongest capital-to-assets ratio in the Top 25 at 12%, up significantly from 4.69% at the end of 2007. The average bank in the Top 25 had capital equal to 5.57% of its total assets at the end of last year, up from 5.1% at the end of 2007.
* Citibank Taiwan figures are based on year-end 2007, all other figures in the ranking are for year-end 2008.
Click here to see further details of the Top 25 Taiwanese Banks