Taipei: The Financial Supervisory Commission (FSC), Taiwan's top financial regulator, is closely watching expanding personal credit as more retail investors borrow money to invest in the stock market and tap the current equity boom. Speaking with reporters, Ku Kun-jung, deputy director of the FSC's Financial Examination Bureau, stated that the bureau conducts regular reviews of the local banking sector and will continue monitoring lending activity.
According to Focus Taiwan, 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. There is apprehension that once the stock market faces volatility, borrowers might fail to repay their loans, potentially increasing the number of non-performing loans shouldered by banks. Citing the latest review data, Ku mentioned that despite an increase in personal credit, the local system remains sound with no irregularities found.
Non-performing loans in the local banking sector amounted to NT$68.49 billion (US$2.16 billion) as of April, down NT$395 million from a month earlier, with a non-performing loan (NPL) ratio of 0.15 percent. This figure remained largely unchanged from March but was down 0.01 percentage points from a year earlier. The Taiex, Taiwan Stock Exchange's benchmark index, has seen significant growth, rising 25.73 percent in 2025 and surging an additional 59 percent this year amid the AI frenzy. This high-flying stock market has prompted many individual investors to enter the market using borrowed funds.
There is a phenomenon referred to as "four loans under one roof," suggesting that many small investors have secured home mortgages, credit without collateral, car loans, and stock margin loans to make equity investments. These investors are driven by a "fear of missing out," according to market analysts.
Since the local financial crisis of 2005-2006, when banks issued numerous credit and debit cards leading to heavy borrowing and repayment failures, the FSC has enforced a debt burden ratio (DBR). Banks are prohibited from extending unsecured loans exceeding 22 times a borrower's average monthly income. Ku emphasized that as long as banks observe the DBR requirements, their risks will remain controllable.
Wang Yun-chung, deputy director of the FSC's Banking Bureau, echoed Ku's sentiments, stating that in addition to the DBR requirements, if banks discover the borrowed money is used for unapproved purposes, they 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, reflecting improving economic fundamentals. Wang noted that no irregularities have been found.
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.