Chinatrust Financial Holding Co (中信金控), the nation’s fourth-largest financial service provider by market value, yesterday said its US-based subsidiary had set aside US$21 million to cover potential bad loans related to the housing market.
The subsidiary’s non-performing loan ratio rose to 3.82 percent from 2.89 percent at the end of last year. At the same time, its coverage ratio improved from 43.6 percent to 63.3 percent, chief financial officer Hsu Miao-chiu (�?R) told an investor conference yesterday.
“So far, we believe such bad-loan provisioning is sufficient. However, if the US property market continues to worsen in the third quarter, we may have to set aside more funds,” Hsu said.
The bank’s lending totaled US$1.974 billion, with 79.2 percent, or US$1.563 billion, consisting of mortgage-related loans that may be vulnerable to the subprime crisis, Hsu said.
In total, the parent company has set aside NT$7.27 billion (US$235.5 million) for potential bad loans, she said.
Chinatrust Financial president James Chen (陳佳文) said yesterday the company might suffer a loss of NT$30 million in the second half after Prodisc Technology Inc (仕欽) defaulted on around NT$60 million in loans.
“We did poorly regarding the loans’ credit policy, but we’re comfortable with our overall asset quality now and there’s no sign of any [unexpected] systematic risks, like the one in 2001,” he said at the conference.
Prodisc, which makes optical discs, on Tuesday said it was seeking court protection against creditors after experiencing financial difficulties as a result of a dispute with Royal Philips Electronics NV over royalties.
As more bad news could hit Chinatrust Financial in the second half, Chen said the company’s full year before-tax profits might drop from last year’s NT$17.5 billion, but dismissed speculation that the company could see a 20 percent decline in profits.
Despite troubles at its US subsidiary, Chinatrust Financial’s after-tax profits for the first half grew 8.6 percent year-on-year. Net profits in the first seven months of the year totaled NT$9.216 billion, or NT$1.02 per share.
Shares of Chinatrust Financial closed up NT$0.85 at NT$21.35 yesterday. The company’s investors’ conference was held after the local stock markets closed.
Separately, Fubon Financial Holding Co (富邦金控) yesterday reported NT$9.23 billion, or NT$1.2 per share, in after-tax profits for the first seven months the year.
First Financial Holding Co (第一金控) yesterday reported an 8.1 percent year-on-year decline to NT$7.122 billion, or NT$1.17 per share, in after-tax profits for the first seven months of the year, while Mega Financial Holding Co (兆豐金控) and China Development Financial Holding Corp (開發金控) reported NT$3.482 billion, or NT$0.31 per share, and NT$756 million, or NT$0.07 per share, in net profit respectively.
Jih Sun Financial Holding Co (日盛金控) reported NT$2.3 billion, or NT$0.88 per share, in after-tax losses in the first seven months.
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