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Hua Nan Financial, Chang Hwa post losses for first half

Hua Nan Financial Holdings Co (華南金控), owner of Taiwan's fifth-largest lender, and Chang Hwa Commercial Bank (彰化銀行), the sixth-largest, posted net losses for the first half after accelerating write-offs of bad loans.

First Commercial Bank (第一銀行), the biggest publicly traded lender by assets, reported a pretax loss.

Hua Nan, Chang Hwa and First Commercial are among lenders forecasting losses this year as Taiwan deregulates its financial industry and spurs a cleanup of bad loans. Almost 12 percent of bank loans, or NT$1.68 trillion (US$50 billion), was nonperforming or in danger of default in March, according to the central bank.

"It's good that they are writing off the bad loans as it helps to increase transparency and may allow them to post better earnings next year," said Steven Chu, who manages NT$2.7 billion of global equities at ING CHB Securities & Investment Trust Co.

"The share prices have risen to reflect that."

Hua Nan and Chang Hwa shares have climbed 25 percent and 19 percent respectively this year, compared with a 3.1 percent decline in the benchmark index. First Commercial shares have gained 7.4 percent in the same period.

Hua Nan Financial had a net loss of NT$30.3 billion for the first half, according to a faxed statement that didn't provide a year-earlier figure. The company started trading as a financial holding company on Dec. 19 after delisting Hua Nan Commercial Bank (華南銀行) and taking over Entrust Securities Co (永昌證券).

Chang Hwa posted a six-month net loss of NT$18.8 billion after setting aside NT$24.3 billion to cover bad loans. It has written off NT$25.7 billion of overdue loans, it said in a statement. The bank had net income of NT$989.3 million in last year's first half.

First Commercial, which last month sold NT$11 billion of bad loans, reported a pretax loss of NT$17.97 billion. It had a pretax profit of NT$2.3 billion last year.

Companies are resorting to bond sales, making it harder for lenders to achieve profits.
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