Chinatrust Commercial Bank (中國信託銀行), the commercial banking arm of Taiwan's sixth-biggest financial services company, said it sold bad loans with a face value of NT$2.5 billion (US$75.3 million) to its affiliate asset manager.
Chinatrust Commercial's bad loan ratio fell to 2.42 percent after today's sale, according to international accounting standards, said Perry Chang (張明田), the financial controller at parent Chinatrust Financial Holding Co (中信金控). That's down from 3 percent of total lending on Jan. 27. Chang didn't say how much the bank received for the bad loans.
``The bank's profitability will not be affected, as full provisions were made previously,'' Chang said.
On Feb. 20, Chinatrust Financial said it expected this year's pretax profit to rise to NT$22 billion after writing off NT$1.5 billion in goodwill for Grand Commercial Bank (萬通銀行).
Chinatrust Financial bought Grand Commercial Bank last year, completing the merging of the acquisition's computer systems with its own commercial bank's systems at the end of January.
Domestic lenders' bad-loan ratio fell to 6.08 percent as of Dec. 31 last year, from 7.87 percent at the end of September, after banks accelerated write-offs of troubled loans, according to the central bank. The ratio hit a peak of 11.53 percent in 2001.
"If domestic lenders can further dispose of bad loans of NT$158.7 billion, or 1.09 percent, this year, the 5 percent goal earmarked by the government can easily be reached," according to Cliff So (
While the country's financial sector had become healthier after the aggressive write-off of non-performing loans in the past three years, there was room for improvement with the bad-loan problem and financial transparency, international ratings agency Standard & Poor's (S&P) said earlier last week.
S&P said the country still faced many challenges and estimated that the nation's bad-loan ratio may decline to between 5 percent and 7 percent by the year's end.
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