Bank of Overseas Chinese cuts back earnings forecast

The Bank of Overseas Chinese (華僑銀行) yesterday adjusted downward its earnings forecast for this year after writing off NT$864.9 million (US$27.6 million) worth of depreciated assets in compliance with stricter accounting measures.

The bank forecast a pre-tax net loss of NT$957 million this year, up sharply from a loss of NT$92 million predicted in October last year, according to a statement it filed to the Taiwan Stock Exchange yesterday.

"To comply with the Statements of Financial Accounting Standard 35, we decided to write off depreciated assets of about NT870 million in this fiscal year ... including more than NT$300 million from collateral and over NT$500 million from idle properties," the bank's spokesman Weng Chien (翁健) said yesterday.

The lender yesterday also trimmed off projected annual revenue for this year by NT$518 million to NT$9.4 billion. As a result, shares of the bank closed down NT$0.20, or 2.11 percent, at NT$9.30.

The Bank of Overseas Chinese became the first privatized state-controlled bank after Polaris Financial Group (寶來金融集團) increased its holding to 21 percent from 7 percent while the Cabinet's Development Fund (開發基金) reduced the stakes it held to 11.4 percent from 20 percent amid the bank's capital restructuring at the end of last year.

Mike Chang (張嵩峨) yesterday officially took the helm as the bank's president and vice chairman of the board.

Chang retired as president of Chang Hwa Bank (彰化銀行) at the end of last month.

The priorities of the Bank of Overseas Chinese this year are to reduce its default loan ratio and to raise capital while upgrading its information-technology systems and increasing organic efficiency, he said.

As of February, the bank's non-performing loan (NPL) ratio, including loans under surveillance, reached 6.5 percent, or around NT$10.2 billion worth of default loans, way above the financial authority's regulated 5 percent cap, according to the bank's figures.

"We hoped to lower the NPL ratio to 2.5 percent by the year's end or the beginning of next year ... by expanding the loan balance to NT$200 billion from the current NT$160 billion and selling bad loans," Weng said.