Sat, Feb 04, 2006 - Page 10 News List

Taishin unit turns group profit to loss

TURNAROUND Taishin Financial Holding Co had a NT$3 billion loss last year as its banking unit ramped up reserves to ensconce itself against bad consumer loans

By Amber Chung  /  STAFF REPORTER

Profits at Taishin Financial Holding Co (台新金控), the nation's ninth-largest financial group by assets, dipped into the red last year after its flagship banking unit nearly doubled its reserves in a bid to address the spiraling problem of bad consumer loans, the company said yesterday.

Taishin Financial incurred an estimated net loss of more than NT$3 billion (US$93.48 million) last year, or a loss of NT$0.60 per share, in a dramatic turnaround from a projected net profit of NT$11.08 billion, or NT$2.22 per share, as a result of Taishin International Bank's (台新銀行) addition of NT$19.1 billion to reserves of NT$19.8 billion.

The extra provision was made to cover potential defaulted loans expected in the credit, cash-card and unsecured loan business, Taishin Financial's president Julius Chen (陳淮舟) told a press conference yesterday.

Taishin International was the nation's second-biggest credit-card issuer with 4.88 million cards in circulation at the end of last year.

"We expect the company's profitability to return to normal levels this year after the precautionary measure," Chen said.

Taishin Financial posted unaudited net earnings of NT$1 billion last month. However, Chen declined to disclose its financial forecasts for this year.

The financial group made the announcement after its shares closed limit-up at NT$19.55 on the Taiwan Stock Exchange yesterday, as Newbridge Asia IV LP announced plans just before the Lunar New Year holiday to invest NT$27 billion in the company through a private placement with a mixture of common shares, preferred shares and convertible bonds.

The deal is expected to be finalized by the middle of next month, Taishin Financial's spokeswoman Carol Lai (賴昭吟) said.

Newbridge Asia, which is based in San Francisco, will obtain a maximum of two seats on Taishin Financial's nine-seat board and become the single largest shareholder with a 23.12 percent stake in the financial group when the preferred shares mature into common shares in three years, Lai said.

Newbridge Asia's investment was part of Taishin Financial's fundraising plan worth NT$35 billion to sustain the financial group's investment of NT$36 billion in Chang Hwa Bank (彰化銀行).

The financial holding firm declined to confirm any ongoing talks with other foreign investors for the moment to raise the remaining NT$8 billion, citing a confidentiality agreement.

Nomura Securities Co of Japan planned to invest NT$4 billion in Taiwan Financial, the Chinese-language Economic Daily reported earlier this week, without citing sources.

Meanwhile, Credit Suisse First Boston Ltd announced that it has upgraded Taishin Financial shares to "outperform" from "underperform," with the target price raised to NT$24 from NT$17, in the wake of Newbridge Asia's investment.

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