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    Shinkong Bank drops into the red for the first time

    By Amber Chung
    STAFF REPORTER
    Saturday, Feb 18, 2006, Page 10

    Shinkong Bank (新光銀行) dropped into the red last month, largely because of the increased amount of provisions it needed to address bad credit-card debts, the bank said yesterday.

    The bank posted its first net loss last month of NT$499 million (US$15.45 million), down from a net profit of NT$300 million a year earlier, after it decided to book another NT$750 million on top of its regular monthly provision of about NT$500 million to NT$600 million to cover the rising cost of defaulting credit-card loans.

    Shinkong Bank, which had a lending balance of NT$220.6 billion, reported a rising non-performing loan ratio of 2.42 percent last month, up slightly from 2.39 percent the previous month, and a declining coverage ratio of 46.83 percent, down from 27.04 percent over the same period.

    Revolving credit card balance accounted for about 6 percent of the total lending balance, while cash-card loans made up a minimum of 1 percent, the bank said.

    They have no clear idea how much more money needs to be spent on reserves because of the continued uncertainty over bad consumer debts, Shinkong Financial Holding Co (新光金控) spokesman Victor Hsu (許澎) said.

    The problem is expected to ease in the second half of this year, he said.
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