Union Bank to write off NT$5 billion

Union Bank of Taiwan (聯邦銀行), the nation's fourth-largest credit card issuer, plans to write off NT$5 billion (US$154.06 million) this year in a bid to combat mounting bad credit and cash card bad debts, the bank said yesterday.

"We will make an extra provision of NT$4 billion to cover potential credit card defaulted loans and another NT$900 million for cash card bad debts this year," Union Bank's president Lee Shian-chang (李憲章) said at a media gathering yesterday.

The move is expected to reduce the bank's credit card bad loan ratio to 2.5 percent this year, down from 2.95 percent at the end of last year, according to the bank.

The bank's profitability will stabilize this year if the consumer bad debts issue eases off in the first half of this year, Lee said.

Union Bank went into the red with a net loss of NT$3.3 billion last year, down from profits of more than NT$2 billion previously, after an extra large write-off of nearly NT$6 billion of credit and cash card bad loans.

Union Bank, which has 2.94 million credit cards in circulation, said it will not be giving up the high-yield business.

The bank has taken over the issuance of the Carrefour co-brand card from the French Cetelem bank, the retail banking arm of BNP Paribas group, which quit the Taiwan market late last year.

It plans to launch the new hypermarket co-brand card on April 22, said Celia Chu (朱郁青), chief executive officer of Union Bank's credit card group.

To date the co-brand card has enjoyed a respectable client base of around 300,000 cardholders, Chu added.

Meanwhile, the bank planned to refocus on the secured housing loans business and expected to see a 20 percent growth in the lending balance to NT$108 billion this year, Union Bank's housing mortgage manager Hsia Kuo-hsien (夏國賢) said.