Chinatrust posts new loss

Chinatrust Financial Holding Co (中信金控), under government investigation for misuse of funds, had a third straight quarterly loss in the fourth quarter after setting aside more money to cover bad loans.

The net loss for the quarter was NT$7.76 billion (US$237 million), compared with a profit of NT$2.06 billion a year earlier.

The fourth-quarter loss was derived by subtracting nine-month numbers from full-year figures released by the Taipei-based financial services company in a statement today.

Chinatrust Financial Holding Co which owns Taiwan's largest credit-card issuer, is making provisions to cope with rising debt defaults.

Banks in Taiwan more than doubled write-offs related to bad loans in the first 11 months of last year, according to the financial regulator.

The company boosted bad loan provisions to NT$48.13 billion last year from NT$13.17 billion a year earlier, it said today.

Before the provisions, Chinatrust's pretax profit last year was NT$31 billion.

The company has also been stung by a government probe into whether it misused funds in purchasing a stake in Mega Financial Holding Co (兆豐金控), a deal that would make it Taiwan's second-largest financial group.

The investigation has hindered Chinatrust's overseas expansion, Charles Lo (羅聯福), head of the banking arm, said on Oct. 25.

A month later, vice chairman Jeffrey Koo Jr (辜仲諒) resigned after prosecutors issued a warrant for his arrest and was put on the most-wanted list on Dec. 4 after he didn't report to police.

Written off

Taiwanese credit-card issuers wrote off NT$108.3 billion in soured loans in the first 11 months of last year, up from NT$41.6 billion a year earlier, the Financial Supervisory Commission said last month.

Chinatrust president James Sheu (許建基) said in October that the company, which had an audited net loss of NT$2.41 billion in the first nine months of last year, aimed to break even in the fourth quarter and this year. Bad-loan provisions have peaked, he said at the time.

Separately, Cathay Financial Holding Co (國泰金控), the nation's biggest financial services company by assets, posted a 62 percent narrowing in fourth-quarter net loss after cutting its provisions for bad loans from a year earlier.

Fourth-quarter loss at the Taipei-based company, which owns Taiwan's largest life insurer, was NT$2.11 billion, compared with a loss of NT$5.5 billion a year ago.

Cathay United Bank

Banking arm Cathay United Bank (國泰世華銀行) said last month it would set aside NT$7.3 billion in the fourth quarter to cover bad loans. In the fourth quarter of 2005 the banking unit set aside NT$9 billion to cover possible losses in consumer banking.

January-December profit was NT$10.96 billion, based on unaudited figures, compared with NT$21.8 billion in 2005.

The company must release a full and audited report by the end of April.

Today it provided only an income figure with no explanations.

Fubon Financial Holding Co (富邦金控), the nation's third-largest financial services company by market value, posted a fourth-quarter profit after a loss a year earlier on smaller provisions for bad loans.

Net income at the Taipei-based company, which owns the nation's largest non-life insurer, was NT$2.59 billion, compared with a loss of NT$1.96 billion in 2005 when banking unit Taipei Fubon Bank (台北富邦銀行) set aside an additional NT$5 billion for bad loans.