Shin Kong Financial Holding Co (
Shin Kong Financial, the nation's eighth-largest financial service provider by assets, posted NT$2.85 billion (US$87.5 million) in losses last month, or NT$0.57 per share, after its two units wrote off NT$5.04 billion in Cosmos debt holdings and in the CBOs issued by E.Sun Bank (
Following the write-off, the company posted a NT$7.28 billion net profit in the first nine months of the year, or NT$1.48 per share. The company posted a net profit of NT$10.1 billion in the first eight months and NT$8.79 billion in the first nine months of last year.
Shares of Shin Kong Financial dropped NT$0.1, or 0.31 percent, to close at NT$31.8 on Tuesday. The local financial markets were closed yesterday for the Double Ten National Day.
Shin Kong's share price has declined 25.9 percent from this year's high of NT$42.9 on July 24. It has fallen 9.5 percent since the beginning of the year, the stock exchange's statistics showed.
In its filing to the stock exchange, Shin Kong Financial said its life insurance unit, Shin Kong Life Insurance Co (新光人壽), booked a loss of NT$1.03 billion on NT$2.49 billion in CBOs issued by E.Sun Bank.
The insurer said it expected the CBOs, though not directly linked to US subprime mortgages, to see a recovery by the end of the year as the US credit crunch stablizes.
Shin Kong Financial isn't the only financial holding firm to report losses on structured securities investment as a result of the US credit problem.
Fubon Financial Holding Co (富邦金控), the nation's second-largest financial services company by market value, on Tuesday also reported a loss of NT$2.5 billion in CBO investment last month.
Shin Kong Financial's decision to write off its investment loss in cash-strapped Cosmos, the nation's largest cash card issuer, was the main reason for the contraction in its nine-month profit figure from the first eight months of the year and the decline year-on-year.
The company's banking unit, Shin Kong Bank (
Shin Kong Bank first signed a memorandum of understanding with Cosmos on Sept. 7 over the debt-to-equity conversion scheme as part of Cosmos' plans to improve its financial structure.
Shin Kong Life Insurance, meanwhile, also agreed on Tuesday to write off NT$406 million when converting NT$700 million in subordinate debts in Cosmos into NT$232 million in common shares. It also reported an impairment loss of NT$1.79 billion on 106.3 million shares it owns in Cosmos, it said.
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