Taishin Financial Holding Co (台新金控) will suspend trading of its shares on the main bourse from tomorrow until Feb. 2 as the company cuts its capital by 6.77 percent to strengthen its financial structure.
Taishin Financial will resume trading on the Taiwan Stock Exchange on Feb. 3 after completing the capital reduction, the company said in a stock exchange filing on Dec. 10.
Taishin Financial will cut the firm’s capital by NT$4.73 billion (US$148.6 million) to NT$65.15 billion.
“The purpose is to recover losses and improve financial structure,” the filing said.
Via the capital reduction, in which batches of 1,000 old shares were transferred into 932.3 new common shares, Taishin Financial will increase its book value per share by NT$0.88 to NT$13, the filing said.
Shares of the Taipei-based financial services provider closed NT$0.50, or 0.39 percent, higher at NT$12.92 on Friday.
Credit Suisse on Wednesday maintained its “outperform” rating for Taishin Financial with a target price of NT$16 per share, saying the asset quality of the firm’s banking unit was likely to remain above the industry average this year.
Taishin International Bank (台新銀行), the nation’s third-largest credit card issuer, has improved the asset quality of unsecured consumer lending following a series of sizeable write-offs between 2005 and 2008. In addition, the lender set side large precautionary provisions in late 2008 to buffer against existing non-performing loans (NPLs) and potential future delinquencies in unsecured personal loans.
Based on a company statement on Jan. 4 and the latest data gathered by the Financial Supervisory Commission, the lender’s coverage ratio rose to 220 percent at the end of last year from 177.03 percent as of Nov. 30. That meant the bank was able to allocate 220 dollars in loan-loss reserves to absorb every 1 dollar loss in NPLs as of Dec. 31, higher than the industry’s average of about 70 dollars.
Meanwhile, the bank’s NPL ratio dropped to 0.6 percent as of Dec. 31 from 0.83 percent as of Nov. 30 and was compared to an average of 1.63 percent in the industry.
BNP Paribas also last week recommended a “buy” rating on Taishin Financial with a target price of NT$14.5, saying the company is likely to see synergy effect from its newly acquired Chinfon Commercial Bank’s (慶豐銀行) credit-card operation in the second quarter at the earliest.
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