SinoPac Financial Holdings Co (永豐金控) yesterday reported net income of NT$710 million (US$22.66 million) for last month, down 20.04 percent annually after it wrote off NT$300 million in bad debt.
The write-off was for a NT$400 million loan to dentistry supply-focused Ting Shing Trading Co Ltd (鼎興企業), SinoPac said.
The loan was part of NT$3.1 billion in uncollateralized loans among 13 domestic banks, SinoPac added.
SinoPac is also at risk of breaching the Banking Act (銀行法), as Ting Shing is operated by the son of a nephew of SinoPac Financial chairman Ho Shou-chuan (何壽川), company president Yu Kuo-chih (游國治) said.
The act prohibits banks from lending to parties that present a conflict of interest.
Yu said the company would improve its internal controls after it reported the oversight to the Financial Supervisory Commission.
SinoPac Financial’s second-quarter net income dropped 19.3 percent quarter-on-quarter to NT$280 million, with earnings per share of NT$0.17.
Barring the write-off, earnings recovery is set to recover from the first half amid inclement macroeconomic conditions in Taiwan and around the globe, the company said.
Bank SinoPac (永豐銀行), the flagship of the bank-focused conglomerate, saw its non-performing loan ratio during the April-to-June period worsen to 0.33 percent, compared with 0.21 percent a year earlier.
Bank SinoPac president Michael Chang (張晉源) said that the company’s lending exposure would inevitably continue rising in China as it implements sweeping reforms aimed at curbing excessive leverage utilization and production capacity.
“We expect a chain reaction of loan defaults. Setbacks by a single company would likely spread to others in the sector across all levels of the supply chain,” Chang said.
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