State-run financial service providers took hard hits from loan defaults by Ching Fu Shipbuilding Co (慶富造船) and TransAsia Airways Corp (復興航空), with profits falling by as much as 50 percent last month, filings with the Taiwan Stock Exchange showed.
Kaohsiung-based Ching Fu had taken out a NT$20.5 billion (US$683.5 million) syndicated loan from state-run lenders, most of which have written down losses in the past two months to improve asset quality.
Mega Financial Holding Co (兆豐金控) reported NT$1.15 billion in net income for last month, its lowest this year and a 30 percent retreat from October, as provision costs totaled NT$1.4 billion, with NT$890 million caused by Ching Fu and NT$400 million by TransAsia, Mega Financial said in a statement earlier this week.
TransAsia has yet to find buyers for all of its aircraft after halting operations more than a year ago, Mega Financial said, adding that extra write-offs were required of creditor banks due to accounting rules.
Mega Financial said its main source of income, Mega International Commercial Bank (兆豐銀行), would have to set aside another NT$300 million for Ching Fu and an extra NT$400 million for TransAsia this month.
While Mega Bank did not participate in the NT$20.5 billion syndicated loan to Ching Fu, it lent money to the cash-strapped shipbuilder on its own.
Taiwan Cooperative Financial Holding Co (合庫金控) said in a filing that it posted NT$801 million in net income for last month, a 35 percent decrease from October, after provision costs increased fourfold to NT$708 million.
Its lending subsidiary, Taiwan Cooperative Bank (合庫銀行), indicated that it might have to further write down losses this month after TransAsia secured buyers for two aircraft, but at prices less than its collateral.
Hua Nan Financial Holding Co (華南金控) reported that profit last month plunged 50 percent month-on-month to NT$568 million due to swelling provision costs.
Provision costs last month amounted to NT$1.24 billion at its flagship unit, Hua Nan Commercial Bank (華南銀航), with Ching Fu and TransAsia accounting for the bulk, the conglomerate said.
First Financial Holding Co (第一金控) reported NT$855 million in net income last month, a plunge of 24.2 percent month-on-month, a filing showed.
Banking arm First Commercial Bank (第一銀行) last month wrote off NT$700 million due to Ching Fu, after setting aside a similar amount in October.
As the lender has a total exposure of NT$4.55 billion to Ching Fu, it needs to write down more this month if it aims to start anew next year.
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