FCB erased near NT$30 billion in bad loans in November

Dec 10, 2003 Ι Industry In-Focus Ι Furniture Ι By Judy, CENS
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Taipei, Dec. 10, 2003 (CENS)--First Commercial Bank (FCB) wrote off as much as NT$29.7 billion (US$873.56 million at US$1 = NT$34) in non-performing loans (NPLs) in November, which is expected to help the bank lower its NPL ratio to 2% from 3.95% recorded a month earlier.

The move will make FCB boast the best asset quality among Taiwan's seven leading domestic banks, including Bank of Taiwan, Taiwan Cooperative Bank, Land Bank of Taiwan, Taiwan Business Bank, Hua Nan Commercial Bank and Chang Hwa Commercial Bank.

Far behind First Bank, Land Bank of Taiwan wrote off NT$2.975 billion (US$87.5 million) worth of NPLs in November, followed by Chang Hwa Bank with NT$1.634 billion (US$48.1 million), Hua Nan Bank NT$1.215 billion (US$35.74 million), Taiwan Cooperative Bank NT$902 million (US$26.53 million), Bank of Taiwan NT$694 million (US$20.4 million) and Taiwan Business Bank NT$71 million (US$2.1 million).

The seven banks together scrapped a total of NT$104.712 billion (US$3.08 billion) in NPLs in the first 11 months of the year.

A raking FCB executive said the FCB decided to write off a total of NT$39.5 billion (US$1.16 billion) in NPLs this year to improve the quality of its assets. During the first eleven months of the year, FCB erased bad loans totaling NT$38.17 billion (US$1.12 billion), still NT$1.4 billion (US$41.18 million) short of its full-year target.

The executive said FCB would continue to write off bad loans this month, hoping to further lower the NPL ratio to 1.5% by the end of the year and reduce the broad NPL ratio to below 2.5% or near the target of 2.12%.

While massively writing off NPLs in November, FCB unexpectedly received growing repayments from the clients that are to be included in the "NPL club." The bank executive said these clients are afraid of being placed on the "black list" of poor- credit accounts, and rushed to repay their overdue loans to the bank.
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