02.27.2001
Ta Chong Bank and Ta Chong Bills Finance to merge

• Ta Chong Bank (2847 'Da Zhong Yin') and Ta Chong Bills Finance Co. (unlisted) will today pass a resolution permitting a merger of the two entities. Ta Chong's total share capital will increase to NT$16.5b from NT$13.6b.

• Ta Chong is targeting share capital of NT$30b by end-2003 and NT$50b by end-2004. The merger with Ta Chong Bills Finance is the first step in achieving its aggressive target.

• The bank wrote off NT$2.2b in bad loans last year, bringing its overdue loans ratio down to 4.2%. It has a conservative 2001 EBT forecast of only NT$500m, reflecting the bank's large provisions for bad debt in coming years. We believe the bank is of average quality and expect its overdue loans ratio to improve only slightly this year. Any further provisions and debt write-offs will suppress earnings growth.

WilliamFong@Primasia.com +886-[0]2-2547-8864