08.28.2001
Fitch downgrades long-term outlook for 2 banks

• Development: Fitch downgraded its long term outlook for First Commercial Bank and Hua Nan Commercial from A- to BBB+, reflecting a poor economy. The rating firm suggested that NPL ratios might rise to 12-13% by year-end.

• Analysis: Although both banks began to aggressively write-off bad debts since end 2000, overdue loan ratios have still climbed. In 1H01, NPL ratios for First Commercial increased to 7.73% and Hua Nan’s ratio enlarged to 7.12%.

• Primasia View: We believe the overdue loan ratio for both banks will continue to rise in the coming quarter, especially since loan demand is sluggish.