Citic Ka Wah Bank, which assumed its new name yesterday, surprised the market by disclosing non-performing loans reached $1.54 billion or 7.47 per cent of its loan portfolio last month.
The abnormally high level forced the bank to increase provisions from last year's $49.5 million to $139.6 million, which reduced its attributable profit for the first half by 28.65 per cent to $191.4 million.
In terms of absolute provisions made, specific provisions increased 225.81 per cent year-on-year to $595.8 million, while general provisions declined 52.66 per cent to $208.34 million.
The decline in general provisions reflected the bank's change in its general provisions coverage ratio to 1.03 per cent of its loans from last year's 2.38 per cent.
Chief executive Cai Zhong-zhi said a majority of the $1.54 billion came from credits for use in the mainland.
Mr Cai, appointed to the position on March 18, said the banks' former management, led by the former honorary chairman Jin De-qin, recently arrested for alleged commercial crimes, must take responsibility for the creation of the bad-debt situation.
