Sat, Oct 25, 2003 - Page 11 News List

Cathay Financial nears profit target

BETTER THAN EXPECTED The company said that third-quarter results show all divisions have almost hit their forecasts for the year, especially insurance and banking

By Joyce Huang  /  STAFF REPORTER

Cathay Financial Holding Corp (國泰金控), the nation's largest financial holding company, yesterday reported better-than-expected profits of NT$7.12 billion for the third quarter, compared with NT$1.13 billion a year earlier.

The Taipei-based financial conglomerate said that all of its divisions, especially its insurance and banking units, have almost hit their full-year forecast.

"We have met 99.5 percent of our profit target for this year," Cathay Financial's spokesman Lee Chang-ken (李長庚) told an investors' conference.

After-tax earnings for the first nine months of the year amounted to NT$20.9 billion, or NT$2.78 in earning per share (EPS), he said.

Cathay Life Insurance Co (國泰人壽), the nation's largest life insurer, performed the best among other subsidiaries, making NT$13.4 billion in after-tax earnings -- or 101.4 percent of its profit target for this year -- which accounted for 61.4 percent of the parent company's total earnings.

United World Chinese Commercial Bank (世華銀行), whose merger into Cathay United Bank (國泰銀行) will be completed on Monday, Lee said.

The integration of United World into the Cathay group is estimated to help contribute about NT$6.2 billion, or 29.5 percent, of the parent company's total earnings for this year.

Cathay United Bank's contribution to the total was around 6.8 percent, Lee said.

Despite of the rosier-than-expected profit performance, Cathay Financial is considering whether to revise upward its profit forecast for the year late next month or in early December, Lee said.

"We may use the fourth quar-ter's earnings to further write off the banking unit's combined bad loans, which stand at 5.3 percent including loans under observa-tion," he said.

Lee said that the company's insurance arm outperformed its banking unit as a result of the recovery in the nation's capital and property markets.

The legislature's decision in January to allow insurers to invest up to 35 percent of their assets overseas may also help Cathay Life's bottom line.

To expand consumer banking business, Joseph Jao (饒世湛), vice president of United World Chi-nese Commercial Bank, said that the financial institution plans to expand and strengthen its credit-card businesses as well as wealth management in order to reap profits.

The company will still keep its corporate banking businesses vibrant, which Lee said will lay the groundwork for its future expansion into Chinese markets.

Commenting on expansion plans, Lee said that Cathay Financial is interested in acquiring a securities arm to provide comprehensive financial services to its 9 million clients.

But the company is not so desperate as to over-pay for the merger target since a securities arm will not greatly enhance the parent company's cross-selling capabilities.

Cathay Financial's board met yesterday and approved setting up a special task force in preparation for the company's plan to branch into Vietnam and set up a liaison office in that country.

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