Cathay Financial Holding Co (
Cathay Financial forecast profit of NT$22.7 billion (US$681 million) for this year, according to a statement issued through the Taiwan Stock Exchange Corp. The company reiterated it had unaudited profit of NT$20.6 billion last year.
"We had two profit forecast scenarios in mind: one aggressive and one conservative," said Lee Chang-ken (
"We decided to pick the conservative approach because what happened in the last few days after the election may have a negative impact on the economy and equity market," Lee said.
Cathay Financial's forecast is prudent, given "its relatively high level of investment in equities and real estate," said Simon Chao (
"The financial business is domestic-driven and would be hit harder than exporters" by political instability, he said.
Financial companies that haven't yet made their profit forecasts for this year may follow the example of Cathay Financial, Chao said.
Under government regulations, companies have to publish a new forecast if they expect profit to fall more than 20 percent short of their original forecast.
The "fundamentals of the economy will be adversely affected if the issue lingers longer," Lee said.
Goldman Sachs Group Inc on Monday downgraded its investment recommendations on some Taiwanese banks, including Chinatrust Financial Holding Co (
"We believe that the financial sector, given its domestic demand focus and traditional political sensitivity, could get hit harder than the overall market," Goldman said in a research report.
The nation's economy grew 5.2 percent in the fourth quarter, its biggest gain in a year.
For the nine months ended Sept. 30, Cathay Financial had net income of NT$20.9 billion, 61.4 percent of it coming from its life insurance unit, Cathay Life Insurance Co (
As Taiwan's largest life insurer, Cathay Life had total assets of NT$1.39 trillion at the end of September and had 61 percent invested domestically.
Fubon Financial Holding Co (
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