Financial firm may raise forecast

Cathay Financial Holding Co (國泰金控), the nation's largest financial services company in terms of assets, may raise its annual profit forecast later this year if the company sees strong performance this quarter, a company executive told investors yesterday.

The company, which last month forecast profit of NT$22.7 billion (US$688 million) for this year, posted a first-quarter net income of NT$12 billion, or earnings per share (EPS) of NT$1.51, which represents an increase of 71 percent over a year before, according to a statement issued through the Taiwan Stock Exchange.

Cathay's first-quarter profit amounted to 53 percent of the company's profit goal for the year, Cathay Financial Chief Strategic Officer Lee Chang-ken (李長庚) said at an investors' meeting.

"Many have asked me if we will raise our forecast in view of our bright results," Lee said.

"My answer is: We'll make an adjustment if our business continues to grow in the second quarter."

Cathay Financial shares closed up NT$0.5 at NT$64.5 on the TAIEX.

"I think Cathay Financial will retain its leading position because of its good fundamentals," said Mike Chow (周道中), a manager with Yuanta Core Pacific Securities Corp (元大京華證券).

For the three months ended March 31, Cathay Life Insurance Co (國泰人壽), Cathay Financial's largest cash producer, posted net income of NT$6.74 billion, accounting for 56 percent of Cathay Financial's net income.

However, the largest growth in net income for Cathay Financial came from its banking unit, Cathay United Bank (國泰世華銀行), whose net income totalled NT$4.65 billion in the first quarter.

The bank's consumer banking business reported NT$294.2 billion in sales for the first quarter, up from NT$253.3 billion a year ago, while its corporate banking sector saw NT$283.9 billion in sales, which was almost unchanged.

Joseph Jao (饒世湛), chief senior executive vice president and spokesman of Cathay United, said he expects a rosier second quarter as the bank has succeeded in cutting its non-performing loan ratio from 5.6 percent to 2.4 percent. The bank plans to expand its consumer banking business, Jao said.

Perhaps as early as July a new subsidiary of Cathay Financial will begin operations -- a securities firm into which the company has pumped NT$3.5 billion. Cathay expects to see red ink of NT$11.37 million in the company's first year.