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Financial companies' profits surge

Mega Financial Holding Co (兆豐金控), the nation's second-largest financial services provider, Fubon Financial Holding Co (富邦金控) and Chinatrust Financial Holding Co (中信金控) said first-quarter profit surged as lending expanded.

Mega's profit almost doubled to NT$5.41 billion (US$162 million), or NT.055 a share, in the three months to March 31 from NT$2.77 billion, or NT$0.28 a share, a year earlier.

Cheap borrowing costs and accelerating economic growth are making Taiwanese people more inclined to spend. The government expects consumer spending to increase 2.9 percent this year after rising 0.8 percent last year.

"We will see strong growth in banks' consumer and cooperate loans this year, thanks to the pickup in the economy," said Kenny Lu, a fund manager at AIG Securities Investment & Trust Co in Taipei.

Fubon Financial, the No. 5 financial company, said net income rose almost one-third to NT$4.84 billion, or NT$0.65 a share, from NT$3.73 billion, or NT$0.51 a share. Chinatrust Financial's profit rose 29 percent to NT$4.54 billion, or NT$0.82 a share, from NT$3.53 billion, or NT$0.77 a share.

Bank lending in March rose at its fastest monthly rate in 69 months as record-low interest rates encouraged companies to tap credit lines to fund expansion. Total lending by the island's financial institutions rose 8.2 percent in March from a year earlier to NT$14.5 trillion.

"Consumer lending would lead profit growth at Taiwan banks given the margins are better" than those on corporate loans, said Tess Wang, an analyst at Yuanta Core Pacific Securities Co (元大京華證券). "It should be a fabulous year for Taiwan banks."

Mega's first-quarter profit represents more than a quarter of its 2004 profit forecast of NT$21.9 billion.

Fubon Financial, which is about a 10th owned by Citigroup Inc, on March 12 said it expected profit this year to rise 14 percent to NT$16 billion. The first-quarter profit represents about one-third of its target.

Chinatrust Financial, which is more than half-owned by foreign investors, said the first-quarter profit represents more than a fifth of the target. Its Chinatrust Commercial Bank (中國信託) banking arm, Taiwan's largest credit card issuer, now runs 101 branches and more than 2,500 automated teller machines nationwide after it absorbed Grand Commercial Bank (萬通銀行) in December.

Shares of Mega Financial were unchanged at NT$22.3, Fubon Financial fell 5.4 percent to NT$31.7 and Chinatrust Financial dropped 3.5 percent to NT$35.7.
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