Fri, Aug 06, 2004 - Page 11 News List

Chinatrust's Q2 net profit drops

FINANCIAL SERVICES Management said stock market losses were behind the fall in earnings and confirmed plans to bid on Chung Shing Bank later in the year

By Jackie Lin  /  STAFF REPORTER

Chinatrust Financial Holding Co (中信金控), the nation's sixth-largest financial service provider, reported yesterday that its net profit for the second quarter fell 11.5 percent to NT$3.43 billion, with earnings per share (EPS) at NT$1.43.

First half earnings rose slightly to NT$7.97 billion, representing 46 percent of its annual forecast of NT$17.2 billion.

"We're very satisfied with the performance. And I have full confidence in our ability to reach the financial forecast for the year," Steve Chou (周榮生), the company's retail group president told an investors conference yesterday.

Chou assured investors that the company's growth momentum would continue through the latter half of the year, despite posting an investment loss in stock markets of NT$1.1 billion in the second quarter, which "is the main reason for the profit drop."

Chou hailed wealth management services as the company's most profitable unit, with profits in the first half rocketing to NT$4.9 billion, up 79 percent from a year earlier.

The wealth management unit is expected to rake in net profit of NT$3 billion by year-end, he added.

Operator of the nation's largest credit card issuer Chinatrust Commercial Bank (中國信託), Chinatrust Financial reported a 63 percent rise in fee income in the first two quarters, compared with the same period last year.

The company has also shown ambition in exploring the market for cash-advance cards by heavily investing in marketing.

"[Cash cards] will be a cash cow as the overall market will grow at a two-digit rate per year to 2007, when the market scale is expected to reach NT$400 billion," Chou said.

After joining the cash card market last year, Chinatrust had issued 530,000 cards as of the end of June, making it the nation's third-largest card issuer among 34 players.

Chinatrust FHC

* Q2 net profit: NT$3.43 billion

* Change from Q1: down 11.5 percent

* Q2 EPS: NT$1.43

* H1 earnings: NT$7.97 billion

* Full-year earnings target: NT$17.2 billion

* Percent of target achieved: 46 percent

Source: taipei times

Chou praised the company's merger with Grand Commercial Bank (萬通銀行) at the end of last year as a successful deal as fee income at its smaller lender has jumped six-fold to NT$60 million per month.

"Since we introduced Chinatrust Commercial's operation model into Grand Commercial half a year ago, it has shown marked growth," said Perry Chang (張明田), executive vice president of the Chinatrust Commercial's finance group. "We forecast total annual revenues in Grand Commercial's 43 branches will top NT$720 million and reach NT$2 billion next year."

Asked about future expansion plans, Chou said the company would focus on strengthening its banking unit and "we'll take part in bidding for Chung Shing Bank (中興銀行) later in the year."

It is too early to predict whether the company's participation in the bidding is a good move, according to Crippen Lee (李翰霖), assistant manager of the investment and research department of First Taisec Securities (一銀證券).

"The key will lie in how much money it spends to secure the deal," he said.

Lee said the company's performance in the first half of the year fell short of expectations due to stock market fluctuations but it should be able to reach its profit goal this year.

Shares of Chinatrust Financial rose NT$0.2 to close at NT$34.2 on the TAIEX yesterday.

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