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Shinkong Financial Holding profits jump 19 percent

Shinkong Financial Holding Co (新光金控), the nation's seventh-largest financial service group in terms of assets, posted a 19 percent jump in first-quarter profits with subsidiary Shinkong Life Insurance Co (新光人壽) as the major contributor, company executives said yesterday.

Shinkong Financial's unaudited after-tax profits for the first three months stood at NT$2.97 billion (US$94 million), up from NT$2.49 billion a year ago. Its earnings per share was NT$0.99, said Hsu Shun-yun (徐順鋆), manager of the company's accounting department.

Shinkong shares slid NT$0.80, or 2.56 percent, to close at NT$30.40 on the Taiwan Stock Exchange yesterday. The investors conference was held after the stock market closed.

The company's cash cow, Shinkong Life Insurance, raked in net income of NT$2.99 billion on revenues of NT$58.83 billion in the first quarter, while its banking unit Shinkong Commercial Bank (新光銀行) posted losses due to investments on promoting credit cards and writing off bad loans, Hsu said.

Shinkong Bank was renamed from United-Credit Commercial Bank (聯信銀行) after Shinkong Financial acquired it in September last year. The Taichung-based lender currently has 29 branches nationwide, but its parent company is looking for a middle-sized local lender for merger deals to help expand its market reach, Shinkong Financial spokesman Victor Hsu (許澎) said.

Citing the ideal merger targets outlined by chairman Eugene Wu (吳東進), Victor Hsu said they are targeting those running 50 to 70 branches with most locations in the north to complement Shinkong Bank's operations.

This way, the bank's number of outlets would jump nearly three-fold to between 80 and 100 branches to take a firm stand amid fierce competition, Victor Hsu added.

With these qualities combined, International Bank of Taipei (IBT, 台北商銀), which owns 83 branches throughout the nation, appears to be the financial holding company's perfect target, as the market has long speculated.

However, the spokesman said that any banks with good performance and favorable earnings per share would be possible merger targets.

On the other hand, Shinkong Life Insurance is aggressive in seeking partners in China in the hopes of setting up a life insurance company within a year, Victor Hsu said.

The nation's largest life insurer Cathay Life Insurance Co (國泰人壽), a flagship under Cathay Financial Holding Co (國泰金控), has made inroads into China in January this year. Its joint venture with China's state-run China Eastern Airlines Corp (東方航空) makes it Taiwan's first life insurer to start operations there.

Victor Hsu said the company now has targeted one large-scale Chinese company for further discussions, but he cannot tell when the venture deal will be finalized, as a consensus on details is needed. Exactly how to allocate operation rights and deal with share options after the venture would need to be ironed out.

The Chinese company they are will seek to acquire more locations, which will be conducive to selling insurance products after the 50-50 joint venture worth 800 million yuan is accomplished, Hsu said.
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