Cathay Financial announces income of NT$4.79 billion

Cathay Financial Holding Co's (國泰金控) first-quarter net income reached NT$4.79 billion (US$152 million) on revenues of NT$5.19 billion, the nation's largest provider of financial services said in a statement it filed to the Taiwan Stock Exchange yesterday.

Following a board meeting yesterday morning, Cathay Financial announced earnings per share of NT$0.57 for the first quarter.

The board also passed a decision to issue a dividend of NT$2.50 per share. The financial holding company is expected to hold an investors conference on Monday to provide more detailed information.

On April 10, the company reported that its unaudited after-tax profit declined to NT$4.75 billion, a 61 percent decline from a year ago, as slowing economic growth eroded investment returns.

Separately, Cathay Financial said it is highly interested in bidding for stakes in state-controlled banks, as they can complement its banking arm's business operations.

The ideal target for a merger, according to Cathay Financial chairman Tsai Hong-tu (蔡宏圖), would be a large-sized financial institution, which will not have too much impact on the company's return on equity after the merger.

As its subsidiary Cathay United Bank (國泰世華銀行), the nation's third-largest credit-card issuer, is geared toward consumer finance, Tsai said state-controlled banks with a focus on corporate finance would greatly benefit its banking arm.

Cathay Financial's list for evaluation includes the three popular targets which other private financial holding companies are also eager to buy into: First Commercial Bank (第一銀行), Hua Nan Commercial Bank (華南銀行) and Chang Hwa Bank (彰化銀行).

The Land Bank of Taiwan (土地銀行) and Taiwan Cooperative Bank (合作金庫) are also possible targets, considering their low NPL ratios and strong housing mortgage businesses, Tsai said.

But he stressed that he has not contacted any of these banks about possible merger talks and that such a merger deal is not likely to take place this year.

Tsai said that since Taiwan's real property prices will not have much room to grow in the future, Cathay Financial also plans to issue its first real-estate investment trust in the latter half of this year to lure over NT$10 billion.