Chinatrust Commercial eyes foreign finance markets

Chinatrust Commercial Bank (中國信託), the nation's largest credit-card issuer, plans to expand its consumer finance business overseas this year, as it expects local growth in this segment to decline in the near future.

Hoping duplicate its successful experience at home, the bank has targeted developing nations, such as Indonesia and the Philippines -- which share similar economic growth models with Taiwan -- to develop consumer finance, a company executive said yesterday on condition of anonymity.

The bank currently operates 64 branches, subsidiaries and representative offices outside Taiwan, which play a key role in its global positioning.

Chinatrust Commercial's ambitious move is seen as a way out of white-hot domestic competition, but it would not be easy to explore these rising markets, considering the strong presence of its international counterparts, such as HSBC and Citibank, said Wang Chien-ming (王建民), an analyst at Capital Securities Corp (群益證券).

"Taiwan's consumer finance market has attained maturity, and price wars will become inevitable. Chinatrust Commercial chooses to bet on these neighboring markets, because it believes that consumer finance will take off when people's incomes rise," he said.

However, a bumpy road is expected and the bank would have to focus on serving Chinese communities and Taiwanese businesspeople in the initial stage, Wang said.

He set a target price for Chinatrust Commercial of between NT$30 and NT$35 in the coming year.

Shares Chinatrust Financial Holding Co (中信金控), the bank's parent company, gained NT$1.75 to close at NT$27.35 on the local bourse yesterday, the first trading day after the eight-day Lunar New Year break.

Chinatrust Commercial's major rival, Taishin International Bank (台新銀行), now has no plans to follow suit due to its limited number of overseas locations.

Taishin International, Taiwan's biggest cash-advance card issuer in terms of outstanding loans, has one branch in Hong Kong and one representative office in Vietnam. It is planning to set up a new location in Los Angles in the near term.

"We believe that those with the competitive edge will survive the intense competition, even though the domestic market is small. Consumer demand still exists and we'll reorganize our products and services to outpace rivals," said a high-ranking Taishin International executive who refused to be named.

Most banks were dogged by growing bad loans last year that accumulated from the two major consumer financing tools -- credit and cash cards.

The Banking Bureau's statistics showed that as of the end of last year, revolving interest on the nation's 45.49 million credit cards reached NT$494.7 billion (US$15.4 billion), with a non-performing loan ratio of 2.44 percent. The lending on a total of 3.27 million cash cards topped NT$298.45 billion at the same time.