The profitability of Cathay Financial Holding Co (
For the first half of this year, Cathay Financial generated earnings of NT$9.1 billion (US$278 million), or NT$1.07 per share, down 15 percent from NT$10.6 billion, or NT$1.27 per share, a year ago.
The decline was a result of the increased provision expenses of banking arm Cathay United Bank (
Cathay Financial outperformed its rivals in profitability over the same period, compared with the net loss of NT$0.44 per share of Chinatrust Financial Holding Co (
However, the performance of the company looked less impressive in comparison with its immediate, smaller competitor Shin Kong Financial Holding Co (新光金控), which generated earnings of NT$1.32 per share.
"Looking ahead, we expect our second-half profits to greatly improve compared to the first half," Cathay Financial's spokesman Lee Chang-ken (
Provisioning costs would decrease as the impact of the consumer bad loans issue ebbs away, Lee said, adding that the scale is yet to be determined.
Meanwhile, Cathay Financial would reap NT$4.4 billion of cash dividends in the current quarter coming from its NT$121.8 billion of domestic stock investment.
That accounted for 6.6 percent of its NT$1.84 trillion of investment portfolios as of the end of June, according to the executive.
The company also anticipated an additional NT$4 billion of income from its second batch of real estate investment trust (REIT) products.
This could be worth NT$8 billion and will be rolled out by its flagship unit Cathay Life Insurance Corp (國泰人壽), the nation's largest life insurer, in the October-December quarter, he added.
The seemingly rosy outlook appeared well-received by market watchers, with SinoPac Securities Corp's (
"Cathay Financial's fundamentals are reviving as consumer bad loans are easing off," Chu said.
The provision expenses could fall to between NT$5 billion and NT$7 billion in the second half, Chu forecasted.
She expected the company to create earnings of NT$16 billion, inclusive of the above-mentioned capital gains, bringing its annual profits to around NT$25 billion this year.
SinoPac Securities had a target price of NT$72 for the financial group.
Cathay Financial closed up 0.59 percent at NT$68.30 on the Taiwan Stock Exchange yesterday.