Ratings firm raises China Development Financial Holding's outlook to `positive'

The outlook on China Development Financial Holding Corp (中華開發金控), the nation's No. 13 financial group by assets, was revised to "positive" on strengthening fundamentals, Taiwan Ratings Corp (中華信評) said yesterday.

"The positive outlook reflects the expectation that the financial group's fundamentals are likely to continue to strengthen, underpinned by smooth integration between China Development Industrial Bank (中華開發工銀) and Grand Cathay Securities Corp (大華證券)," the local arm of Standard & Poor's Ratings service said.

The financial holding firm has made progress in terms of risk management and its allocation of financial and business resources, the ratings services provider said.

Meanwhile, Taiwan Ratings also upgraded outlook on the company's banking and securities units to "positive" from "stable."

However, the financial group's profitability remains more volatile than its rivals mainly because of its banking arm's venture capital focus and securities arm's reliance on the performance of capital markets, it said.

The outlook may be revised back to stable if the quality of the group's earnings deteriorates or a change in management structure disrupts the operations of the group, Taiwan Ratings warned.

The ratings service affirmed its twA+/twA-2 ratings on China Development Financial and twAA-/twA-1 ratings on China Development Industrial Bank and twA+/twA-1 ratings on Grand Cathay Securities.