Financial firms report mixed earnings results

The nation's financial holding companies reported mixed first-quarter results, with Cathay Financial Holding Co (國泰金控) and Mega Financial Holding Co (兆豐金控) posting increases while Taishin Financial Holding Co (台新金控) saw a big plunge in earnings.

Cathay Financial, the nation's biggest financial services company and owner of the nation's largest life insurer, yesterday said that first-quarter profits surged 26 percent.

Unaudited net income rose to NT$10 billion (US$302 million) from NT$7.94 billion a year earlier, Cathay Financial said in a statement to the Taiwan Stock Exchange.

The company had a fourth-quarter loss of NT$2.33 billion on provisions for bad credit card debt.

A loss at Cathay's banking unit last year was outweighed by profits at flagship Cathay Life Insurance Co (國泰人壽), which had investments of NT$1.96 trillion as of Dec. 31.

recovery

Cathay United Bank (國泰世華銀行) is expected to return to profit in the first quarter after setting aside NT$31.8 billion to cover bad loans last year, more than half the previous year's amount, said Chu Yu-chun (朱玉君), an assistant vice president at SinoPac Securities Corp (永豐金證券).

Cathay Financial's statement didn't provide other figures or give a reason for the rise. It's expected to release a full audited report later this month.

Mega Financial, the nation's third-biggest financial group, posted NT$3.71 billion, or NT$0.34 per share, in first-quarter earnings, up sharply from NT$2.81 billion, or NT$0.25 per share, a year ago, the company said yesterday.

Meanwhile, Taishin Financial, the nation's second-largest financial holding company, yesterday reported that first-quarter earnings plunged 40 percent from a year ago to NT$1.83 billion, or NT$0.26 per share.

Macquarie Research said it has upgraded its rating on Mega Financial to "outperform" from "neutral" with a target price of NT$24.84 on expectations that issues relating to the Rebar Asia Pacific Group's loan default and Chinatrust Financial Holding Co's (中信金控) disposal of its 3.9 percent stake in Mega Financial would soon be resolved, relieving downward pressure on the share price.

ratings downgrade

The Australian brokerage, however, revised downward its ratings on both Taishin Financial and Chinatrust Financial to "underperform" from "outperform."

Beset by competition, Chinatrust Financial is operating in a low-growth, structurally deficient environment with no positive catalysts evident, while Taishin Financial is still suffering from the consumer credit card crisis with margins hurt by the write-offs and weak pre-provision profitability, Macquarie said.

Chinatrust Financial yesterday said its unaudited net income rose to NT$2.64 billion in the first quarter from NT$824 million a year earlier.

Fubon Financial Holding Co (富邦金控), the nation's fourth-largest financial services company by assets, on Thursday reported a 3.6 percent profit gain in the first quarter compared with a year earlier.

Net income at the company, which owns the nation's largest non-life insurer, was NT$3.41 billion, Fubon Financial said in a filing to the Taiwan Stock Exchange. That compares with profit of NT$3.29 billion a year earlier.

Fubon Financial, which reported a 21 percent profit decline last year to NT$8.4 billion, said on March 8 it would increase its gains from corporate and investment banking this year and upgrade its wealth management services.