Chinatrust Financial Holding Co (中信金控), the owner of the nation's biggest credit card issuer, is mulling whether to form strategic partnerships with foreign companies by next year to improve its international business and enhance its corporate governance, company executives said yesterday.
"We obtained the board's approval on Friday to form a task force and study the feasibility of introducing foreign strategic partners," Chinatrust Financial chief strategy officer Jason Wang (王正新) said at a press conference yesterday.
The company is open to selling a stake of 10 percent or larger to partners as long as the cooperation helps to transform the financial group, Wang said.
The plan is meant to expand lucrative international business opportunities as intense competition in the local market continues to slash net interest margins.
The company enjoys a margin exceeding 400 basis points in overseas lending, compared to a level of less than 200 basis points in Taiwan, and expects local lending margins to continue weakening.
Chinatrust Financial is looking for foreign partners with extensive global networks, especially in Asia and China, that can help lift overseas profits to over 20 percent from the current 17.5 percent, Wang said.
Changes in shareholder structure, board members and management teams that could accompany a partnership would be acceptable so long as they helped Chinatrust Financial reach its goal, he said.
Chinatrust Financial is founded and controlled by the Koo family, one of the oldest and wealthiest families in Taiwan.
More than 10 interested foreign investors have approached the company, Wang said, but he declined to identify them.
The company hopes to bring in a foreign investor before the board is reshuffled next year, he added.
Chinatrust Financial yesterday posted first-quarter earnings of NT$2.64 billion (US$79 million), or NT$0.3 per share, up 220 percent from a year ago, as bad loan reserves dropped by 80.9 percent to NT$2.14 billion in the same period.
Looking ahead, the company hopes to earn NT$17.5 billion this year, or 1 percent of its NT$1.75 trillion in assets, a turnaround from a loss of NT$14.73 billion, or negative NT$2.03 per share, last year, Wang said.
The projected rebound this year will likely be driven by shrinking provision costs, which should return to a normal level of around 0.5 percent of total assets, or NT$8.9 billion, down from NT$48 billion last year, Wang said.
"The company's profit projection is neutral, but its fast-worsening net interest income worries us," said Fiona Uang (汪姵吟), an analyst at Mega Securities Co (兆豐證券).
Financial groups focused on consumer banking could continue to suffer from the bad consumer loan crisis that "has yet to bottom out" and it will continue to depress share prices, Uang said.
Meanwhile, Chinatrust Financial has turned passive on the domestic market following its controversial attempted takeover of larger rival Mega Financial Holding Co (兆豐金控).
"We think we have had enough franchises in the local market," Wang said.
Chinatrust Financial will seek the Financial Supervisory Commission's advice in handling its remaining 11.7 percent holding in Mega after disposing of the 3.9 percent stake the regulator had required the firm to sell, he added.
Chinatrust Financial may not retain the holding, as the government does not intend to give up control of Mega Financial in the short term, he said.
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