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Chinatrust bullish on wealth business

Chinatrust Financial Holding Co (中信金控), the nation's sixth-biggest financial service provider, yesterday expressed confidence that it could secure NT$10 billion (US$3.07 billion) in transaction fees from its wealth management business next year amid an expanding economy.

Chinatrust provides assets and banking consultancy services to 300,000 clients with a net worth of more than US$1 million, making it the top player in the nation's wealth management market.

"Thanks to a big customer base and diverse range of products, Chinatrust expects to rack up NT$10 billion in transaction fees next year," Oliver Shang (尚瑞強), president of Chinatrust's retail banking operation, said by telephone.

Transaction fees from wealth management operations will approach NT$10 billion this year, Shang said.

Last year, individuals with assets of more than US$1 million grew about 12 percent to 66,000 from a year ago, according to the latest wealth report released by Merrill Lynch and consultancy firm Capgemini.

"Improved economic growth and a robust stock market have driven subscription for funds and debt-linked products this year. If this uptrend extends into next year, we believe that income from transaction fees may surpass our forecast," Shang said.

Chinatrust expects revenues from its retail banking business to reach NT$22 billion this year, with 60 percent coming from transaction fees, Shang said.

Shares of Chinatrust rose NT$0.05, or 0.2 percent, to NT$24.4 yesterday. The stock has declined 1.6 percent in the last 12 months, underperforming the benchmark TAIEX, which has risen by 37.4 percent.

Citigroup said in a report on Tuesday that it favored Chinatrust as the stock had lagged despite the recent rise in financial stocks, implying more room for the stock to rise given sound fundamentals.

"Despite management changes and problems with the Koo family, operating profits have continued to improve given strong emphasis on wealth management," Citigroup Global Markets analysts Bradford Ti (鄭溫煌) and Janet Lu wrote.

Earnings growth will mainly come from wealth management and institutional business, particularly overseas, as the company's unsecured consumer loan business remains under pressure, the analysts said.

Shang said that the worst was over for the company's credit card business, with the delinquency rate falling from a recent peak.

"Chinatrust's credit card business is recovering and will make a comeback in the next three years," Shang said.

He added that earnings from its credit card business could bounce back to NT$5 billion to NT$6 billion next year.

The financial holding firm owns the nation's biggest credit card issuer, Chinatrust Commercial Bank (中國信託商銀).

Chinatrust Financial reported NT$12.85 billion in net profits for the first nine months of this year, compared with losses of NT$2.42 billion a year ago.

Separately, Shang, who doubles as chairman of Chinatrust's charity lottery unit, Taiwan Lottery Co (台灣彩券公司), said the company would start sales of a new lottery in January, with a jackpot of NT$250 million.

Shang said that lottery revenues this year would only hit the low end of the NT$64 billion to NT$80 billion target set by the government.
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