Taishin Financial reports Q3 rebound

Taishin Financial Holding Co (台新金控), the parent company of the nation's third-largest credit-card issuer Taishin International Bank (台新銀行), said yesterday that its financial performance rebounded last month after the third quarter's net profits lagged behind the first two quarters.

"Income from wealth management fees, which dipped to the lowest in the first three quarters, has rebounded to the level in June -- one month before the earnings peak in July," Taishin Financial's chief operations officer Greg Gibb told an investors' conference.

Gibb said wealth-management consumers turned prudent during August and September when the extent of the US subprime mortgage crisis became evident.

To assure investors that the company's business will not be dragged down bu the US subprime mortgage problems, Taishin chief financial officer Carol Lai (賴昭吟) said the company had no exposure in US subprime-related investments such as collateralized bond obligations (CBOs) or structured-investment vehicles (SIVs).

The company "luckily" avoided any potential losses, Lai said.

The company reported net profits of NT$1.58 billion (US$48.66 million) in the third quarter -- a 27.8 percent drop from the second quarter's NT$2.19 billion and a 13 percent drop from the first quarter's NT$1.82 billion.

Net income in the past nine months totaled NT$5.59 billion as loan provision fell after posting a loss of NT$16.2 billion last year and NT$2.9 billion in 2005 when the default on unsecured consumer loans strongly affected the company.

"Its provision trend is stable although its bank coverage fell to 62 percent [in the third quarter from a high of 139.4 percent one year earlier]," said Dexter Hsu (許世德), an analyst with JPMorgan.

His firm has a neutral view toward Taishin Financial's business fundamentals.

After-tax net income from the outperforming retail brokerage by [subsidiary] Taishin Securities Co (台証證券) hit a three-year high of NT$2.047 billion in the first three quarters, Gibb said.

That compares with NT$585 million a year earlier, he said.

Meanwhile, Taishin Financial president Lin Keh-hsiao (林克孝) refused to discuss future prospects and a proposed merger with state-run Chang Hwa Commercial Bank (彰化銀行) yestereday.

"The company is advised by its financial consultants to remain silent for now," Lin said.

Taishin Financial is the biggest shareholder in Chang Hwa, with a 22 percent stake.

It plans to acquire the state-run bank's remaining shares, although "the financial company's major shareholders believed the market was abnormal in July" for Taishin to complete the merger, Lin said.

Shares of Taishin Financial yesterday closed 2.99 percent higher at NT$13.8, outperforming the 3.35-percent decline in the TAIEX.