Fri, Apr 25, 2008 page12

• First Financial 2007 earnings up 17.1%

  GROWTH Chairman Michael Chang said the company would expand through mergers and acquisitions, but expects its wealth management sector to be hurt by a US slowdown

  • By Joyce Huang / STAFF REPORTER
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  First Financial Holding Co (第一金控), the nation’s ninth-largest financial service provider by assets, posted NT$12.49 billion (US$412.25 million) in after-tax earnings for last year yesterday, or 17.1 percent year-on-year growth.

  Its earning per share (EPS) last year was NT$2.05, up from NT$1.79 in 2006.

  In the quarter ending March 31, First Financial also concluded a better-than-expected performance, seeing 31.6 percent quarter-on-quarter growth to NT$3.44 billion in net profits, up from NT$2.62 billion in the fourth quarter last year.

  “The company’s organic performance has been satisfactory,” First Financial chairman Michael Chang (張兆順) told investors yesterday, “but we’re anxious to accelerate growth through mergers and acquisitions to expand our assets to become a leading player in the coming years.”

  Company assets grew just 3.35 percent to reach NT$1.65 trillion last year from NT$1.6 trillion in 2006.

  Subsidiary First Taisec Securities Co’s (一銀證券) year-on-year growth, however, jumped almost fourfold to NT$1.1 billion last year while its fee income-based businesses — including wealth management and bancassurance sales — saw a 53 percent year-on-year growth at the same time.

  Anticipating a US economic slowdown, the state-run financial service provider estimates its growth from the wealth management sector may not be as strong, falling to between 15 percent and 20 percent this year, Chang said.

  After securing a 10.8 percent growth from loans last year, First Financial expects its loan growth to slow down to between 5 percent and 6 percent this year, he said.

  A foreign bank analyst, who requested anonymity, was bullish yesterday on First Financial’s future.

  “The company did very well to deliver a higher-than-expected return on equity [ROE] of 12.11 percent — an achievement that is usually expected from private banks, instead of state-run ones,” he said, adding the bank’s interest rate income should climb along with the nation’s rising interest rates after achieving a 10.9 percent growth from net interest income last year.

  First Financial has vowed to pursue ROE higher than 15 percent this year while maintaining a payout ratio comparable to last year’s 88.78 percent to shareholders, executive vice president Huang Hsien-chuang (黃獻全) said.

  The analyst also said that he was upbeat about the bank’s plan to maximize the value of its outlets because its clients usually have a high level of loyalty to its sales and services.

  He said First Financial has also been the least affected by the US subprime crisis, compared to its local peers.

  First Financial expects to write down less than NT$200 million this year out of its US$22 million holding in subprime-related investments, or collateralized mortgage obligations, Chang said.

  It also cut its loan provision this year to NT$240 million from last year’s NT$300 million.

  First Financial has also decided to sell its 240 million shares of Chang Hwa Commercial Bank (彰化銀行) on the open market for NT$7.5 per share, based on Chang Hwa share prices late last month.

  That sale should net First Financial NT$230 million.
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