Wed, May 07, 2008 - Page 12 News List

Chinatrust reports profits

SHAKE IT OFF Chinatrust said it wrote off another US$21 million from subprime-related investments last quarter to completely shake off losses from the crisis

By Joyce Huang  /  STAFF REPORTER

Chinatrust Financial Holding Co (中信金控), the nation’s sixth-biggest financial service provider, yesterday said that it had completely shaken off losses incurred from subprime-related investments.

The company had written off another US$21 million, in the first quarter, from its remaining structured investment vehicle (SIV) holding, chief financial officer Hsu Miao-chiu (�?R) told an investor conference yesterday.

The company yesterday reported satisfactory performance, with first quarter net profits seeing a 90.6 percent year-on-year growth to NT$4.93 billion (US$161.5 million), or earnings per share of NT$0.55, on growing corporate lending and fee income.

The flagship bank — Chinatrust Commercial Bank’s (中國信託商銀) corporate lending businesses, which accounted for 55 percent of total lending, saw an 11 percent year-on-year growth last quarter, the company’s financial statement showed.

“The US’s aggressive interest rate cuts [in the first quarter] have made our US dollar-denominated loans cheaper for companies to borrow,” Hsu said.

The bank’s foreign-currency loans grew 13.2 percent in the first quarter, compared with one year earlier. After reinforcing services to quality clients, the company saw a robust 19.8 percent year-on-year growth of fee incomes from credit card business to NT$1.89 billion and a 6 percent steady growth from wealth management businesses to NT$2.5 billion last quarter.

The company also managed to maintain its loan quality to post a 1.68 percent non-performing loan ratio in March with an 84.33 percent coverage ratio, down from 110.61 percent in the first quarter last year.

Its ratio of broken accounts among debtors, who had previously entered the inter-bank debt relief program, was also lowered to 1.04 percent in the same month.

Albert Cheung (張儉生), director of Chinatrust Financial’s unsecured lending division under the consumer finance group, yesterday further expressed concerns over a possible negative impact from the implementation of the Consumer Debt Clearance Regulations (消費者債務清理條例), designed to resolve the consumer credit and cash card-debt problem, since April 11.

He said that the bank was well prepared to see its ratio of broken accounts to climb further to “between 2.2 percent and 3.6 percent” for last month — a high level in late 2006 when defaults of unsecured credit-card and cash-card loans emerged.

Cheung said that as of last month, the bank had received 1,000 applications, worth NT$200 million in lending, for pre-bankruptcy negotiations to facilitate a debt-repaying program, with each borrower averaging NT$1.5 million in debts.

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