Thu, May 08, 2008 - Page 12 News List

Taishin posts sharp fall in net income

LACKLUSTER A company executive attributed the performance to a drop in its banking arm's net interest income. Fee income from wealth management was up

By Joyce Huang  /  STAFF REPORTER

Taishin Financial Holdings Co (台新金控) yesterday reported a net profit of NT$453 million (US$14.84 million), or NT$0.22 per share, in the first quarter. This represented a 75 percent year-on-year decline, but a significant improvement from losses of NT$1.4 billion in the previous quarter.

“It’s not a rosy figure, but it’s in line with” the firm’s expectations, Taishin Financial president Lin Keh-hsiao (林克孝) told an investor conference yesterday.

“We expect to see better growth in the next quarter as some of our efforts start to pay off,” he said.

Taishin Financial chief operating officer Greg Gibb said he expected the company’s full-year profits to return to 2004 levels of about NT$10 billion after taking a big hit from cash card and credit card loan defaults in 2005 and 2006.

Chief financial officer Carol Lai (賴昭吟) yesterday blamed last quarter’s lackluster performance on its banking subsidiary Taishin International Bank’s (台新銀行). The bank’s net interest income dropped by NT$216 million to NT$3.7 billion last quarter as its margin slid 22 basis points to 1.78 percent.

“We expect the margin to rebound to 1.85 percent in the following quarters and further to 1.9 percent by the end of the year,” Lai said.

Taishin Financial’s banking arm posted a net income of NT$397 million in the first quarter, while its securities arm had a net income of NT$160 million. Its bills finance subsidiary suffered losses of NT$176 million.

Taishin Financial, however, enjoyed solid growth in its wealth management business last quarter, which saw a 47 percent quarter-on-quarter rise to NT$1.3 billion in fee income.

Gibb said that fee income from wealth management was expected to be flat in the second quarter but should rise in the long run as the company continues to provide tailor-made products to some 190,000 high-income clients.

As to corporate lending, Gibb said the company had a conservative view of the market given expectations of a US economic slowdown.

The company’s ratio of nonperforming loans also improved to 1.81 percent in the first quarter from 2.07 percent the previous quarter.

Gibb was cautiously optimistic on the potential impact of the implementation of the personal bankruptcy law last month.

He said that as of last month, the company had received 718 pre-bankruptcy applications, totaling NT$206 million.

He expected provisioning for loan losses to reach NT$1.6 billion by the end of next year.

An analyst, who requested anonymity, was also cautious on Taishin Financial’s prospects.

“Taishin Financial’s performance will remain flat this year and its stock will fluctuate between NT$10 and NT$15 per share,” the analyst said yesterday.

Taishin Financial closed down NT$0.15 at NT$15.65 on the Taiwan Stock Exchange yesterday.

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