Sat, Feb 28, 2009 - Page 12 News List

Chinatrust sees opportunities in consumer area

OPTIMISM: Although the public is cutting back on spending, the firm sees opportunities from some of its fee income-based services like credit cards

By Joyce Huang  /  STAFF REPORTER

Despite its pessimistic view on the consumer spending trend, Chinatrust Financial Holding Co (中信金控) said yesterday it expected to see a mild recovery in its consumer banking business this year, executives said yesterday.

“Although consumers are cutting back on spending, an increasing number are turning to our monthly installation plan [to pay credit card bills], which contributes to our fee income-based business,” chief investment officer Daniel Wu (吳一揆) told a media briefing yesterday.

An improving credit card environment will allow the company to seek a much more normal risk-based pricing this year by, for example, charging cardholders late-payment fees or annual membership fees, he said.

Weaker growth last year also means the company has a lower base of comparison for its consumer banking business this year, he said.

Chinatrust Financial reported 10 percent year-on-year growth in net profit to NT$14.71 billion (US$420.8 million) last year — the highest among the nation’s 14 financial service providers. That translated into earnings of NT$1.51 per share last year.

Despite its sound earnings last year, the company may not be able to pay out big dividends to shareholders this year after setting aside NT$11.65 billion in earnings as capital reserves, chief financial officer Hsu Miao-chiu (�?R) said.

The company’s net interest income declined 9.1 percent year-on-year to NT$29.8 million last year, accounting for 50 percent of overall income.

Following a series of rate cuts by the central bank from September, Wu said the company’s net interest margin would likely narrow this year from an average of 1.87 percent last quarter.

Revenues from the company’s fee income-based businesses dropped 10 percent to NT$22.5 billion last year, accounting for 38 percent of all income.

Affected by the global financial crisis, the company reported a 35.6 percent year-on-year drop in fee income from wealth management to NT$7.37 billion last year, Wu said, adding that this could further slow down this year.

But the company saw 14.4 percent year-on-year growth in fee income from credit cards to NT$7.9 billion last year — the biggest contributor to its fee income-based businesses.

Its subsidiary, Chinatrust Commercial Bank (中國信託商銀), reported NT$12.6 billion in net profit last year, accounting for 85 percent of the parent company’s full-year profit.

Chinatrust Bank saw corporate loans rise a significant 10 percent to NT$551 billion last year.

The bank expects to see solid growth this year amid a pickup in demand for funding from China-based businesses, as well as those in the Philippines and Indonesia, the bank said.

Company chairman Jeffrey Koo (辜濂松) also said earlier yesterday that the government should issue another round of consumer vouchers to spur growth in domestic consumption.

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