Despite no rating change at Standard and Poor’s, Chinatrust Financial Holding Co (中信金控) saw its share price drop sharply yesterday after the company made a substantial downward revision of its preliminary earnings result for the first half of the year.
Shares of the nation’s largest credit card provider fell 5.53 percent to NT$19.65, underperforming a 3.27 percent decline on the financial sub-index that was also weaker than a 1.55 percent decline on the benchmark TAIEX, Taiwan Stock Exchange data showed.
The stock has risen 41.37 percent this year, while the TAIEX has increased 49.16 percent.
On Tuesday night, Chinatrust Financial said it would cut its first-half profit by 93 percent from a preliminary figure announced last month.
The company said that it set aside NT$4.1 billion (US$125 million) in provisions for the settlement of the structured notes linked to the failed Lehman Brothers sold by its banking unit.
The Financial Supervisory Commission estimated that NT$80 billion in Lehman Brothers products had been sold in Taiwan.
The revision also reflected a NT$1.9 billion cut in deferred tax assets at the bank’s US subsidiary to comply with Generally Accepted Accounting Principles standards in the US, the statement said.
Following the revision, profit at Chinatrust Financial was NT$353 million for the January to June period, down from a preliminary profit of NT$5.23 billion the company reported last month.
It was also a 96 percent decline from the NT$8.9 billion it made a year earlier.
For the April to June period, Chinatrust Financial posted a NT$3.04 billion loss, compared with a preliminary second-quarter profit of NT$1.84 billion posted last month and a NT$3.97 billion profit a year ago.
Standard & Poor’s Ratings Services, however, maintained its ratings on Chinatrust Financial and Chinatrust Commercial Bank (中國信託銀行), citing no immediate concern to address, it said in a press release.
“In our view, Chinatrust Financial still faces uncertainty over potential additional expenses on the settlement of structured notes, but we expect the impact to be absorbable given the company’s core earning capability,” the agency said.
S&P said Chinatrust Financial recorded a 0.04 percent in annualized return on average assets on a consolidated basis for the first half and that the company’s ratio of reported consolidated total equity to assets remained adequate at 8.4 percent, the release said.
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