Taishin Financial Holding Co (台新金控) yesterday expressed confidence it would return to the black this year despite posting a net loss of NT$2.36 billion (US$71.6 million) in the first half of this year.
“On the back of an improving macroeconomy, we are likely to see monthly earnings of between NT$400 million and NT$500 million in the coming months,” Justin Tsai (蔡榮棟), president of subsidiary Taishin International Bank (台新銀), told an investor meeting yesterday.
The company said it expected to benefit from a recovery in its wealth management businesses, rising net interest margins and renewed lending growth in the second half of this year.
Should the macroeconomy fail to rebound in the second half of this year, Taishin Financial would also be “ready” given its improving asset quality, coverage ratio and declining operational cost, Tsai said.
The company attributed its net loss in the first half to a one-time write-off of NT$5 billion, which includes NT$2.7 billion to reflect the planned 5 percent reduction of deferrred tax assets and NT$1.6 billion set aside to compensate those who invested in Lehman Brothers-issued structured notes.
Excluding the write-off, the financial service provider would have reported NT$2.17 billion in pre-tax earnings, up about three times from the same period last year, company president Lin Keh-hsiao (林克孝) said.
Taishin Financial expects to close its sale of Taishin Securities Co (台証證券) for NT$43 billion in cash to KGI Securities Co (凱基證券) in the fourth quarter of this year, it said.
The securities unit contributed an average of NT$1.7 billion in pre-tax profit to the company per year, but Taishin Financial expects the negative impact from the sale of the unit to be limited to between 10 percent and 15 percent of its pre-provision operating profit, company chief operating officer Greg Gibb said.
Gibb said that despite the sale of the securities unit, Taishin Financial would retain its underwriting businesses, which is estimated to contribute an average of NT$300 million in pre-tax profit to the parent company per year, Gibb said.
The company could also post an annual gain of NT$500 million, a 2 percent return from its NT$27 billion net cash gain from the deal, Gibb said.
Part of the proceeds from the unit’s sale, or NT$10 billion, will be used to boost Taishin International Bank’s Bank for International Settlements (BIS) ratio to about 12 percent. Another NT$5 billion will be used to repay bank subordinated debts, and NT$10 billion to NT$20 billion will be used to acquire a new securities firm with a focus on investment banking businesses, the company said.
However, a major portion of the proceeds will be used to fund the company’s possible expansion into Chinese markets, once Taiwan inks a financial memorandum of understanding (MOU) with China, Lin said.
He added that the company would put a priority on niche markets in China with a population of more than 10 million people, high income earners and where Taiwanese businesses gather.
By that definition, Beijing, Tianjin, the planned economic zone on the west coast of the Taiwan Strait and Shenzhen are likely to be Taishin’s first four targets in China, Lin said.
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