Cathay Financial Holding Co (國泰金控) yesterday reported a loss of NT$1 billion (US$31.3 million) for the first half of the year, but said it expected to swing back to profit in the second half by boosting investments overseas, especially in China, and retiring low-margin products.
The nation’s biggest financial services provider by market value earned NT$5.5 billion in the first six months of last year, according to the company’s financial statement.
Its flagship company, Cathay Life Insurance (國泰人壽), reported a loss of NT$7.1 billion in the first half, compared with a net profit of NT$1 billion a year earlier, as investments at home and abroad failed to yield profits, the statement said.
“The figures already turned better in July and will continue to improve for the rest of the year,” Cathay Financial president Chen Tsu-pei (陳祖培) told an investors’ conference in Taipei.
The company reported a net income of NT$1.44 billion (US$45.04 million) last month and an accumulated profit of NT$460 million for the first seven months, or NT$0.05 earnings per share, according to its Taiwan Stock Exchange filing.
“The company’s life insurer, Cathay Life Insurance, may invest up to NT$100 billion in Chinese securities,” Chen said. “We plan to ask authorities to raise the ceiling higher.”
The financial service provider said it would apply to increase the amount its insurance unit can invest overseas to 45 percent of its working capital, from the current 40 percent.
Chen said the life insurance unit would also seek to sell more conventional health and accident polices that offer higher margins and retire low-margin products, such as interest-sensitive annuities.
The insurance unit had 154 of its 209 real estate properties reappraised and added about NT$41 billion to its book value, lifting its risk-based capital ratio by 70 percent, Chen said.
First-year premiums jumped 74.3 percent year-on-year to NT$18.07 billion in the first half, with high-margin products contributing 49.2 percent, the statement said.
“Cathay Life will continue to deleverage its cash position in the second half,” Chen said, adding that cash and cash equivalents accounted for 16.7 percent of its assets.
Cathay United Bank Co (國泰世華銀行), the banking unit of Cathay Financial, posted a net gain of NT$6.4 billion in the first half, rising 52.4 percent from the same period last year, the statement said.
The bank’s fee income increased 41.9 percent to NT$3.66 billion for the first six months, with all divisions — including wealth management, foreign exchange and credit card — reporting a pickup, the statement showed.
The bank’s bad loan ratio slid to 0.34 percent in the first half, from 0.84 percent a year earlier, while its coverage ratio climbed to 206.6 percent, from 111.5 percent, the statement said.
Cathay United will soon file an application with China to upgrade its representative office to a branch in Shanghai, after Taiwan gave its approval last week, Chen said.
The bank plans to open a second branch in China, he said, declining to elaborate.
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