Chinatrust Financial Holding Co (中信金控), the nation’s third-largest financial services provider by assets, posted a net profit of NT$3.1 billion (US$100.3 million) in the third quarter, 17.5 percent less than the second quarter, but nearly an 11-fold improvement from the same period last year, the company said yesterday.
The company, which owns the nation’s largest credit card issuer and relies on its banking arm for almost all its income, attributed the quarterly decline in net profit to pension fund and treasury stock expenses aimed at improving employee benefits.
“The company set aside more pension fund reserves and recognized losses from transferring shares to employees last month, which weakened third-quarter earnings by more than NT$600 million,” executive vice president Hsu Miao-chiu (許妙靜) said at an investors conference.
Apart from that adjustment, Chinatrust Financial said its core business showed sharp improvement last quarter, compared with last year and would recover further from this quarter onward.
Net profit for the first nine months surged nearly 11-fold year-on-year to NT$11.02 billion, translating into NT$1.03 earnings per share, after its US subsidiary began making profits, Hsu said.
Banking unit Chinatrust Commercial Bank (中國信託商銀) generated NT$3.01 billion in net profit in the June-to-September period, contributing 97.19 percent to the parent company, as economic recovery boosted interest and fee incomes, the company said.
Net fee income grew 4.3 percent quarterly to NT$6.38 billion in the third quarter, rising 14.9 percent from last year, on gains in credit card, wealth management and corporate banking businesses, it said.
Net interest income rose 3.6 percent to NT$6.28 billion last quarter from the preceding quarter on growing demand for capital, Chinatrust Financial president Daniel Wu (吳一揆) said. That marked an increase of 10.5 percent from the same period last year.
The net interest margin edged up to 1.5 percent last quarter, from 1.47 percent three months earlier following the central bank’s interest rate hikes in June and last month.
The interest spread may expand further because there is more room for the central bank to hike rates next year, Wu said.
Chinatrust Financial remains interested in buying Nan Shan life Insurance Co (南山人壽), but has not made any contact with the firm’s US parent, American International Group Inc (AIG), after Taiwan’s government rejected its plan to sell the Taiwanese unit two months ago.
“We cannot make any moves before AIG puts the insurer on the market,” Wu said. “We have not targeted other insurers, since it takes a while to formulate an acquisition plan.”
Wu said Chinatrust Commercial Bank intends to open a branch in Shanghai in the first quarter if it obtains China’s regulatory approval by the end of this year.
Chinatrust Financial may also sign a cooperation agreement later this year with Bank of China (中國銀行), which opened a representative office in Taipei on Monday, Wu said, although he refuse to elaborate except to hinting the pact will benefit bilateral operations.
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