Thu, Feb 24, 2011 - Page 11 News List

New rate pushes Cathay Financial’s earnings down

By Kevin Chen  /  Staff Reporter

Cathay Financial Holdings Co (國泰金控), the nation’s largest financial services provider, said yesterday its net income would be NT$4.58 billion (US$154.9 million) last year, a 44.35 percent downward revision from the figure it released last month after using a new foreign exchange conversion rate.

The company posted on Jan. 7 a net income of NT$8.23 billion for last year, down 19.55 percent from the previous year, because its insurance unit reported a loss of NT$2.93 billion.

Cathay Financial said in a stock exchange filing that its use of the new exchange conversion rate was in line with the regulations set by the Accounting Research and Development Foundation (會計研究發展基金會).

On Friday last week, the foundation issued a report saying that whenever there are excessive fluctuations in the exchange rate, businesses should use the average intraday rate of the US dollar against the New Taiwan dollar set by the state-run Bank of Taiwan (BOT, 台灣銀行) rather than the closing rate set by the central bank.

As such, Cathay Financial said it used NT$29.13 per US dollar on Dec. 31 set by the BOT, instead of the NT$30.368 rate set by the central bank.

As a result, earnings per share would also be revised to NT$0.45 for all of last year, compared with the NT$0.81 the company reported last month, the filing said.

The net income figure for last month was also revised to NT$1.4 billion, or NT$0.14 per share, after the company used NT$29.035 per US dollar on Jan. 31. That helped the company recover from a loss of NT$1.47 billion, or NT$0.14 a share, last month when it initially used a rate of NT$29.3, it said.

Likewise, Shin Kong Financial Holding Co (新光金控) said in a separate filing that it revised its net income to NT$2.51 billion for last year, compared with NT$4.49 billion it reported on Jan. 10, after adopting the new exchange rate.

For last month, the company revised its net loss to NT$1.76 billion from the initial loss of NT$3.52 billion, it said.

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