Sat, Oct 08, 2011 - Page 12 News List

Turbulent markets hit finance industry

By Crystal Hsu  /  Staff Reporter

The nation’s major financial holding companies saw their earnings last month eroded by global financial market volatility as their securities units incurred losses, while their banking arms reported falling fees.

Cathay Financial Holding Co (國泰金控), the nation’s largest financial services provider by assets, reported a mere NT$160 million (US$5.25 million) in net income last month, an 88.69 percent plunge from the previous month and a 91.9 percent decline compared with last year, the company said in a statement.

The group’s banking unit, Cathay United Bank (國泰世華銀行), posted NT$1.08 billion in net profit last month, slightly more than the losses incurred by Cathay Life Insurance (國泰人壽) and Cathay Securities (國泰證券), which lost NT$870 million and NT$60 million respectively, company data showed.

Cathay Financial attributed the shrinking earnings to turbulence on global financial markets that more than muted hedging cost recoveries after the local currency weakened against the greenback last month.

Net income was NT$4.92 billion in the third quarter, up 4.68 percent from the second quarter, thanks to cash dividend income, the company said.

Fubon Financial Holding Co (富邦金控), the nation’s second-largest financial services provider by assets, saw its net income fall 13.78 percent to NT$1.57 billion last month on diminishing earnings across all of its main subsidiaries, the company said in a stock exchange filing.

Taipei Fubon Commercial Bank Co (台北富邦銀行), the group’s main source of income, contributed a modest NT$40 million in net profit last month, while Fubon Securities (富邦證券) just managed to break even, company data showed.

“The banking arm increased loan loss reserves by NT$940 million in September as suggested by the regulator to lift the reserve ratio to 1 percent,” from the statutory requirement of 0.5 percent amid heightened default risk, the parent company said.

Fubon Financial did not comment, but 26 state-run and private banks involved in a syndicated loan of NT$54.5 billion to cash-strapped ProMOS Technologies Inc (茂德科技) reportedly started to list that loan as bad last month.

Fubon Life Insurance (富邦人壽) was the mainstay, reporting NT$1.08 billion in net income last month, the parent company said.

For the first nine months, Fubon Financial was the most profitable company among its peers, with NT$31.4 billion in cumulative net profit, or NT$3.49 earnings per share, the company said.

Chinatrust Financial Holding Co (中信金控), the nation’s third-largest financial services provider, posted NT$578 million in net income last month, a 63.53 percent decline on the previous month, the group said in a statement.

The bank-centric group also linked the profit retreat to a larger provisions, as well as falling wealth management fees as rising economic uncertainty dampens risk appetite.

Cumulative net income totaled NT$14.52 billion as of last month, translating into NT$1.29 earnings per share, the group said.

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