Thu, Dec 08, 2011 - Page 12 News List

First Financial to open a second company in China

FINANCE LEASING:First Financial Holding expects to be issued a permit from China in time to allow it to open a capital leasing firm in Chengdu next month

By Crystal Hsu  /  Staff Reporter

State-run First Financial Holding Co (第一金控) plans to open its second capital leasing company in China next month to boost earnings from its operations there to at least 1 percent of the group’s total pretax income next year, executives said yesterday.

“We expect China to issue the permit next week, allowing our capital leasing firm in Chengdu to start business on Jan. 5,” said Chiang Jin-der (江金德), chairman of First Financial AMC Co (第一資產), the conglomerate’s asset management unit.

With a capital of US$30 million (NT$900 million), the new firm will be First Financial’s second capital leasing company, after the first one opened in Suzhou in April this year, Chiang said.

It aims to serve Taiwanese firms based in China, providing loans for their purchases of capital equipment at interest rates of about 10 percent, Chiang said.

The firm might start to see profit from the second quarter onward, allowing the group to capitalize on higher borrowing costs in China, First Commercial Bank (第一銀行) executive vice president Lin Hann-chyi (林漢奇) said.

The interest margin topped 8 percent in China and hovered around 1.4 percent for the banking sector in Taiwan, he said.

First Financial would raise the new leasing firm’s capital to US$90 million, if necessary, Lin said.

Chinese operations, however, would be marginal in terms of earnings contribution, he said.

“While the Chinese market promises growth potential, it will take some time to see it bear fruit,” Lin said.

Shares in First Financial gained 1.7 percent to NT$17.95 at the close of Taipei trading yesterday, outpacing the TAIEX’s increase of 1.1 percent.

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