Tue, Feb 07, 2012 - Page 11 News List

Hua Nan income jumps 40% on interest spreads

CHINA PUSH:NT$20 billion in recently raised capital has been earmarked for expansion, with the purchase of a stake in a Fujian-based lender on the horizon

By Crystal Hsu  /  Staff Reporter

Hua Nan Financial Holdings Co (華南金控) expects earnings to grow this year on the expectation that the eurozone debt crisis would ease, company chairman Wang Rong-jou (王榮周) said yesterday.

Last year, net income jumped 40 percent year-on-year to NT$8.45 billion (US$285 million) from a year earlier.

“We are confident in continued growth this year, but it is difficult to predict the pace, given the clouding of the global landscape,” Wong told reporters during a public function.

Improvement in the state-run conglomerate’s net profit last year was mainly due to improving interest income from the banking arm, Hua Nan Commercial Bank (華南銀行), the company report said.

The lender reported NT$19.58 billion in interest income last year, up 16 percent from NT$16.94 billion, on broadening interest spreads, the report said.

Pretax income at the bank is expected to increase to NT$11 billion this year on the back of overseas expansion, officials said, requesting not to be named.

Hua Nan Financial recently raised NT$20 billion in new capital that it intends to use to expand its presence in China, the officials said.

The banking unit is awaiting regulatory approval to establish a second branch in Shanghai and is evaluating locations for a third branch, Wang said. Hua Nan Bank also plans to enter China’s capital leasing market and is close to finalizing assessments to take a 20 percent stake in a Chinese peer, likely on the eastern coast, the chair said.

Fujian Haixia Bank (福建海峽銀行), the largest city-level lender in Fuzhou, Fujian Province, which inked a cooperation agreement with Hua Nan Bank last year on operational, business and professional exchanges, appears the most likely candidate, the officials said.

“The two sides have yet to agree on share prices and other investment terms,” one official said. “We hope that by taking this stake Hua Nan Bank will at least win influence over the Chinese lender’s decision-making, if short of the power to set its future course.”

Potential investment targets should have a price-to-book-ratio of more than two, as evidence of financial health and market value, Hua Nan Bank chairman Lin Ming-cheng (林明成) said.

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