China Development Financial Holding Corp (中華開發金控), the nation’s worst-performing financial services company in terms of earnings last year, aims to strengthen its asset management business rather than chase capital gains to boost profitability and economic scale, top executives said yesterday.
The investment banking-centric group set a goal of an annual return of between 10 percent and 15 percent of its equity mainly through aggressive expansion in China, Paul Yang (楊文鈞) told an investor conference.
“China Development Financial has mapped out a new business model and it will shift its focus away from capital gains to the asset management business,” Yang said.
The company posted NT$1.56 million (US$52.89 million) in net profit last year, or earnings per share of NT$0.14, Taiwan Stock Exchange data showed.
Yang attributed the poor performance to heavy exposure to technology firms in the solar energy, flat panel and LED sectors.
As the crowded Taiwanese banking sector squeezes profits, China Development Financial is looking for growth by actively tapping the Chinese market this year. The group is the only Taiwanese financial services firm that has obtained regulatory approval to establish a private equity fund and management company in China, executive vice president David Chow (周大任) said.
“We plan to partner with a Chinese state enterprise to set up a yuan private equity fund in northern China and we expect to secure a cooperation agreement in the first half of the year,” Chow said.
A day earlier, the firm’s banking subsidiary, China Development Industrial Bank (中華開發工銀), inked a cooperation pact with Shanghai Lujiazui Financial Holdings (上海陸家嘴金融發展) to establish a private equity fund valued at 2 billion yuan (US$318 million) in eastern China, Chow said.
The lender signed a cooperation agreement with Fujian Electronics & Information (福建電子集團) last year to establish a fund of the same size in southern China, he added.
On the corporate banking side, the group plans to partner with 10 leading Chinese lenders to increase its business and enhance risk management, executive vice president Eddie Wang (王幼章) said.
“We have secured cooperation pacts with seven major Chinese banks and we will add three more soon,” Wang said.
China Development Financial also aims to enter China’s capital leasing market, with its first leasing subsidiary in Kunshan scheduled to start operations next month or in April, Wang said.
“We plan to open 15 branches within five years” to meet the needs of Chinese customers, a venture that will generate higher interest income than in Taiwan given the broader interest rate spread in China, he said.
On the securities side, Grand Cathay Securities Corp (大華證券) plans to set up a representative office in Fuzhou and to buy a 25 percent stake in Fujian Haixia Stock Equity Exchange, said Hsu Daw-yi (許道義), chairman of the group’s brokerage unit.
The brokerage set up a representative office in Shanghai in 2002 and it signed a cooperation agreement with a futures firm in Wuxi, Jiangsu Province, in August last year.
China Development shares closed up 1.41 percent at NT$10.05 yesterday. The company’s shares have risen 17.27 percent this year, outpacing the financial index’s 11 percent rise and the TAIEX’s 13.19 percent gain on the back of its investment in Facebook, the US social networking service provider.