Thu, May 03, 2012 - Page 12 News List

Chinatrust Financial sees slower lending

By Crystal Hsu  /  Staff reporter

Chinatrust Financial Holding Co (中信金控), the nation’s third-largest financial services provider, expects overall lending to expand by middle single-digit figures this year as the economy slows, senior executives said yesterday.

Net income totaled NT$5.19 billion (US$177.88 million) in the first quarter, a 6.2 percent increase from a year ago and 38 percent from the preceding quarter when global market volatility dampened core businesses, company data showed.

The results represented earnings of NT$0.46 per share, making Chinatrust Financial the third-best performer among 16 domestic peers after Fubon Financial Holding Co (富邦金控) with an EPS of NT$0.72 and state-run Mega Financial Holdings Co (兆豐金控) with an EPS of NT$0.59, according to their stock filings.

“We expect a middle single-digit growth in total loans this year driven mainly by corporate lending,” Rachael Kao (高麗雪), senior vice president of Chinatrust Commercial Bank (中信銀), said of the group’s main source of income.

Demand for foreign currency is expected to outpace that for local currency although growth momentum has showed signs of moderation this year, compared with last year, Kao said.

China’s tightening measures had driven Taiwanese companies with operations in China to seek loans here, but the trend has eased somewhat after the Chinese central bank lowered required reserves ratios.

Chinatrust Bank plans to keep mortgage loan operations flat at NT$300 million, making up 30 percent of total lending, in line with the government’s continued efforts to contain property speculation and prices, she said.

The lender, the nation’s largest credit card issuer, expects unsecured lending to flatten or gain slightly from last year, Kao said, as consumers are likely to cut spending as the cost of living rises.

Some key figures:

‧ First quarter net income totaled NT$5.19 billion.

‧ Earnings per share were NT$0.46.

‧ Syndicated loans to ProMOS Technologies Inc total NT$3.7 billion.


Chinatrust Bank has NT$3.7 billion in syndicated loans to money-losing ProMOS Technologies Inc (茂德科技) and has set aside a 76 percent provision, she said.

Net interest margin, a critical gauge of banks’ profitability, is expected to climb 5 to 7 basis points this year after staying unchanged for the past two quarters at 1.62 percent, Kao said.

The central bank is unlikely to raise interest rates in the foreseeable future, but allow the local currency to strengthen against the US dollar to absorb some inflationary pressures, Chinatrust Financial president Daniel Wu (吳一揆) said.

“That explains the recent gain in the New Taiwan dollar,” Wu said.

A stronger NT dollar, which appreciated 3.5 percent versus the greenback this year, accounted for NT$680 million in foreign exchange losses at the life insurance arm, Chinatrust Life Insurance Co (中信人壽), Wu said.

The insurer, which Chinatrust Financial acquired from the local unit of MetLife Inc in November last year, posted a net loss of NT$620 million in the first quarter because it failed to hedge against losses linked to currency volatility, Wu said.

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