Thu, Aug 08, 2013 - Page 14 News List

Chailease income rises as loans grow

CASTING A SHADOW:The firm downplayed worries about its asset quality caused by the rise of China’s shadow banking system, saying its delinquency ratio there was easing

By Crystal Hsu  /  Staff reporter

Chailease Holding Co (中租控股), the nation’s top leasing services provider, yesterday posted a 7 percent quarterly rise in net income to NT$1.49 billion (US$49.39 million) during the April-to-June period, as its loan operations continue to grow, company executives said yesterday.

The figures translate into earnings per share (EPS) of NT$1.49, compared with EPS of NT$1.39 recorded three months earlier, Chailease data showed.

Cumulative earnings totaled NT$2.87 billion for the first six months, surging 79 percent from the first half of last year, while accumulated EPS rose from NT$2.04 to NT$2.88 during the same period, according to the company’s financial report.

The market has been concerned about Chailease’s asset quality in recent months amid rising risks stem from China’s rapidly growing shadow banking system.

In late June, the company issued a statement saying it has sufficient funds to maintain smooth operations even with China’s liquidity squeeze.

In a conference call yesterday, the company said its overall delinquency ratio stayed flat at 3.5 percent last quarter, but that its delinquency value had risen from NT$5.04 billion to NT$5.36 billion.

Chailease’s allowance — equivalent to coverage for banks — dropped from NT$4.5 billion in the first quarter to NT$4.37 billion last quarter, while its provisioning ratio fell from 3.1 percent to 2.9 percent, the company said.

“The company does not set provisioning or capital adequacy targets, but is making adjustments as it sees fit, after factoring in the macro-economic environment and credit profiles of individual clients,” Chailease spokesman Kevin Liao (廖英智) told investors via an online Webcast.

Chailease does not see a need to implement a steep provision pickup on the horizon, although the delinquency ratio for its China operations rose to 5.2 percent as of June 30, from 4.8 percent in late March and 4.3 percent a year earlier.

“Our asset quality will improve in the future, as the delinquency ratio for our China operations already eased to 5.1 percent last month,” Liao said, adding that better recoveries will also help assets, as seen last quarter.

Liao declined to elaborate on delinquent clients except to say that textile firms rank high in delinquency.

Chailease shares ended down 3.39 percent yesterday, underperforming the TAIEX, which fell 1.46 percent, according to the Taiwan Stock Exchange.

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