China Development Financial Holding Corp (CDF, 中華開發金控) yesterday said that it would continue to shift capital allocation toward the company’s commercial banking arm as part of its business transformation.
After completing the transformation of China Development Industrial Bank (CDIB, 開發工銀) into CDIB Capital Group (中華開發資本) last month, the company is focusing on KGI Bank (凱基銀行), its commercial banking unit and primary earnings driver.
However, the company said that it is facing the challenge of utilizing a considerable amount of idle capital and cash proceeds, as the newly formed CDIB Capital Group continues asset monetization efforts on legacy investment portfolios from the time it was an industrial bank.
Before the end of this month the parent company’s cash position should increase by about NT$20 billion (US$663.3 million), China Development Financial spokesman Eddy Chang (張立人) told an investors’ conference.
The company’s cash position stood at NT$27 billion at the end of last year, Chang said, adding that he expects NT$5 billion to NT$10 billion in followup monetization efforts that would result in more than NT$1 billion in annual cash influx in the next two to three years.
“We are flush with cash, and while the situation has led to much higher reserve and capital adequacy ratios compared with our peers, our return on equity performance is lower than the industry average and has a lot of room for improvement,” he said.
The company is looking for options to utilize the cash proceeds through acquisitions and by establishing new investment business platforms, he added, without providing further details.
He also declined to comment on the possibility of expanding into life insurance.
At present, China Development Financial allocates 50 percent of its capital to its commercial banking unit;, 28 percent to its brokerage arm, KGI Securities (凱基證券); and 22 percent to the newly formed CDIB Capital Group, company data showed.
Meanwhile, CDIB Capital Group will focus on the “China Plus” strategy, which taps into inbound and outbound investments to capitalize on rising middle-class consumption there, which are expected to drive up demand for retail and services, as well as value-added manufacturing.
In addition to helping Chinese companies expand into global markets, the strategy aims to assist foreign companies that are looking to gain a foothold in the country, China Development Financial said.
KGI Bank is also awaiting regulatory approval to acquire stakes in China’s Bank of Jiangsu (江蘇銀行) as part of preparations to establish a consumer financing joint venture.
As Chinese regulators crack down on the country’s chaotic peer-to-peer lending market, it is hoped that a consumer financing business backed by a bank would better meet elevated compliance requirements, Chang said.
China Development Financial reported that net income last quarter rose 64.55 percent annually to NT$1.85 billion.
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
CROSS-STRAIT TENSIONS: The US company could switch orders from TSMC to alternative suppliers, but that would lower chip quality, CEO Jensen Huang said Nvidia Corp CEO Jensen Huang (黃仁勳), whose products have become the hottest commodity in the technology world, on Wednesday said that the scramble for a limited amount of supply has frustrated some customers and raised tensions. “The demand on it is so great, and everyone wants to be first and everyone wants to be most,” he told the audience at a Goldman Sachs Group Inc technology conference in San Francisco. “We probably have more emotional customers today. Deservedly so. It’s tense. We’re trying to do the best we can.” Huang’s company is experiencing strong demand for its latest generation of chips, called
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure