Chailease Holding Co (中租控股), the nation’s top leasing services provider, yesterday said that it would continue to expand in China, as the nation’s asset quality continues to improve.
Company data showed that overall asset quality had improved consistently in the first nine months of the year, with delinquency on loans falling from 4.5 percent at the end of the first quarter to 3.9 percent in the period ending Sept. 30.
In particular, delinquency in China fell from 4.7 percent to 3.7 percent during the same period, while its allowance to loan portfolio ratio improved from 4.9 percent to 4.7 percent.
The company plans to open two or three branches in China next year, compared with two this year, it said at an earnings conference.
However, the company expects cost of funding to continue rising as Beijing’s debt deleveraging policies continue, and said that costs last quarter were 1 basis point higher than the previous period.
At the same time, analysts raised concerns that as tighter liquidity continues to strain Chinese businesses, the improvement in loan delinquency might be hampered.
Chailease’s close partnerships with a few select and larger Chinese lenders have helped in minimizing the effects of rising funding costs, as they have remained stable while other banks have been raising loan pricing, the company said.
Despite the credit crunch, the company expects to have enough capital to sustain its lending operations, it said.
The company added that it is working with Chinese lenders to tap into that nation’s small and medium-sized enterprises (SME), a segment that it specializes in, but deemed to be labor intensive and avoided by banks in the country.
It said that it is in talks with Chinese banks to facilitate SME loans with Chinese banks for a fee.
Although recent legal amendments have made credit information more transparent among China’s smaller businesses, Chinese banks would require further convincing.
The company reported that net income in the first three quarters of the year rose 29 percent annually to NT$7.03 billion (US$232.88 million), or earnings per share of NT$6.17.
Concurrently, its loan portfolio in Taiwan, China and Southeast Asia saw respective annual gains of 15, 71 and 12 percent.
Overall, its loan portfolio rose 14 percent to NT$272 million.
Shares of Chailease yesterday dipped 0.25 percent to NT$79.60 in Taipei trading.
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