China Development Financial Holding Corp (中華開發金控) yesterday unveiled its roadmap for the coming three years, which includes raising its stake in Taipei-based China Life Insurance Co (中國人壽) to 100 percent and increasing its subsidiaries’ return on equity (ROE) ratios to 12 percent.
“We are to make China Life a fully owned subsidiary by the end of 2020, from the current 35 percent stake, through means that are beneficial to both sides,” newly installed president and CEO Alan Wang (王銘陽) told an investors’ conference in Taipei.
Wang did not to elaborate on how the firm plans to do so except to say that a share swap would be unfavorable to China Development shareholders because their interest in the group would be diluted.
China Development last year bought another 25 percent stake in China Life on the open market.
The strategy already paid off last quarter, as the life insurance arm generated NT$3.68 billion (US$125.31 million) in net income, accounting for 35 percent of China Development’s overall earnings, company data showed.
The group earned NT$3.2 billion in net income during the January-to-March period, a 77.8 percent improvement from a year earlier, or earnings of NT$0.22 per share, according to its financial statement.
Wang said China Development would actively reallocate its assets to shore up their proficiency, so that the group could reduce its dependence on capital gains and grow recurrent fee-based revenue.
He set a 12 percent ROE target for all subsidiaries, which also include KGI Bank (凱基銀行), KGI Securities Co (凱基證券) and CDIB Capital Group (中華開發資本) by 2020, from single-digit percentages at present.
“Top executives at all subsidiaries have to draw up performance plans and achieve their target according to their schedule,” Wang said.
KGI Bank is seeking to expand its customer base and lending operations by taking part in syndicated loans and strengthening ties with small and medium-sized enterprises, China Development said.
The lender is waiting for regulatory approval to set up a branch in Hong Kong to increase its overseas earnings contributions and is tapping into financial technology business opportunities, KGI Bank said.
KGI Securities is to consolidate its leadership position in underwriting and financial advisory, stock brokerage, margin loans and option businesses, while CDIB Capital would actively slash its direct investment position and raise fee-based revenue, in line with its efforts to transform into an asset manager.
Assets under management rose 8.1 percent to NT$37 billion last year and is expected to reach NT$45 billion this year, CDIB Capital said.
China Life is to reveal more details about its business operations at its earnings conference next month.
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