Fri, May 03, 2019 - Page 12 News List

Improving banking and insurance segments to boost CTBC this year

By Chen Cheng-hui  /  Staff reporter

CTBC Financial Holding Co (中信金控), owner of the nation’s largest credit-card issuer, has maintained a positive yearly outlook on the back of strengthening banking business and improved insurance operations.

The key focuses for this year are to increase overseas profit contribution, pursue a value-driven life insurance business, and explore digital banking and financial technology opportunities, a report released at a company earnings conference on Tuesday said.

The bank-centric financial conglomerate said that it aims to achieve single-digit percentage loan growth at CTBC Bank (中信銀行) this year from last year.

It is also targeting annual expansion of 3 to 5 basis points in net interest margin, a critical gauge of the bank’s profitability, driven by corporate loan growth for capital equipment imports and rising fund demand from Taiwanese companies moving back from China, it added.

Despite an annual decline of 11.6 percent in first-quarter premiums last quarter, compared with the industry average of an annual increase of 6.4 percent, Taiwan Life Insurance Co (台灣人壽) is expected to see liability costs drop by 5 to 10 basis points this year, CTBC Financial told analysts.

The life insurance arm is also to see an increase of 8 basis points in its recurring yield, as well as a bigger investment portfolio and contained hedging costs, it added.

CTBC Financial reported net profit of NT$11.07 billion (US$358.19 million) in the first quarter, up 131.3 percent quarterly, but down 9.4 percent annually, with earnings per share of NT$0.57.

The company’s return on equity (ROE) and return on assets (ROA) last quarter improved from the previous quarter to 14.18 percent and 0.75 percent respectively.

However, ROE and ROA were both down from 16.08 percent and 0.91 percent a year earlier respectively.

Nonetheless, the firm said that it last quarter enjoyed benign asset quality and high coverage ratio, as well as adequate capital structure.

The first-quarter profit decline was mainly dragged by the banking unit’s high comparison base last year and its increased bad debt provisions, Yuanta Securities Investment Consulting Co (元大投顧) said.

CTBC Bank, which accounted for 75 percent of the parent company’s earnings, posted net profit of NT$8.29 billion, up 20.8 percent quarterly, but down 9.4 percent annually.

Taiwan Life reported net profit of NT$2.77 billion, up 262 percent from the previous quarter and 0.8 percent from a year earlier, company data showed.

The insurance unit’s performance was supported by equity and bond market rallies in the first quarter, which helped increase its recurring income, while decreasing liability costs, it said.

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