CTBC poised for record annual earnings

DIVESTMENT::The conglomerate may gain an extra NT$1.09 in EPS this year if the sale of its current headquarters brings in the expected NT$15 billion in net profit, CTBC Bank said

By Crystal Hsu  /  Staff reporter

Wed, Aug 14, 2013 - Page 13

CTBC Financial Holding Co (中信金控), the nation’s third-largest financial services provider, is poised to achieve record-high earnings this year if it manages to sell its headquarters building in Tapei’s Xinyi District (信義) next quarter.

The conglomerate plans to relocate to a new building in Nangang District (南港) next year and is putting its current headquarters building on the market next quarter, CTBC president Daniel Wu (吳一揆) told investors.

“If things proceed smoothly, the company may complete the sale by the end of this year,” Wu said.

Located in a prime real-estate area on Sung Shou Rd near Taipei 101, the building and its adjoining Novel Hall Theater (新舞台) are expected to be sold for about NT$25 billion (US$833.28 million), an amount that would translate into a substantial net profit after subtracting costs valued at NT$6 billion.

Rachael Kao (高麗雪), senior vice president of the company’s main subsidiary, CTBC Bank (中信銀), said the conglomerate may gain an extra NT$1.09 in earnings per share (EPS) this year if the divestment brings in the expected NT$15 billion in net profit.

That would raise CTBC Financial’s total earnings to a record-high NT$35 billion for the year after it posted NT$13.3 billion in net income during the January-to-June period, up 21.9 percent from the same period last year, a company report showed.

The first-half earnings translate into EPS of NT$1.02 and the full-year figure may rise to more than NT$2.70 on the back of the property sale, analysts said.

On a quarterly basis, CTBC Financial reported a 6.4 percent pickup in net income last quarter with NT$6.86 billion from the NT$6.44 billion it posted in the first quarter, the report showed.

Kao attributed the improvement to the group’s growing wealth management and treasury marketing businesses.

CTBC Bank generated NT$6.05 billion in net income during the April-to-June period, accounting for 88 percent of the conglomerate’s total net income and more than making up for the NT$82 million in net losses incurred by its securities subsidiary, CTBC Securities Co (中信證), the report said.

The securities arm posted NT$8 million in net losses for the first half of the year as markets reflected worries about the US Federal Reserve tapering off quantitative easing.

CTBC Bank is looking at stable growth in fee and interest incomes in the second half, barring any downside surprises, Kao said.

The lender saw its net interest margin decline to 1.52 percent in June from 1.55 percent in March, while its interest-earning assets edged up from NT$1.79 billion to NT$1.83 billion, the report added.

CTBC Bank needs to set aside an additional NT$6 billion in general provisions to meet the 1 percent interest margin requirement and the lender plans to comply with a one-off measure by the year’s end, Kao said.

The lender has no exposure to failing LED chip manufacturer Chi Mei Lighting Technology Corp (奇力光電), Kao added.

CTBC Financial shares closed up 0.78 percent to NT$19.45 yesterday, underperforming the TAIEX, which gained 1.05 percent, Taiwan Stock Exchange data showed.