CTBC Financial Holding Co (中信金控), the nation’s third-largest financial service provider by assets, aims to keep its life insurance arm at 20 percent of its total assets and contributing 10 percent of its profit due to limited investment options, a senior executive said yesterday.
The conglomerate made the statements after inking deals a day earlier to acquire Taiwan Life Insurance Co (台灣人壽) and Japan’s Tokyo Star Bank as part of its bid to grow its customer base and profits.
“The group will keep its bank-focused business strategy,” CTBC Financial president Daniel Wu (吳一揆) told an investors’ conference.
Under the strategy, CTBC Bank (中信銀行) — the company’s main source of income — is expected to account for 90 percent of profit while making up 80 percent of overall assets, Wu said.
The bank generated NT$3.91 billion (US$132.61 million) in net income during the July-to-September period, which was 79 percent of the group’s NT$4.97 billion in earnings, thanks to a healthy increase in its wealth management business, company data showed.
However, the number marked a slowdown from three months earlier due to weaker trading gains and higher provisioning costs linked to Taiwan Maritime Transportation Co Ltd (台灣海陸運輸) and ProMOS Technologies Inc (茂德科技), CTBC Bank senior vice president Rachael Kao (高麗雪) said.
CTBC Bank plans to integrate Tokyo Star Bank in the first quarter of next year after securing an agreement on Thursday to buy a 98.16 percent stake in the regional Japanese lender, which offers retail and corporate banking services at 31 branches in major Japanese cities.
“The buyout will enable CTBC Financial to serve Japanese customers and take advantage of the world’s second largest economy,” Wu said.
The integration of Taiwan Life, also likely to occur next quarter at the earliest, will add 868,000 customers and NT$431.69 billion in assets after regulators give it the go-ahead, Wu said.
Taiwan Life is the second insurer CTBC Financial has purchased this year after the conglomerate acquired the local unit of Canadian firm Manulife International Ltd’s Taiwanese unit — Manulife Insurance Co (宏利人壽) — in August to boost the economies of scale of its life insurance subsidiary.
The latest acquisitions will not affect CTBC’s overall asset quality with its double-leverage ratio set to climb from 96.2 percent to 103.6 percent and capital adequacy ratio from 155.3 percent to 139.3 percent, both much higher than statutory requirements, Wu said.
The purchase of Taiwan Life for NT$26.6 billion through a share-swap scheme will dilute existing shareholders’ equities by 8.4 percent, Wu said.
In 2011, CTBC Financial bought US-based MetLife Inc’s local unit, MetLife Taiwan Life Insurance Co (大都會人壽), and renamed it CTBC Life Insurance Co (中信人壽).
Shares in CTBC ended down 3.27 percent at NT$19.25 yesterday, underperforming the TAIEX’s 0.73 percent fall, Taiwan Stock Exchange data showed.