Cathay Financial Holding Co (國泰金控), the nation's largest financial service provider, is considering revising upward its financial forecast for the year as it may have met its financial goal about five months ahead of schedule, a company executive told investors yesterday.
"Based on our preliminary calculation, we may have reached our annual profit last month," said Lee Chang-ken (李長庚), chief strategic officer of Cathay Financial.
In March the company forecast profit of NT$22.7 billion for this year.
Despite the company posting a barely satisfactory financial report for the second quarter, Lee said "We'll consider raising our financial forecast in September."
Cathay Financial last week announced that net income for the second quarter ended June 30 fell to NT$5.9 billion from NT$6.5 billion in the same period last year, attributing the declining profit to a soft stock market that has impacted the company's profitability.
For the first half of the year, Cathay Financial reported net income of NT$18 billion, up from NT$13.8 billion during the same period last year. Earnings per share (EPS) for the period reacjed NT$2.24, the highest among the nation's finance industry players.
The largest growth in revenue for the second quarter, as well as the first half of the year, came from the company's banking unit, Cathay United Bank (國泰世華銀行), which jumped by 59 percent and 84 percent respectively.
Joseph Jao (饒世湛), chief senior executive vice president of Cathay United Bank, said that the lender has written off NT$3.1 billion of bad loans in the first half of the year and reduced its non-performing loan ratio to 2.33 percent.
However, the company's insurance unit, Cathay Life Insurance Co (國泰人壽), the nation's largest life insurer, saw second quarter net income drop from NT$4.5 billion to NT$3 billion. It reported net income of NT$9.8 billion for the first half of the year, a slight (4.3 percent) increase from a year ago.
The recent stock slump has exacerbated concerns among investors that growth in the nation's financial sector may slow.
"Cathay Financial will see less impact from the weak stock market, although the profitability of financial holding companies is highly related to market fluctuations," said Peter Hsieh (謝杰良), a manager for Polaris-Protime Securities Consultants (寶來普泰投顧) in Taipei.
Shares of Cathay Financial fell NT$0.5 to close at NT$55.5 on the TAIEX yesterday.
"The company's insurance sector now earns more interest income from overseas as the US has adjusted upwardly its interest rates ... I think [the central bank of] Taiwan may match that policy by the end of the year, which is a plus to Cathay Financial," Hsieh said.
Mike Chow (周道中), a manager with Yuanta Core Pacific Securities Corp (元大京華證券), said the somewhat disappointing results were no surprise, given the weak stock market in the second quarter.
He added that financial reports to be released this week by other holding companies are likely to see the same range of decline in profits.
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