Cathay Financial Holdings (國泰金控) posted a net profit of NT$5.2 billion (US$169.41 million) last quarter, a sharp increase from NT$300 million three months earlier, after its life insurance arm swung into profits on stock dividend gains and lower capital costs, the company said yesterday.
The nation’s largest financial service provider also gave a resilient outlook for next year, saying its core businesses would improve further as it benefits from the global economic recovery.
“The company’s net profit surged to NT$5.2 billion in the third quarter, 16.33 times higher than the second quarter, after Cathay Life Insurance Co (國泰人壽) reversed losses,” company president Chen Tsu-pei (陳祖培) told an investors’ conference in Taipei.
The insurer, the nation’s largest by market share, reported a net income of NT$2 billion for the July-to-September period, from a loss of NT$3.1 billion in the preceding quarter, thanks to stock dividends, lower capital costs and improving overseas investments.
“I’m confident [Cathay Financial’s] net profit will exceed NT$10 billion next year as growth momentum remains healthy in the current quarter and beyond,” Chen said.
Overall insurance fee income rose 27.9 percent year-on-year to NT$432.1 billion in the first nine months of the year, with traditional life insurance products contributing about 50 percent, its financial report showed.
First-year premiums grew 52.3 percent to NT$264.4 billion, from NT$173.6 billion a year earlier, the report said.
Chen attributed the increase chiefly to the retirement of -interest-sensitive annuity policies and a strong sales network.
The insurer’s domestic stock investment also generated a 10 percent return to NT$174.4 billion in the third quarter, said Lin Chao-ting (林昭廷), a senior vice president at Cathay Life, albeit lower than the main stock index’s 12.39 percent increase during the same period.
Real estate investment contributed another 4.9 percent return for the insurer. Lin expected the figure to move up further as an improving economy and closer trade ties with China could increase demand for office space.
Chen said the insurer aimed to lower its cash position, currently at NT$406.6 billion, accounting for 15.1 percent of its assets, and increase overseas investments instead.
Cathay United Bank (國泰世華銀行), the banking subsidiary of Cathay Financial, contributed a net profit of NT$3.1 billion in the third quarter, as recovering demand for capital investment drove up loan growth by 7.7 percent from a year earlier, Chen said.
Fee income jumped 36.2 percent year-on-year to NT$5.57 billion, with income from wealth management expanding 65.8 percent, the report showed.
Cathay Financial chief financial officer Grace Chen (陳晏如) said interest and fee income should see stable and gradual growth this quarter and next year after the central bank hiked interest rates in June and September.
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