China Development Financial Holding Corp (中華開發金控) posted NT$5.72 billion (US$191.77 million) in net income for the first eight months of this year, outperforming its net income for the whole of last year, as its strategy adjustments started to pay off, senior executives said yesterday.
The figures translated into earnings per share (EPS) of NT$0.39, making the conglomerate the second-worst performer among 15 listed peers, better only than Waterland Financial Holding Co (國票金控), with an EPS of NT$0.3 during the same period.
“We aim to boost returns on equity [ROE] to 15 percent,” from 4.6 percent in the first half of the year and 3.7 percent a year earlier, president Paul Yang (楊文鈞) told an investors’ conference.
Yang attributed the earnings pickup to more evenly distributed contributions from major subsidiaries after the holding company’s securities arm, KGI Securities Co (凱基證券), generated 35.7 percent of the profit, investment banking brought in 34.3 percent and financial market business 30 percent.
The integration of KGI with Grand Cathay Securities Corp (大華證券) allowed the subsidiary to take the No. 2 position in terms of profitability and assets after No. 1, Yuanta Securities Co (元大寶來證券), Yang said.
KGI is to strengthen business at home and take advantage of deregulations governing offshore securities units and deepen its presence in Singapore, Thailand and Hong Kong, as well as explore the Chinese market, he said.
China Development Financial remains interested in acquiring a commercial bank and is in talks with potential targets, Yang said, declining to comment on reports it is wooing Cosmos Bank (萬泰銀行).
“We have between NT$20 billion and NT$30 billion in idle funds and are exploring options to enhance capital efficiency,” Yang said.
The banking subsidiary, China Development Industrial Bank (中華開發工銀), cannot take deposits from individual customers, meaning it cannot conduct business with the bulk of KGI clients when individual customers account for 80 percent of the KGI clientele, Yang said.
As for the financial market, the conglomerate saw its book value of bond holdings shrink by NT$2.06 billion in the first half as a result of bond yield gains after the US Federal Reserve signaled plans in June to wind down quantitative easing.
“The hikes in bond yields should have a limited and tolerable impact on our portfolio given its average duration at 4.5 years and 3.3 years after risk hedge,” China Development Financial spokesman Eddy Chang (張立人) said.
Higher bond yields may weaken interest income and pose a big problem in 2017, Chang said.
Shares in China Development Financial edged up 0.48 percent to NT$8.4 yesterday, stronger than the TAIEX, which ended flat, Taiwan Stock Exchange data showed.
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