State-run Mega Financial Holding Co (兆豐金控) is positive about earnings improvement this year, even though quantitative easing by global central banks is making it difficult to turn a profit in overseas markets, chairman Mckinney Tsai (蔡友才) said.
The bank-focused financial services provider last month posted NT$2.87 billion (US$93.15 million) in net income, raising its cumulative profit for the first four months of the year to NT$11.07 billion, or earnings per share (EPS) of NT$0.89, company data showed.
Mega International Commercial Bank (兆豐國際商銀), the main source of income, generated NT$9.08 billion, accounting for 82 percent of the profit, Mega statistics showed.
The results translate into an EPS of NT$1.18 as of last month, outperforming the banking subsidiaries of Cathay Financial Holding Co (國泰金控), Fubon Financial Holding Co (富邦金控) and CTBC Financial Holding Co (中信金控).
Tsai expects net profit to top NT$15 billion in the first half of the year, allowing Mega Financial to retain its title as the most profitable state-run financial service provider and Mega Bank as the most profitable lender among large-sized banks.
If Mega Bank decides to sell its shares in China Development Financial Holding Corp (中華開發金控), it could boost its income this year by NT$1 billion or more, Tsai said.
Mega Bank owns 100 million shares of China Development Financial, which it bought for NT$2 per share, Tsai said, adding that it intends to dispose of the holdings when the share price rises to NT$13 or NT$14.
Financial shares are generally expected to outperform Taiwan’s main trading index due to a series of liberalization measures.
However, there is no timetable for such a share sale, given Mega Bank’s robust profitability, Tsai said, as the state-run lender generates about NT$2 billion a month.
The loose monetary policy stance of major central banks worldwide has made operating conditions more difficult in overseas markets, especially in China, where authorities have cut interest rates three times this year to support that nation’s economic growth, Tsai said.
Overseas and offshore banking unit operations, which generated about 65 percent of the group’s net income in recent years, are likely to fall below the 60 percent mark this year, Tsai said.
Increasing competition is also constraining profitability, he said.
Mega Financial shares yesterday closed up 1.29 percent in Taipei trading at NT$27.25, outperforming the TAIEX, which rose 0.18 percent, Taiwan Stock Exchange data showed.
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