Chailease Holding Co Ltd (中租控股), the nation’s biggest leasing services provider with operations in Taiwan and China, yesterday raised the general provision ratio from 4 percent to 4.5 percent for its loan portfolio in China in response to potential impact from the nation’s unfavorable macroeconomic environment.
“Some investors have indicated that an increase to the provision ratio is required to be sufficient,” company spokesman Kevin Liao (廖英智) said in an investors’ conference.
“We might lower the figure to less than 4 percent in the near future, if we see improvements in asset quality and recovery ratio,” he said.
The company is still expecting a loan portfolio in China to continue expanding in the second half, propelled by anticipated demand for funds in Shenzhen and Xiamen, where a high proportion of regional GDP comes from exports, Liao said.
“In the Chinese market, we are sacrificing immediate profits to build a better foundation that enables long-term growth,” Liao said.
Daiwa Securities is anticipating that China’s weakened economy will have some impact on the company’s performance there.
Daiwa analyst Helen Chien (簡君穎) slashed forecasts for Chailease’s annual loan growth in China this year from 25 percent to 20 percent in a note to investors published on Wednesday.
Chien said that the company’s loan growth in China is not highly correlated to China’s purchasing managers index, which has dipped from 51 percent in the fourth quarter last year to 50 percent in the first half this year. Weaker investor sentiment in China’s economy is to continue to drag the company’s loan growth in China next year, she said.
Chailease yesterday reported that first-half net income rose 6.21 percent year-on-year to NT$3.42 billion, or NT$3 per share, compared with NT$3.22 billion, or NT$2.94 per share.
Revenue rose 4.39 percent to NT$17.6 billion in the first six months, from NT$16.86 billion in the same period last year.
The company plans to open offices in Cambodia, Malaysia and the Philippines to increase its presence in emerging markets.
The capital leasing firm said its consolidated loan portfolio grew 19 percent year-on-year to NT$212.47 billion, with loans in Taiwan, China and Thailand respectively increasing 22 percent, 20 percent and 2 percent annually.
Taiwan remains the company’s largest market, with loans accounting for 52 percent of its loan portfolio, followed by China at 32 percent and Thailand at 13 percent in the first half of the year.
However, loans in Thailand dwindled from 16 percent in 2013, with the delinquency ratio rising to 5.9 percent at the end of June, compared with 3.6 percent in the same month last year, while the delinquent ratio rose from NT$967 million to NT$1.6 billion amid a weakened economy in Thailand in the first half of the year.
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