Cathay Financial Holding Co (國泰金控), the nation’s biggest financial services provider, is looking at flat business in the second half of this year, as it seeks to focus on risk controls amid lingering economic uncertainty, officials said yesterday.
The remarks came after net income in the first half totaled NT$32.91 billion (US$1.03 billion), or earnings per share of NT$1.98. That was a 33.06 percent decline from the same period last year.
The profit retreat had much to do with a weak local currency and capital gains last year, officials said, adding that lower stock holdings would weigh on cash dividend income this year.
Photo: CNA
A soft New Taiwan dollar would boost the value of foreign-currency assets, which account for 70 percent of investments at main subsidiary Cathay Life Insurance Co (國泰人壽), officials said.
Like other peers, Cathay Financial has no lending to cash-strained Chinese developers, although it has NT$400 billion of exposure to China, Cathay Financial president Lee Chang-ken (李長庚) said.
The sum reflected a drop of NT$200 billion over the past three years as a result of sluggish business activity in China due to the COVID-19 pandemic, rather than a strategic pullout, Lee said.
China, while going through some headwinds, is still a major growth driver in the world’s economy this year, according to international research bodies, Lee said, expressing hope that Beijing would take due measures and rein in downside risks.
Total premiums at Cathay Life fell 4 percent to NT$233.7 billion in the first half, easing from a 26 percent decline a year earlier, officials said.
Protection insurance policy sales grew 5 percent, more healthy and profitable in the long term and consistent with regulatory requirements, officials said.
The life insurer is confident of keeping hedging costs within 1 to 1.5 percent as predicted earlier this year after expenses subsided in the second quarter.
Another main subsidiary, Cathay United Bank (國泰世華銀行), saw its number of Cube credit cards soar to 5 million despite ending a partnership with retailer Costco, officials said, attributing the success to strong promotions.
However, the credit card business would make neutral contribution to the bottom line after factoring in promotion costs, officials said.
The lender declined to project profit from swap operations in the second half, saying it took advantage of an opportunity to make NT$3 billion in the first six months, but the business might cease to exist going forward.
Cathay Century Insurance Co (國泰世紀產險), a profit drag last year, would not affect the group’s future financial performance, as the subsidiary has set aside sufficient provisions for residual COVID-19 claims, officials said.
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