Cathay Financial falls after gaining on quarterly profit surge

Cathay Financial shares rose as much as 2.3 percent to NT$85.9, their highest since July 26, before closing 0.2 percent lower at NT$83.80 in Taipei. The stock has gained 18 percent over the past month.

“Although Cathay Financial’s profit surged, it has been mostly discounted as it reports unaudited profits every month,” said Michael On, who invests the equivalent of NT$100 million as managing director at Beyond Asset Management Co. in Taipei. Trading became volatile in the afternoon and some investors funds to shipping stocks from financial institutions after cargo rates rose, On said.

Cathay Financial Chief Strategy Officer Lee Chang-ken said he didn’t know why the shares declined.

Net income at the Taipei-based company, which owns Taiwan’s largest life insurer, rose to NT$12.2 billion from NT$4.09 billion a year earlier. Earnings were calculated by subtracting the company’s first-half results from unaudited nine- month figures released in a statement after the market close on Oct. 9. Taiwan’s markets closed Wednesday for its National Day.

“Cathay Financial wasn’t seriously hurt in the credit-card crisis as other companies,” said Kevin Yang, chief investment officer at Paradigm Asset Management Co., which oversees NT$360 million in assets in Taipei. “I remain optimistic on its outlook through next year.” He said his funds hold some Cathay Financial shares.

Taiwan’s banks are recovering after a surge in defaults on credit-card loans crimped earnings the past two years. Banks wrote off NT$45.2 billion of credit-card debt in the first eight months of this year, about 55 percent of the amount in the same period in 2006, according to the Financial Supervisory Commission.

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