No change in ongoing relations with LCY: CTBC
By Ted Chen,The China Post
August 6, 2014, 12:00 am TWN
CTBC Financial Holding Co. (CTBC, 中信金) yesterday announced at an earnings conference that its dealings with the LCY Chemical Co. (LCY, 李長榮化學工業), which is suspected to be the culprit behind the gas explosions in Kaohsiung City last Thursday, and is possibly facing immense reparation obligations.
CTBC acknowledged current collateralized loans extended to LCY are tallied at about NT$430 million, and that according to conventions, no changes in its dealings with the petrochemical company will be initiated before investigations by authorities are complete. CTBC noted that LCY has always exhibited stellar credit and debt repayment ratings, and that its banking arm will not halt the extension of financing services in the absence of compelling factors.
CTBC yesterday recorded after-tax net income of NT$28.478 billion, up by 118.6 percent year-on-year, and earnings-per-share of NT$1.94 over the first six months of the year, with return on equity (ROE) and return on asset (ROA) reaching 27.74 percent and 1.94 percent, respectively.
Profits Recognized Since June
Most notably, CTBC President Daniel Wu (吳一揆) stated that the company recognized profits of NT$14.8 billion from its acquisition of Japan's Tokyo Star Bank (東京之星) in June on account of the bargain price of the transaction.
The acquisition contributed to a 114-percent improvement in earnings performance over the first half of this year. The acquisition also marked the first acquisition of a Japanese bank by a Taiwanese counterpart, while swelling CTBC's consolidated assets from NT$2.7 trillion to NT$3.5 trillion and bolstering the company's overseas service locations to 100, the highest among domestic financial institutions. The company noted that Tokyo Star Bank is expected to contribute about NT$331 million in pre-tax income monthly.
In addition, citing tax regulations, the company stated that the windfall from its acquisition of Tokyo Star Bank at a bargain price will not be subject to tax amortization, as the Japanese company will be allowed to continue operating under its name and will not be dissolved.
Meanwhile, the company noted that over the first half of this year, cumulative revenues generated by its insurance arm, CTBC Life (中信人壽), rose to NT$983 million, up by 6.8 percent year-on-year.
The company noted that excluding the windfall derived from the Tokyo Star Bank and gains recorded by its insurance arm, growth in overall operating revenue rose by 10.1 year-on-year, with net interest revenues improving by 21.8 percent, propelled by strong growth in net interest margin performance ratings. Revenues derived from its services including wealth management, lottery operation and transaction fees improved by 16.3 percent, said the company.