- Credit Portfolio Growth: Taiwan 6%, China 7%, ASEAN 5% year-over-year; consolidated 7% year-over-year.
- Delinquency Ratio: Consolidated 3.5%; Taiwan decreased to 2.7%, China increased to 4.1%, ASEAN increased to 4.9%.
- Consolidated Revenue: TWD50.7 billion for the first six months of 2024, 7% growth year-over-year; TWD25.7 billion for Q2 2024, 3% growth quarter-over-quarter.
- Net Profit: TWD12.2 billion for the first six months of 2024; Q2 2024 net profit up 10% quarter-over-quarter.
- Earnings Per Share (EPS): TWD7.08 for the first six months of 2024.
- Cost-to-Income Ratio: Improved to 27% for the first six months of 2024 from 28% last year.
- Return on Assets (ROA): 2.6% for the first half of 2024, improved from 2.5% in Q1 2024.
- Return on Equity (ROE): 17% for the first half of 2024, improved from 16% in Q1 2024.
- Allowance to Loan Portfolio Ratio: Consolidated 2.5%, Taiwan 1.9%, China 3%, ASEAN 3.6%.
- Taiwan Revenue: TWD27.4 billion for the first six months of 2024, 9% growth year-over-year; Q2 2024 revenue up 4% quarter-over-quarter.
- Taiwan Net Profit: Decreased by 4% year-over-year for the first six months of 2024; Q2 2024 net profit up 11% quarter-over-quarter.
- China Revenue: TWD16.4 billion for the first six months of 2024, 6% growth year-over-year; Q2 2024 revenue up 1% quarter-over-quarter.
- China Net Profit: TWD6.26 billion for the first six months of 2024, decreased by 12% year-over-year; Q2 2024 net profit up 22% quarter-over-quarter.
- ASEAN Revenue: TWD6.74 billion for Q2 2024, 4% growth year-over-year; Q2 2024 revenue up 2% quarter-over-quarter.
- ASEAN Net Profit: TWD935 million for the first six months of 2024, decreased by 26% year-over-year; Q2 2024 net profit up 2% quarter-over-quarter.
Release Date: August 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Chailease Holding Co Ltd (TPE:5871, Financial) achieved a 7% year-over-year credit portfolio increase on a consolidated level.
- Taiwan's delinquency ratio decreased from 2.8% to 2.7%, indicating improved asset quality.
- Consolidated revenue for the first six months of 2024 reached TWD50.7 billion, representing a 7% growth compared to the same period last year.
- Second quarter consolidated profit was up 10% quarter-over-quarter, driven by more tax rebates recognized in China.
- The cost-to-income ratio improved slightly to 27% for the first six months of 2024 compared to 28% last year.
Negative Points
- Delinquency ratios for China and ASEAN increased in the second quarter, reflecting weak macroeconomic conditions.
- Net profit for the first six months of 2024 decreased due to less tax rebates in China and more impairment losses.
- ASEAN's delinquency ratio increased to 4.9%, with Thailand's macroeconomic situation causing continued asset quality issues.
- The average loan yield in Taiwan decreased due to a change in product mix, particularly slower growth in the higher-yield secondhand car financing business.
- Impairment losses for the first half of 2024 totaled TWD9 billion, reflecting increased delinquency ratios and the need for higher provisions.
Q & A Highlights
Q: Can we check if the 10% growth rate target is still intact and where do we see the growth accelerating to achieve that 10%?
A: Sharon Fan, SVP of IR: The management wants to maintain the full-year target. Historically, the second half of the year tends to perform better, so despite being slightly behind, the target remains unchanged.
Q: Regarding the delinquency in ASEAN, particularly Thailand, can you break out how much is led by Thailand and how much by Malaysia or other regions?
A: Sharon Fan, SVP of IR: The delinquency ratio for ASEAN is mainly driven by Thailand. Other regions like Malaysia and Vietnam have shown some improvement. Managing Thailand's asset quality is currently a priority.
Q: What is the outlook for the spread in Taiwan following the March rate hike and changes in product mix?
A: Sharon Fan, SVP of IR: The contraction in Taiwan's spread is mainly due to product mix changes, particularly a slowdown in higher-yield used car financing. The spread is expected to maintain a similar level going forward.
Q: When was the new policy to involve the legal team earlier in the collection process in China implemented?
A: Sharon Fan, SVP of IR: The policy is a gradual process and part of regular monthly reviews. It aims to improve recovery rates and overall asset quality.
Q: Is the previous guidance of TWD330 million to TWD340 million for full-year tax rebates in China still unchanged?
A: Sharon Fan, SVP of IR: Yes, the guidance remains unchanged. Most tax rebates are received in the first two quarters, with smaller amounts expected in the third and fourth quarters.
Q: How has the used car business portfolio balance changed in Taiwan, and what is the current average yield on that portfolio?
A: Sharon Fan, SVP of IR: The used car financing business, which accounts for 15-20% of the Taiwan book, has not grown this year and is being maintained or slightly decreased. The average yield is not expected to have a significant negative impact going forward.
Q: What is the outlook for China’s funding costs if the LPR remains unchanged?
A: Sharon Fan, SVP of IR: If the LPR remains unchanged, funding costs will maintain current levels. Any LPR cuts would benefit funding costs, though with some lag due to the timing of bank credit line renewals.
Q: How do you balance volume and margin to achieve the 10% loan growth target?
A: Sharon Fan, SVP of IR: The priority is to maintain a stable spread. Business volume growth will rely on a meaningful recovery of the macroeconomy.
Q: What is the current situation of China’s asset quality in July and August?
A: Sharon Fan, SVP of IR: The delinquency ratio has remained stable, and it is expected to stay around this level until the end of the year unless there is significant macroeconomic acceleration.
Q: Why did the fee and commission income decline in the second quarter, and is it more driven by Taiwan or China?
A: Sharon Fan, SVP of IR: The decline is due to lower fees from Taiwan's used car financing and changes in China’s pricing mix. The overall pricing remains stable, but the fee component has decreased.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
