Increased letter of credit (L/C) commissions have helped Cathay General Bancorp to its 13th consecutive year of double-digit earnings growth and record 2006 earnings of US$117.6 million.

The Los Angeles-based bank cites a strong growth in loans, collection of interest on a non-accrual loan as well as the acquisitions of Great Eastern Bank (GEB) in April 2006 and New Asia Bancorp (NAB) in October 2006 as other reasons behind its strong performance.

Export boost

Commissions on L/Cs increased US$262,000, or 23.8 per cent, from US$1.1 million in the fourth quarter of 2005 to US$1.4 million in the fourth quarter of 2006, according to a statement issued by the bank.

It says this improved performance is due primarily to increases in export L/C commissions and acceptance commissions due in part to the GEB acquisition.

Expansion plans

Cathay's growth and its acquisitions of two more banks makes it one of the largest US-based full-service Asian-American banks, and the bank says it is looking to expand its network even more this year.

"We expect to open new branches in Ontario California, Dallas, Texas and Bellevue, Washington during the first half of 2007 and are awaiting regulatory approval to convert our Hong Kong representative office into a full branch to attract new customers and to expand our branch network," says executive vice chairman and chief operating officer, Peter Wu.

L/C boom

Several banks have said their 2006 performance was enhanced by sharp increases in L/C business.

One of these was Commercial Bank of Dubai, which announced record results for the year 2006 and said that trade finance services, including L/Cs, had made a significant contribution to CBD's results (DC World News, 19 January 2007).

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