The China Post staff
Taiwan Ratings Corporation yesterday assigned a “twBB-/twB” rating to International Securities, which reflects its short history as an integrated securities firm and lack of diversity in its revenue stream. The company continually faces significant challenges and aims to strengthen its new business operations, such as underwriting, as it further diversifies its revenue base which will in the long run provide a stronger and competitive position for the firm. International Securities has experienced a rapid expansion in its number of branches which has helped to increase its market share to 1.1 percent as of May this year. The company’s operations include proprietary trading, underwriting, margin lending and so forth. Revenues from this line of business alone accounted for 61 percent of last year’s adjusted revenues.
Although International Securities has not booked a loss-making year since 1989, annual return on equity has averaged a 5.3 percent which can be modestly attributed to a sharp increase in capital requirements.
As of June this year, the company’s adequacy ratio improved by 255 percent due to the start up of its margin lending business.
Despite the company’s three-year history, most of International’s balance sheet is relatively clean compared to other securities houses. The company’s focus on risk management should provide some down-side protection to its financial profile as it competes for larger market share, stated the report.