Fubon Financial Holdings Co (
"The fall in first-half earnings was brought about by our securities subsidiary, which saw largely shrinking profits," Fubon Financial spokesman Victor Kung (龔天行) told investors yesterday.
Fubon Financial's first-half net income declined by 17.3 percent from a year ago to NT$6.97 billion, or 0.91 per share, after earnings from its securities unit plummeted by 88.3 percent year-on-year to NT$193 million after booking losses totaling NT$469 million following a trading error in late June, the company said.
A trader at Fubon Securities Co (富邦證券), the nation's second-largest brokerage, erroneously placed a bid of nearly NT$8 billion on June 27 for a basket of about 280 stocks on behalf of Merrill Lynch International, which had asked the brokerage to place an order for only NT$80 million.
To make up for the mistake, Fubon Securities bought NT$5.1 billion worth of shares for its own accounts the next day and reaped profits of NT$310 million after unloading NT$2.5 billion worth of shares by the end of last month, Kung said.
Still, Fubon Financial expected to take further unspecified gains from the remaining NT$2.5 billion equities at hand, the executive said, adding that the company would garner NT$1.7 billion worth of cash dividends in the current quarter.
"We remain confident of achieving our forecasted earnings for this year ... banking on a recovering local bourse in the last half to bolster our securities business," Kung said.
Fubon Financial hoped to create net income of between NT$17.4 billion and NT$18.2 billion this year, up from NT$15 billion last year, contributed by its affiliates including Fubon Securities, Taipei Fubon Bank (台北富邦銀行), Fubon Bank Hong Kong, Fubon Life Assurance Co (富邦人壽), Fubon Insurance Co (富邦產險) and Fubon Asset Management (富邦投信).
Despite the financial conglomerate's stable fundamentals and profits, Fubon Financial may not be an ideal investment target for the time being, said Chu Yu-chun (朱玉君), a finance analyst at SinoPac Securities Corp's (建華證券).
"Shares of Fubon may be subject to downside pressure triggered by a 2 percent share release by Taipei City Government and a 10-percent share offloading from Citigroup Taiwan," Chu said.
The analyst expected a short-term target price of NT$33 and longer-term price of NT$37 for Fubon. Shares closed 0.8 percent slightly higher at NT$31.55 on the Taiwan Stock Exchange yesterday.
Kung yesterday declined to comment on Fubon Financial's reported bidding in the share sale of state-owned Taiwan Business Bank (台灣企銀) but said that the company would not let go of any possible acquisition opportunities that offer a reasonable price.
"Our current 120 outlets nationwide are not enough ... our ideal number is 200 to 250," Kung said.
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