Fubon Financial expects profit surge

Fubon Financial Holding Co (富邦金控), the nation's sixth-largest financial holding firm, expects to see profits surge by 50 percent this year from last year's NT$8 billion (US$243.7 million) as the sector emerges from a period of high consumer credit risk.

"Compared with last year, the consumer finance business will see a reduced degree of losses. Together with financial planning, they will be the twin engines driving the company's growth this year," Fubon Financial chairman Daniel Tsai (蔡明忠) said on the sidelines of a press conference held yesterday with Kaohsiung-based Dream Mall (夢時代購物中心) to launch a co-branded credit card.

While several banks relying heavily on credit and cash-advance cards suffered a big blow last year, Fubon Financial's banking arm, Taipei Fubon Bank (台北富邦銀行), was able to weather the storm thanks to its more conservative strategy in this segment, he said.

At the end of last month, Taipei Fubon Bank had nearly 2.3 million credit cards in circulation, making it the nation's sixth-largest credit card issuer. Its non-performing loan ratio in the segment was 1.09 percent, lower than the average 2.27 percent in the market.

Currently, more than NT$300 billion in credit and cash-card debts in the financial sector is awaiting processing by the government's debt-relief mechanism, which slashes the revolving interest rate to an average of 3 percent.

This made at least NT$40 billion of the bank's interest income disappear virtually overnight, he said.

Facing a brand new market in consumer financing, Tsai said that new approaches and different products were needed to redevelop unsecured consumer loans, but he refused to disclose the firm's tactics to increase its market share.

Fubon Financial's wealth management business, integrated with securities, expanded by 70 to 80 percent last year and the chairman expressed confidence that it would grow by another 30 to 50 percent this year as turnover of the stock market continues to rise.

In corporate financing, the holding firm expects to register another 50 percent growth this year, as the new team brought in from rival Chinatrust Financial Holding Co (中信金控) early last year has been working on integration and started building synergy.

Fee income in syndicated loans and from financial consultancy will continue to be the corporate finance segment's major growth driver, he added.

Outside Taiwan, Tsai said that he was looking to further business interactions with China via the company's Hong Kong-based subsidiary, Fubon Bank (Hong Kong) Ltd, although the strategy has been somewhat restricted by cross-strait regulations.

Taiwan Ratings Corp (中華信評) in November affirmed its "twAA" long-term and "twA-1" short-term counterparty credit ratings on Fubon Financial with a stable outlook.

The ratings continue to reflect the Fubon group's good market position, balanced business mix, prudent financial management and satisfactory capitalization, Taiwan Ratings said at the time.

The group's market presence in the life insurance sector has strengthened because of improved integration and cross selling among group members in recent years, it said.