Shin Kong Financial Holding Co's (新光金控) first-half net income rose by 52 percent from a year ago on strong growth in premiums at its life insurance arm, the company said yesterday.
The company, the nation's eighth-largest financial group by assets, said its holdings of asset-backed securities (ABS) collateralized debt obligations (CDOs) related to US subprime home loans will suffer a limited impact from the recent market meltdown.
An estimated 37 percent of its NT$10.52 billion (US$319.9 million) ABS CDOs were invested in the US subprime market as of end of last month, the company said.
"We didn't see any downgrade to our ABS CDOs, which are all A-rated or above," Winston Yung (榮覺生), Shin Kong Financial's chief financial officer, told an investor conference.
"We will hold the CDOs to maturity unless the situation gets worse," he said.
Shares of Shin Kong Financial closed up NT$1.05, or 2.94 percent, to NT$36.8 on the Taiwan Stock Exchange yesterday. The company released its latest financial figures after the market closed.
The company posted first half net income of NT$9.24 billion, or NT$1.9 per share, mostly contributed by flagship Shin Kong Life Insurance (新光人壽) -- the nation's second-largest life insurer -- which generated NT$7.8 billion on strong first-year premium that jumped by 52 percent to NT$47 billion, the company said in a statement.
Despite a one-time provision of NT$350 million for its loans to the financially-troubled Ya Hsin Industrial Co (雅新實業), Shin Kong Bank (新光銀行) swung into the black with net income improved to NT$202 million for the first half.
This was compared to a deficit of NT$2,209 million in the same period last year at Shin Kong Bank, the company said in the statement.
In the first half of the year, Shin Kong's fee income soared by 71 percent to NT$783 million, mainly from the bank unit's wealth management sector, the statement said.
The bank's non-performing loan ratio for the first half was 2.21 percent.
"By and large, the performance is in accordance with our previous expectation," Vincent Chang (
Since Shin Kong Financial's shares took a tumble last week amid concern about the US subprime mortgage market, Chang suggested investors to do some bottom feeding on future prospects.
Shin Kong Life Insurance, meanwhile, expects the growth momentum of its first year premiums to remain through the second half of the year, with the better-than-expected sales of variable universal life insurance products.
The insurer also expects its application to set up a joint-venture in China to be approved by the Chinese authorities soon, Shin Kong Financial spokesman Victor Hsu (
Shin Kong Bank is aiming for a 10 percent to 15 percent growth rate in its loan sector, and expects strong demand to continue driving up its wealth management division's income, it said.