Fubon Financial Holding Co (
Addressing concerns about the impact of the US subprime mortgage storm that has swept the Asian markets and weighed on financial stocks, the financial holding company said that its units have US$27.54 million investment linked to US subprime home loans.
"The market has overreacted to the crisis," Fubon Financial president Victor Kung (
Fubon Life Assurance Co (富邦人壽) has US$18 million linked to US subprime loans, guaranteed by an AA- rated bank, and Taipei Fubon Commercial Bank (台北富邦銀行) holds NT$314.8 million (US$9.54 million) of collateralized debt obligations linked to US subprime-related products.
The Financial Supervisory Commission (FSC) said last Friday that local banks' exposure to US subprime mortgage-related instruments was NT$40.4 billion, with losses reaching approximately NT$1.2 billion.
Shares of Fubon Financial declined by 2.5 percent to close at NT$27.6 on the Taiwan Stock Exchange yesterday. That compared with a 3.6 percent decline in the banking index and a 3.6 percent fall in the benchmark TAIEX.
For the first half of the year, Fubon Financial's net income increased to NT$8.66 billion, or NT$1.12 per share, compared with NT$3.65 billion, or NT$0.47 per share, during the same period last year.
Return on assets rose to 0.99 percent from 0.46 percent, and return on equity climbed to 10.5 percent from 4.7 percent a year ago.
Earnings generated by Fubon Life Assurance for the first half of the year rocketed by 583.1 percent to NT$2.73 billion thanks to strong first-year premiums. It contributed 31 percent to the parent company's earnings, up from nearly 11 percent from a year ago and replaced Fubon Financial's securities unit as the biggest contributor.
Fubon Securities Co (
Its banking unit, Taipei Fubon Commercial Bank, saw net income increase 126.3 percent to NT$1.88 billion in the first half of the year, propelled by wealth management fees. With the credit abuse storm easing, its non-performing loan ratio dropped to 1.41 percent at the end of June, from 1.51 percent at the end of March.
"Fubon Financial's first-half result was slightly better than we expected, helped by a vibrant stock market," said Greg Ou (
With the banking unit expected to continue recovering from the bad-debt crisis, the group's performance in the second half of the year is expected to improve further, Ou said.
While working to secure its domestic business, Fubon Financial is also keen to expand overseas.
Fubon Financial's Hong Kong banking subsidiary will qualify for investment in Chinese banks when the Closer Economic Partnership Arrangement, which allows the territory's banks with US$6 billion in assets to invest in China, goes into effect next year, Kung said.
The asset threshold was lowered from US$10 billion.
Kung declined to comment on whether the company was in talks with any Chinese banks for investment, which requires approval from the FSC.
Fubon Financial has applied for a license to set up an insurance company in Vietnam and expects to obtain approval in the second half of the year, Kung said.
It is also looking for Thai insurance companies as buying targets to enter the market, he said.
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