First Financial Holding Co (第一金控) yesterday said that it set aside another NT$129 million (US$3.9 million) in the first half of this year to compensate investors’ losses from NT$4.7 billion in structured notes.
That will make the total provision NT$1.035 billion so far.
As of Monday, the provision was considered to be “enough” to settle a lion’s share of 85 percent of disputed investments, Annie Lee (李淑玲), vice president and head of the company’s strategy and planning department, told a Web-cast investors’ conference yesterday.
“Not too much has been left [that requires further write-offs],” Lee said.
She also said that the company expected “no or minimal exposure” to potential losses from mortgages to owners of facilities such as farmland and fish ponds devastated by Typhoon Marokot in southern Taiwan since the subsidiary banking unit had tightened its loan credit.
Despite a 4.5 percent decline in loan growth in the first half of the year, Lee said that she expected loan demand to pick up in the second half from the nation’s exporters to fund peak-season operations and government agencies for post-disaster reconstruction efforts.
Overall, its subsidiary banking unit’s loan book may ease its decline to contract by a smaller 1 percent to 2 percent year-on-year for this year, Lee said.
The company’s net income declined 52 percent year-on-year to NT$2.9 billion for the first six months of this year, or a NT$0.47 earning per share.
But an improved asset book has pushed up its group capital adequacy ratio by 19 percent year-on-year to level at 123.71 percent in the first half.
And the company has witnessed a pick-up in fee income from its wealth management business since last month, which is expected to further recover along with the climbing equity market.
Lee also expects the company’s net interest margin, which dropped to 0.97 percent last month on the central bank’s previous rate cuts, to bottom out this quarter and return to the 1 percent level by the end of this year.
In spite of slow business recovery, BNP Paribas Securities (Taiwan) Co yesterday recommended a “buy” rating for the company because of its attractive valuation.
“For investors looking for a low beta, high transparency and good value stock, First Financial is our top pick in the banking sector as merger and acquisition risks remain high in the private bank area,” its report, written by James Wu (吳永新), said yesterday.
Fitch Ratings Ltd on Monday also confirmed a “stable” outlook on the company.
The rating agency said it expected First Financial to deliver moderate net profits this year, supported by well-managed assets despite a challenging operating environment amid the unfolding economic slowdown.
The company has low leverage and its subsidiaries are adequately capitalized, its press statement said.
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