Fubon Financial Holding Co (富邦金控), the nation’s second-largest financial service provider, yesterday reported that net income last year surged 82 percent year-on-year to NT$19.8 billion (US$621.8 million), or NT$2.44 per share — the highest in the company’s history and among local financial holding companies.
Along with unspent reserves of NT$18 billion from 2008, the company could distribute cash dividends of NT$3 per share this year, subject to approval by the board, which will be meeting late next month, company president Victor Kung (龔天行) told an investor conference.
The board could decide instead to set aside from reserves to boost the company’s capital adequacy ratio, Kung said.
Its life insurance arm — Fubon Life Insurance Co (富邦人壽) — reported a net income of NT$10.1 billion, accounting for 51 percent of the parent company’s net profit, with a record high number of 10,785 tied agents.
STRONG PERFORMANCE
Kung attributed the insurer’s performance to strong sales of high-margin products, such as traditional life, health and accident policies while absorbing low-cost capital by boosting sales of interest-sensitive annuities.
The company’s banking arm, however, suffered a 14.5 percent decline in profit year-on-year to NT$5.15 billion last year amid a narrow net interest margin (NIM) environment, which offset a sharp 10 percent increase in its loan business.
Saying the central bank will likely raise interest rates in the second half of this year, Fubon expects the sector’s NIM to improve by 10 basis points by the end of the year, Kung said, adding that the company forecasts better prospects this year.
Amid concerns over overheating property prices, Kung expressed confidence in the asset quality of the bank’s mortgage businesses, 74 percent of which are collateralized by properties located in Taipei.
The bank looks forward to growth from mortgage growth opportunities in prime areas in Taichung City, Taipei County and Hsinchu City, he said.
“We believe the formation of a property bubble is not widespread across the nation, but only limited to some metropolitan areas,” Kung said.
To minimize the impact from the nation’s implementation of Statement of Financial Accounting Standards No. 34 at the end of the year, the bank has already set aside NT$1 billion in provisions, he said.
Fubon aims to accelerate its expansion into China this year. Aside from officially launching its non-life insurance joint venture in Xiamen in the middle of this year, Fubon plans to team up with CITIC Group of China (中國中信) to form a 500 million yuan (US$73 million) leasing company in Beijing, with Fubon taking up a 25 percent stake. It also expects to finalize talks with Chinese partners to set up life-insurance and fund management joint ventures there, Kung said.
FUND RAISING
“We do not rule out raising more funds if acquisition opportunities emerge to expand further in China,” he said.
Ling Huang (黃雅玲), an analyst with SinoPac Securities Corp (永豐金證券), said Fubon should refrain from giving out too much cash dividends this year to boost its cash reserves to fund its expansion.
“A cash dividend of between NT$2 and NT$2.30 per share would be satisfactory,” she said.
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