Shin Kong Financial Holding Co (新光金控) expects earnings to strengthen this year after posting a net profit of NT$1.3 billion (US$45 million) in the first quarter amid improving core operations and foreign exchange hedging, company executives said yesterday.
The auction on Wednesday of the real-estate asset trust by the group’s life insurance subsidiary, Shin Kong Life Insurance Co (新光人壽), could contribute an additional NT$2.39 billion in net income later this year or early next year, senior vice president Sunny Hsu (徐舜鋆) said.
IN THE BLACK
“Despite unrest in the Middle East and North Africa and the massive earthquake in Japan in March, the group managed to stay in the black in the first quarter,” reversing a loss of NT$2.93 billion a year earlier, Shin Kong Financial president Victor Hsu (許澎) told an investors’ teleconference.
That translates into earnings of NT$0.15 per share at the end of March, from a loss of NT$0.37 a share a year earlier, the company’s report showed.
The group could benefit further from a growing economy at home and abroad, Sunny Hsu said, after better control of foreign currency exchange costs.
Shin Kong Life, which accounts for the bulk of the group’s assets, posted a net income of NT$280 million during the January-to-March period, the report said.
First-year premiums surged 56.4 percent year-on-year to NT$24.19 million, accounting for 9.1 percent of the market, the report said.
“Hedging costs averaged near 100 basis points in the first quarter as gains from foreign currency exchanges helped offset some costs,” Sunny Hsu said.
“The company has sought to keep the costs at below 200 basis points,” Sunny Hsu.
An asset reappraisal showed Shin Kong Life’s embedded value rising 59.9 percent to NT$176.04 billion at the end of last year compared with a year ago, while its five-year appraised value grew 38.8 percent to NT$219.8 billion, the report said.
Meanwhile, unrealized gains in real estate investments reached NT$$73.1 billion, the report said.
“The figures could climb higher this year in light of healthy demand for real estate properties,” Sunny Hsu said.
Shin Kong Commercial Bank (新光銀行), the group’s banking subsidiary, contributed NT$1.02 billion in net profits in the first quarter, nearly double the earnings made a year earlier, because of falling bad loan and provision costs, the report said.
Its net interest margin edged up to 1.56 percent in the first quarter, from 1.54 percent three months earlier, and is expected to approach 1.6 percent to 1.65 percent toward the end of the year if the central bank continues to raise interest rates each quarter, Sunny Hsu said.
In other news, state-run Hua Nan Financial Holdings Co (華南金控) yesterday reported a net profit of NT$4.52 billion, or earnings per share of NT$0.31, in the first quarter, rising 13 percent from a year earlier.
Hua Nan Commercial Bank (華南銀行), the group’s banking arm and main source of income, saw net earnings in the first three months rise 58 percent year-on-year to NT$1.83 billion.
The group expects profitability to improve further for the rest of the year and will press ahead with its plan to expand in China.