After swinging back into black in the first half of the year, Shin Kong Financial Holding Co (新光金控) expects earnings to climb higher in the second half mainly from a dividend income boost, senior executives said yesterday.
The company posted a net profit of NT$1.91 billion (US$65.81 million), or earnings of NT$0.23 per share, in the first six months of the year, compared with a loss of NT$3 billion in the same period last year, because of a sharp drop in losses at its flagship firm, Shin Kong Life Insurance Co (新光人壽), and strong earnings from its banking arm, company data showed.
Forecasting further improvement, Shin Kong Financial president Victor Hsu (許澎) told a quarterly conference for investors that “net income is likely to trend up in the second half when the group is due to recognize NT$5 billion in dividend income.”
Hsu declined to comment on the economic landscape at home or abroad except to say that he and colleagues sensed increasing uncertainty.
Despite the recent downgrade in the US’ sovereign credit rating, Shin Kong Financial is not worried about default risk as “its central bank can print as many US dollars as needed,” Hsu said.
The US and Europe make up 80 percent of Shin Kong’s government bond holdings, which have generated a stable fixed income, Shin Kong Financial senior vice president Sunny Hsu (徐舜鋆) said.
As of June 30, overseas investments accounted for 39.4 percent of the group’s total portfolio valued at NT$1.39 trillion and generated a return of 4.08 percent, compared with a return of 4.21 percent on domestic investments, Sunny Hsu said.
Shin Kong Financial intends to increase its holding of foreign bonds to 45 percent as they offer higher coupon rates, he added.
Shin Kong Life Insurance Co (新光人壽) saw its net loss shrink to NT$120 million in the first half of the year, from a net loss of NT$3.91 billion in the same period last year.
First-year premiums rose a modest 1.9 percent year-on-year in the first half of the year to NT$38.65 billion, with traditional and investment-linked policies making up 34.1 percent and 39.8 percent respectively, Shin Kong Life president Jason Tsai (蔡雄繼) said.
The first six months of the year saw a steep increase in sales of investment-linked insurance policies totaling NT$15.4 billion, more than six times the level a year earlier, the group said.
Traditional life insurance products jumped 37 percent year-on-year to NT$13.2 billion, while accident and interest-sensitive policies declined 22 percent and 65 percent respectively, Tsai said.
Shin Kong Commercial Bank (新光銀行), the group’s banking arm and main source of income, saw its net profit more than double in the first half to NT$2.03 billion, as improving corporate loan demand boosted interest income.
Net interest income stood at NT$3.46 billion for the first six months, rising 16.6 percent from a year earlier, the group said.
Net interest margin edged up to 1.57 percent at the end of June, from 1.56 a quarter earlier, and could stay flat for the rest of this year, if economic uncertainties prompt the central bank to halt interest rate hikes, Shin Kong Financial investor relations vice president Stan Lee (李超儒) said.
Net fee income fell 11.7 percent to NT$797 million, with delayed recognition of profits as required by new accounting rules blamed for the decline, Lee said.
Shin Kong Financial closed down 1.46 percent at NT$10.50, underperforming the TAIEX, which slid 0.63 percent.
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