Shin Kong Financial Holding Co (新光金控) aims to increase overseas investment this year to boost earnings after posting NT$5.49 billion (US$186.3 million) in net income last year, senior executives said yesterday.
“We will seek regulatory approval to raise the overseas investment ratio to 45 percent of our overall portfolio from the current 40 percent,” Shin Kong Financial senior vice president Sunny Hsu (徐舜鋆) told an -investors’ conference.
The planned adjustment is intended to strengthen earnings and diversify investment risks, Hsu said, adding that the company plans to increase holdings in emerging-market assets such as Russian funds, and Chinese stocks and bonds.
Shin Kong Life Insurance Co (新光人壽), the group’s flagship unit, yesterday obtained approval from China’s foreign exchange authority to invest up to US$100 million in Chinese securities, Shin Kong Financial president Victor Hsu (許澎) said.
“The quota will allow the life insurance unit greater flexibility in terms of asset allocation and the company plans to make the best use of it,” Victor Hsu said.
The insurer was approved as a qualified foreign institutional investor in China in November last year.
In the same month, Shin Kong Financial established a capital leasing firm in Suzhou, China, to capitalize on broader interest spreads there.
Shin Kong Life Insurance’s Shaanxi Province branch is expected to start operations this quarter, Victor Hsu said.
The life insurer reported a net profit of NT$2.48 billion last year, compared with NT$170 million in net income in 2010, company data showed.
Annual return on the company’s investment at home and abroad averaged 4.28 percent, falling from 4.39 percent a year earlier, while the cost of liabilities rose from 4.92 percent to 4.99 percent, Sunny Hsu said.
These figures indicate that Shin Kong Life is suffering from negative interest spreads, although Sunny Hsu said the situation would improve this year, because the company is shaking up its product line.
“We plan to place more emphasis on traditional and protection-type insurance policies to boost recurrent income,” he said.
First-year premiums totaled NT$76.56 billion last year, falling 8 percent from the previous year and commanding a 7.7 percent market share, Sunny Hsu said.
The life insurer is slated to realize profits of NT$7.34 billion next quarter from earlier real-estate trust investments, Sunny Hsu said.
Shin Kong Commercial Bank (新光銀行), the group’s banking subsidiary, plans to grow total assets from US$19 billion to US$20 billion this year, through deposit and loan expansions, bank president Lai Chin-yuan (賴進淵) said.
Larger loans could help keep the net interest margin steady at 1.45 percent this year, because central banks around the world are unlikely to raise interest rates, Lai said.
The lender is also seeking to expand its corporate customer base this year after economic uncertainty shrank wealth management fee income by 10 percent to NT$785 million last year, Lai said.
The bank has very limited exposure to the nation’s technology firms, with the DRAM and flat-panel sectors accounting for 0.89 percent and 0.27 percent of total outstanding loans respectively, Lai said.
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