Fubon Financial Holding Co (富邦金控) yesterday said the issue of unrealized investment losses at its life insurance unit last quarter would not affect the company’s dividend policy this year.
The life insurance unit reported net income of of NT$2.2 billion for the final quarter of last year, down 78 percent from the previous quarter and 47 percent less than a year ago, as investment income fell 20 percent from the third quarter of last year.
As the life insurer is the group’s most profitable unit, its poor performance in the quarter had partly caused Fubon Financial to report lower earnings of NT$5.5 billion for the final three months of last year, down 66 percent from the previous quarter and 18 percent from the prior year.
However, Fubon Financial aims to finalize its plans for a dividend payout for last year at a board meeting next month, Fubon Financial president Vivien Hsu (許婉美) told an investors’ conference in Taipei.
Hsu made the assurances amid rising scrutiny among investors after two main units of the Ruentex Group (潤泰集團) on Tuesday announced disappointing dividend plans, as volatile global markets led to widening asset value losses at its 26 percent-held Nan Shan Life Insurance Co (南山人壽).
Fubon Life Insurance Co (富邦人壽) posted unrealized investment losses of NT$15.6 billion (US$481.11 million) last quarter, but the insurer is expected to report gains in its unrealized investment this quarter, Fubon Financial chief financial officer Eddie Chen (陳彥松) said.
Despite the unrealized investment losses last quarter, Fubon Life last year recorded an overall investment return of 4.97 percent, improving from 4.74 percent a year ago, with net profit contribution rising 15.81 percent annually to NT$41 billion, Chen said.
For this quarter, the insurer had recorded modest gains from its accounts for available for sale assets and holdings of bonds without an active market, Chen added.
Fubon Financial said that slowing economic growth and the central bank’s interest rate cuts had caused net profits at its banking unit, Taipei Fubon Commercial Bank (台北富邦銀行), to dip 2.19 percent annually to NT$17.8 billion last year.
The lender said it has allocated NT$1.2 billion in provisions since August last year to cover potential losses from client defaults on yuan-linked target redemption forwards.
Macroeconomic headwinds significantly affected the lender’s offshore banking units last year, Taipei Fubon Bank said.
Although Fubon Bank (Hong Kong) (富邦香港) recorded an 8.52 percent annual increase in net income to HK$522 million (US$67.32 million), its non-performing loan (NPL) ratio surged to 0.58 percent from 0.02 percent in the previous year, while its coverage for delinquent loans tumbled from 526.1 percent in 2014 to 79 percent at the end of last year.
During the same period, Fubon Bank (China) Co Ltd (富邦華一銀行) said net income dipped 7.5 percent annually to 390 million yuan (US$1.94 billion), while its NPL ratio rose from 0.89 percent in 2014 to 1.04 percent last year, with NPL coverage falling from 282.3 percent to 265.1 percent.
“My view is that the worst is over ... China is at a crossroads where a number of so-called zombie state-run enterprises of slowing sectors are being replaced with newcomers in more promising new segments,” Fubon Bank (China) president Dennis Chan (詹文嶽) said.
For the whole of last year, Fubon Financial’s net income rose 5.6 percent annually to NT$63.6 billion, topping its domestic peers for the seventh consecutive year. Earnings per share were NT$6.21.
This story has been updated since it was first published.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to