The combined earnings of the nation’s financial companies are likely to contract this year amid the nation’s slowing economic growth and a decline in private investment, ending a three-year streak of annual gains, according to data released by the Financial Supervisory Commission (FSC) on Thursday.
The aggregate earnings of domestic banks, credit cooperatives and Chunghwa Post Co (中華郵政) in the first 10 months of the year dropped NT$18.4 billion (US$576.04 million) from the same period last year to NT$297.6 billion, commission statistics showed.
Post offices operated by Chunghwa Post provide not only mail delivery, but also banking services.
The commission attributed the decline to a narrowing net interest margin (NIM) following the central bank’s interest rate cuts, and rising provision requirements by financial authorities against default risks, as well as a massive US$180 million fine imposed on Mega International Commercial Bank (兆豐銀行) for violating US money laundering regulations.
The profits of Taiwanese banks this year were also dragged by a lower contribution from their foreign branches amid a lackluster global economy, as well as the strengthening New Taiwan dollar, which led to earnings dropping at banks’ offshore banking units, analysts said.
As Taiwanese banks have been scaling down their China exposure this year amid an economic slowdown in that nation, yuan devaluation and increased market volatility, earnings contributions from their Chinese branches have also declined, analysts said.
CIMB Securities Ltd analyst Nora Hou (侯乃鳳) said in a note to clients that she is conservative about Taiwanese banks’ earnings outlook for this year and next year.
“We see little chance of topline recovery in the near term given lackluster loan growth, flat NIM and somewhat limited fee momentum,” Hou wrote in the Nov. 8 note.
Compared with banks, life insurers registered a bigger decline in their combined earnings from January through last month, according to the commission’s statistics.
The aggregate earnings of life insurers fell by NT$46.2 billion to NT$95.9 billion in the first 10 months, as increases in investment returns could not offset the impacts of lower policy product sales during the period, the commission said.
The statistics also showed that the aggregate earnings of securities brokerages fell by NT$389 million from the same period last year to NT$21.29 billion during the January-to-October period, while futures brokerages’ profits retreated by NT$13 million to NT$2.48 billion during the period, hurt by a persistent dip in transactions on local exchanges.
Excluding the NT$2 billion in real-estate disposal gains booked by Yuanta Securities Co (元大證券), declines in aggregate earnings by securities brokerages would have been more pronounced, a commission official said on Thursday.
However, general insurers posted a NT$200 million annual gain in aggregate profits to NT$2.48 billion in the first 10 months, statistics showed.
With the end of the year fast approaching, it is unlikely that the financial industry will report higher earnings than last year’s record-high NT$561.4 billion, the commission said.
Taiwan’s foreign exchange reserves fell below the US$600 billion mark at the end of last month, with the central bank reporting a total of US$596.89 billion — a decline of US$8.6 billion from February — ending a three-month streak of increases. The central bank attributed the drop to a combination of factors such as outflows by foreign institutional investors, currency fluctuations and its own market interventions. “The large-scale outflows disrupted the balance of supply and demand in the foreign exchange market, prompting the central bank to intervene repeatedly by selling US dollars to stabilize the local currency,” Department of Foreign
Intel Corp is joining Elon Musk’s long-shot effort to develop semiconductors for Tesla Inc, Space Exploration Technologies Corp and xAI, marking a surprising twist in the chipmaker’s comeback bid. Intel would help the Terafab project “refactor” the technology in a chip factory, the company said on Tuesday in a post on X, Musk’s social media platform. That is a stage in the development process that typically helps make chips more powerful or reliable. The chipmaker’s shares jumped 4.2 percent to US$52.91 in New York trading on Tuesday. The Terafab project is a grand plan by Musk to eventually manufacture his own chips for
Taiwan Power Co (Taipower, 台電) yesterday said it plans to resume operations at two coal-fired power generators for three months to boost security of electricity supply as liquefied natural gas (LNG) supply risks are running high due to the Middle East conflict. The two coal-fired power generators are at Mailiao Power Plant in Yunlin County’s Mailiao Township (麥寮). The plant, operated by Formosa Plastics Group (台塑集團), supplied electricity to Taipower’s power grid until the end of last year. Taipower’s decision came about one month after Minister of Economic Affairs Kung Ming-hsin (龔明鑫) on March 10 said that the nation had no imminent
Some robotaxi passengers were left stranded in the middle of fast-moving traffic in a major Chinese city after their driverless vehicles stopped running, according to police and media reports on Wednesday. A preliminary investigation indicates more than 100 robotaxis came to a halt because of a “system malfunction,” police in the city of Wuhan said in a statement, without elaborating. No injuries were reported. One passenger told Chinese media that their robotaxi stopped after turning a corner. An instruction on a screen read: “Driving system malfunction. Staff are expected to arrive in 5 minutes.” After no one showed up, the passenger pushed
RSS