CTBC Financial Holding Co (中信金控) yesterday reported that fee income declined last quarter due to more stringent regulatory rules on bancassurance sales as well as rising costs from providing credit card rewards.
Fee income fell 18.6 percent year-on-year and 4.4 percent quarter-on-quarter to NT$7.38 billion (US$243.85 million) following declines in wealth management fees and credit card fees, CTBC Financial said.
The Financial Supervisory Commission this year began tightening controls on the structure of premium loading on life insurance products by limiting the amount of sales commissions that may be paid to banks to facilitate product sales.
Although the change affected CTBC Financial’s wealth management fees, it benefited its life insurance unit, Taiwan Life Insurance Co (台灣人壽保險), which saw its earnings last quarter surge 94.2 percent annually to NT$2.77 billion.
The insurer, which was acquired by CTBC on Jan. 1 last year, saw its first-half earnings rise 76.5 percent annually to NT$4.19 billion.
The decline in credit card fees was due to the rapid growth in the number of customers who applied for new cards compatible with Line Pay, the mobile payment service of the popular messaging app that has more than 17 million users in Taiwan, CTBC Financial president Daniel Wu (吳一揆) said.
While competition has heated up among local banks following the arrival of new payment services, the company is confident it would be able to recoup the money spent on promotions and providing purchase rewards, Wu said.
At the end of June, the company had issued 650,000 new Line Pay credit cards, with the figure likely to reach 1 million by the end of this year, Wu said.
“No other credit card has posted such rapid growth,” Wu said, adding that it took the company about 10 years to issue 1 million Costco Wholesale Taiwan co-branded credit cards and 17 years to reach the same milestone with its CPC Corp, Taiwan (CPC, 中油) gas card.
He added that consumers were especially taken with Line Pay’s generous rewards and that they had spent significantly more using the service compared with rival services, such as Apple Pay, Samsung Pay and Android Pay.
“Line Pay has become a vital customer acquisition tool and we are confident that we can recoup our expenses as more products are introduced to existing users,” Wu said, adding that more than 60 percent of users are younger than 34.
The company added that net interest income and robust trading profits helped offset declines in fee income, bringing earnings last quarter to NT$9.18 billion, down 10.1 percent from the previous period.
Nonetheless, net income in the first half came to NT$19.39 billion, 35.6 percent higher than a year ago, company data showed.
Earnings per share were NT$1.
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