State-run Mega Financial Holding Co’s (兆豐金控) earnings momentum remained healthy through the first two months of the third quarter, after a modest pickup in the first half of the year, thanks to improving loan demand, as well as fee and investment incomes, it said yesterday.
The bank-focused conglomerate expressed interest in acquiring a life insurance company to widen its activities, but added that it would be difficult to find friendly targets in Taiwan, despite policy encouragement from the government.
“The absence of a life insurance subsidiary is the main reason Mega Financial lags behind the nation’s top three financial conglomerates in profitability and assets,” Mega Financial president David Hu (胡光華) told an investors’ conference in Taipei, referring to Cathay Financial Holding Co (國泰金控), Fubon Financial Holding Co (富邦金控) and CTBC Financial Holding Co (中信金控).
Cathay Financial and Fubon Financial both achieved earnings of NT$4 per share in the year through last month, compared with NT$1.54 for Mega Financial.
Mega would seize on acquisition opportunities, but opportunities for friendly takeovers are few and far between, as only four domestic insurers are large enough and have not yet joined financial groups, Hu said.
Nan Shan Life Insurance Co (南山人壽), Mercuries Life Insurance Co (三商美邦人壽), Transglobe Life Insurance Co (全球人壽) and Farglory Life Insurance Co (遠雄人壽) are all affiliates of bigger conglomerates.
Regulatory incentives do not apply to state-run financial institutions and Mega Financial would stay away from hostile takeover bids, Hu said.
Still, Mega Financial would seek organic growth and cooperate with insurers to increase its product offering and meet client needs, he said.
While Mega Financial has a competitive edge over peers in international trade finance and foreign currency operations, the group has ample room for improvement in its consumer banking business, said Robert Tsai (蔡永義), president of Mega International Commercial Bank (兆豐銀行), which generates more than 85 percent of Mega Financial’s overall earnings.
The lender plans to bolster mortgage operations through an alliance with reputable property brokers and court young customers by improving its online presence, Tsai said.
Financial innovations are urgent amid a sharp decline in visits to brick-and-mortar branches as more people make transactions over the Internet, he said.
Mega Financial is evaluating the desirability of acquiring a Web-only bank license, but nothing has been finalized, Hu said.
Mega Financial chairman Michael Chang (張兆順) has hinted that the conglomerate could team up with a major telecom to compete for one of two Web-only bank licenses available in the near future.
The group said it would benefit from disposals of convertible bonds in state-run Taiwan Business Bank (台企銀), which could generate NT$100 million (US$3.25 million) in realized gains by the end of this year.
Shares in Mega Financial have gained 7.9 percent since the beginning of this year. They closed 0.57 percent lower at NT$25.95 yesterday in Taipei trading.
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