Local banks saw their pretax profits hit a record last year, buoyed by stable fee income and interest income growth, but local insurers suffered huge hedging losses and saw their pretax profits drop to the lowest point in five years, data released by the Financial Supervisory Commission (FSC) showed yesterday.
Financial sector firms saw their combined pretax profits decline 2.89 percent annually to NT$523.3 billion (US$16.94 billion) last year, as the banking sector’s increased profits were offset by losses in the insurance, securities and futures sector, the data showed.
“We will conduct a comprehensive review of insurers’ ability to fight risks, demanding that they control the risks wisely,” FSC Chairman Wellington Koo told a news conference in New Taipei City.
Last year’s financial performance was stable, given that companies listed on the Taiwan Stock Exchange reported growing revenue and an increased average daily turnover of NT$163.5 billion, Koo said.
“However, no one can forecast if we will face headwinds or downwinds for the year ahead — we can only be cautious with the risks,” he said.
Banks reported combined pretax profits of NT$334.2 billion for the whole of last year, up 9.2 percent from a year earlier, and their profits remained above NT$300 billion for the fifth year in a row, Banking Bureau Director-General Jean Chiu (邱淑貞) said.
Banks booked a return on equity of 9.31 percent and return on assets of 0.7 percent last year, a slight increase from a year earlier, Chiu added.
“Banks did well quite last year, and their profits were backed by continuing growth in lending and consumer credit card spending,” Koo said.
Combined with credit cooperatives, the whole banking industry reported pretax profits of NT$377.7 billion for the whole of last year, a 7.12 percent annual increase and a new high, the data showed.
However, unlike banks, insurance, securities and futures firms saw their pretax profits decline last year, the FSC said.
Net foreign exchange losses for life insurance companies totaled NT$230.9 billion, up 31.1 percent from losses of NT$176.1 billion a year earlier, the data showed.
With the New Taiwan dollar last year falling 2.97 percent against the US dollar, local life insurers booked foreign exchange gains of NT$281 billion, but those gains were offset by heavy hedging losses of NT$484 billion, the data showed.
Life insurance firms saw their pretax profits last year plunge 27.8 percent to NT$842 billion, from NT$116.6 a year earlier, the data showed.
Securities and futures firms’ combined pretax profits totaled NT$46.5 billion, an annual decline of 15.76 percent, the FSC said, adding that they were affected by volatility in global and local equity markets.
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