Fubon Financial incurs losses of NT$1.69 billion

BRANCHING OUT::Hua Nan Bank remained profitable and is looking to operate yuan-denominated business in Shenzhen, and acquire a 20% stake in a Chinese peer

By Crystal Hsu  /  Staff Reporter

Tue, Jan 10, 2012 - Page 11

Fubon Financial Holding Co (富邦金控), the nation’s second--largest financial services provider by assets, incurred net losses of NT$1.69 billion (US$55.95 million) last month, as its sports lottery subsidiary continued to drag down earnings, the parent company said yesterday.

“The losses resulted mainly from an annual one-off provision costing NT$2.1 billion at the sports lottery subsidiary,” Fubon Financial president Victor Kong (龔天行) said by telephone.

The subsidiary, Taiwan Sports Lottery Corp (運彩科技), is required to pay a guaranteed amount based on a set formula in exchange for the right to operate the sports lottery, Kong said.

“To date, the sports lottery unit remains a heavy burden on the group’s earnings,” he said. “We are in the process of litigation [with the government] over the fairness of the formula.”

The company’s life insurance and securities subsidiaries also performed poorly amid global economic uncertainty.

Fubon Life Insurance Co (富邦人壽) and Fubon Securities Co (富邦證券) reported net losses of NT$230 million and NT$160 million respectively, according to a stock exchange filing.

Taipei Fubon Commercial Bank Co (台北富邦銀行), the group’s main source of income, reported a profit of NT$20 million last month, declining 96.3 percent from net income of NT$540 million one month earlier, the filing said.

The group’s net income totaled NT$31 billion last year, translating into NT$3.45 earnings per share, company statistics showed.

The figures marked a 32.2 percent increase from NT$23.45 billion in 2010, making Fubon Financial still the most profitable of 15 locally listed competitors.

Global economic uncertainty appeared to have less impact on state-run Mega Financial Holding Co (兆豐金控) and Hua Nan -Financial Holdings Co (華南金控).

Mega Financial reported net profit of NT$1.13 billion, while Hua Nan Financial posted a net income of NT$627 million on the back of their respective banking arms, stock filings showed.

Mega International Commercial Bank (兆豐國際商銀) contributed net income of NT$801 million last month, accounting for 71.07 percent of the group’s overall earnings, company data indicated.

Cumulative net profit amounted to NT$17.73 billion for last year at Mega Financial, or NT$1.57 earnings per share, the filing said.

That was a 14.11 percent rise from NT$15.54 billion in 2010, thanks to bad loan recoveries and widening interest spreads, Mega Financial executive vice president Grace Lin (林瑞雲) said by telephone.

Net interest margin, critical to banks’ profitability, is likely to stay flat as the central bank has kept the rediscount rate unchanged for two consecutive quarters and is expected to maintain that position in the first half of this year, Lin added.

Hua Nan Commercial Bank (華南銀行) contributed NT$766 million in net profit last month, more than offsetting losses incurred by the group’s securities and non-life insurance units at NT$47 million and NT$33 million respectively, the parent firm’s data showed.

Hua Nan Financial reported NT$8.45 billion in net profit for last year, or NT$1.2 earnings per share, a jump of nearly 40 percent from a year earlier, company statistics indicated.

York Lai (賴明佑), an executive vice president at Hua Nan Bank, attributed the improvement to a low base in 2010 and to the lender boosting its presence in China.

Hua Nan Bank aims to open a second branch in Shanghai, China, later this year and its branch in Shenzhen will soon be allowed to operate yuan-denominated business, Lai said.

The bank also plans to acquire a 20 percent stake in a Chinese peer to expedite its expansion, a venture that should bear fruit this quarter, Lai said.

“The company is likely to unveil more details after the Lunar New Year,” he said.