Fubon Financial boosting foreign debt holdings

RISING INTEREST RATES::The financial conglomerate is expecting two more US Fed rate increases, which should bolster the yields of its US dollar-based assets

By Crystal Hsu  /  Staff reporter

Thu, Aug 30, 2018 - Page 12

Fubon Financial Holding Co (富邦金控) yesterday said it plans to raise its holdings of foreign debt in the coming months while trimming its position in local shares.

The nation’s most profitable financial conglomerate said that net profit in the first half surged 67.1 percent to NT$31.2 billion (US$1.02 billion), as all of its subsidiaries saw improved earnings.

Fubon Life Insurance Co (富邦人壽) generated earnings of NT$19.1 billion, more than doubling the level a year earlier and accounting for 61.2 percent of total profit, company data showed.

The insurance company, the second-largest in the nation by market share, raked in NT$68.1 billion in investment income after expanding its portfolio to NT$185 billion, most of which flowed to foreign debts, company officials said at an investors’ conference.

“Having stable recurring income tops the list for Fubon Life, which should benefit from yield improvement if the US Federal Reserve continues to raise policy rates,” Fubon Financial president Jerry Harn (韓蔚廷) told reporters.

Fubon Financial expects two more Fed rate hikes next month and in December, allowing its US dollar-based assets to enjoy higher yields which currently average 4.5 to 4.7 percent, Harn said.

The group favors a stable investment strategy. Foreign bondholdings accounted for 57.1 percent of its portfolion as of June 30, up from 53.5 percent a year earlier, while local shares dropped from 11.2 percent to 10.7 percent.

Its local shareholdings generated NT$14.6 billion in cash dividends in the first seven months of the years, with the figure projected to grow to NT$18.8 billion for the full year, about the same as last year, the company said.

Global financial markets are prepared for more interest rate hikes, but not for the escalating tariff row between the US and its major trading partners, posing a big downside risk, Harn said.

Fubon Financial does not plan to name a new vice president after Daniel Tsai (蔡明忠) stepped down earlier this week, he said.

The conglomerate is to update its internal control enhancement measures in a few weeks to address calls for a clearer separation of its financial and industrial companies, Harn said.

Tsai is the chairman of Taiwan Mobile Co (台灣大哥大), an affiliate of Fubon Financial and one of the nation’s biggest telecoms.

Fubon Financial’s net profit in the first seven months of the year rose 25 percent to NT$42.61 billion, or earnings of NT$4.02 per share.