Fubon Financial Holding Co (富邦金控) posted a net profit of NT$15.2 billion (US$475.15 million) for the first seven months, or NT$1.87 earnings per share, making it the most profitable financial services provider in Taiwan.
“Between January and July, net income grew 34.91 percent from the same period last year,” company president Victor Kung (龔天行) told an investors’ conference yesterday, attributing the growth to the company’s improving investment strategy and fee incomes, and negative provision costs.
For banks, provisions are created to write off impaired loans and other business losses. For Fubon, negative provisions were created on its financial sheet because the company did not use up the extra funds set aside due to an improvement in credit quality. In the first seven months of the year, Fubon Life Insurance Co (富邦人壽) contributed NT$6.35 billion, or 42 percent, as the insurance unit focused on products with high profit margins and retired lower return policies, Kung said.
First-year premiums for higher margin products picked up 16.8 percent to NT$4.72 billion in the first half, according to the company’s financial statement.
Chao Tsai-ling (董采玲), executive vice president at Fubon Life, said the value of new business rose 25.1 percent in the second quarter from three months earlier and is set to outperform the growth for overall first-year premiums this year.
Taipei Fubon Bank (台北富邦銀行) contributed NT$5.53 billion, or 36 percent of the parent company’s net profit, the statement said.
Net fee incomes grew 26.63 percent to NT$1.78 billion in the second quarter from the preceding three months, driven mainly by the wealth management services, said Morris Huang (黃以孟), executive vice president at the banking unit.
Huang said he expects growth to remain robust for the rest of this year, although Europe’s fiscal debt woes have weakened investors’ risk appetite for overseas debts and securities.
Hong Chu-min (洪主民), another executive vice president in charge of consumer finance at the banking unit, said home mortgage loans shrank by between 7 percent and 10 percent after the central bank adopted measures in late June to curb residential housing prices in the Greater Taipei Area.
The area accounted for 85 percent of the lender’s home mortgage operations, Hong said, adding the impact would not worsen unless the central bank takes further steps to cool the property market.
Fubon Financial, which is actively expanding its business in China, also benefited from its Hong Kong subsidiary and a near 20 percent stake in China’s Xiamen Bank (廈門銀行).
Kung said Xiamen Bank runs several branches in Fujian Province and has applied to set up a branch in Chongqing in Sichuan Province to further serve Taiwanese businessmen there.
Ken Shih (施耕宇), a financial analyst at Primasia Securities Co (亞證券), said Fubon Financial outperformed its local peers in earning capability because of its flexible business model and strategy.
“The edge will bring stable growth in the second half and help the company explore the Chinese market,” Shih said.
Shares of Fubon Financial closed down 0.4 percent at NT$37.6 yesterday, compared with a decline of 0.83 percent on the TAIEX.
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