Hua Nan Financial Holding Co (華南金控) said yesterday its net profit rose 41 percent year-on-year to NT$2.93 billion (US$92.46 million), or NT$0.48 earnings per share, in the first half as fee income growth more than offset interest losses.
In the second quarter, Hua Nan Financial posted a net profit of NT$1.69 billion, up 30 percent from NT$1.3 billion in the first quarter and 380 percent higher than the NT$352 million posted a year earlier.
The state-run financial services provider, which derived 85 percent of its income from its banking subsidiary, Hua Nan Commercial Bank (華南銀行), attributed the improvement chiefly to better wealth management, foreign exchange and home mortgage operations.
“The company emerged further from the global financial crisis as evidenced by improving revenue, asset quality and earning ability,” company vice president David Cheng (鄭永春) told an investors’ conference.
Cheng said the company is on track to explore the Chinese market after the Financial Supervisory Commission last week approved its plan to upgrade its banking unit’s representative office in Shenzhen, Guangdong Province, to a branch.
From January to June, Hua Nan Bank earned NT$2.42 billion in net fee income, up 39 percent from its year-earlier level, while bad loan recoveries jumped 56 percent to NT$881 million, from NT$566 million, Cheng said.
Home mortgage loans totaled NT$340 billion in the second quarter, up 19.21 percent from NT$285.2 billion a year earlier, the statement said.
“There is little default risk since our mortgage customers are mainly government employees and public school teachers,” Cheng said.
The banking unit’s net interest income, however, dropped 2 percent on a yearly basis to NT$8.17 billion in the first six months of the year. Cheng linked the loss to competition from local rivals and record-low interest rates.
Net interest margin stood at 0.91 percent in June, up 10 basis points from the level a year earlier.
Cheng expects the spread to widen further in coming months as the central bank is widely expected to raise the benchmark interest rate at its quarterly board meeting next month.
Non-performing loans dropped to NT$14.2 billion as of June 30, from NT$21.3 billion a year earlier, the statement said, adding that the bad loan ratio fell to 1.13 percent last month from 1.21 percent in June, while the coverage ratio rose to 89.2 percent last month from 84.61 percent in June.
Cheng said the figures lent support to the improving asset quality of the lender and its parent company.
As of June 30, Hua Nan Financial’s capital adequacy ratio rose to 123.36 percent, from 122.58 percent a year earlier, the statement said.
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