Fubon Financial Holding Co (富邦金控) has moderated its home loan growth forecast for this year, from an earlier target of double-digit growth, because its banking arm could suffer more than its peers if the government taxes short-term property transactions, company executives said yesterday.
The group, the nation’s second-largest financial holding firm by assets, posted a net profit of NT$3.49 billion (US$118.66 million) last month, slowing from NT$5.11 billion in January, because of fewer working days, the company said.
“We’ll be hurt more than our peers if the proposed luxury tax is implemented” in the second half, company president Victor Kong (龔天行) told an investor conference. “The company has invested heavily in building the [Fubon] franchise and is about to reap its benefits, but now it’s likely to be eroded in the third quarter.”
The government plans to introduce a 10 percent tax on homes resold within two years of purchase to curb soaring residential property prices. The rate would climb to 15 percent of the transaction price if the houses are resold within one year of purchase.
The banking unit, Taipei Fubon Commercial Bank Co (台北富邦銀行), saw its mortgage loans rise 9.6 percent year-on-year to NT$304.6 billion last year, accounting for 34.98 percent of total loans.
“New home loans hit a record high in January, but eased last month,” Taipei Fubon executive vice president Hong Chu-min (洪主民) said. “The growth momentum may start to freeze in the third quarter if the tax plan remains unchanged.”
Hong expects overall mortgage lending to expand 8 percent this year from a year ago, after factoring in the luxury levy.
Minister of Finance Lee Sush-der (李述德) disagreed, however, saying the proposed levy would not affect the profits of financial institutions.
“The levy will not decrease the demand for house loans, as long-term investors and residential home buyers still account for the majority of the housing market,” Lee told the Taipei Times by telephone.
Taipei Fubon contributed NT$7.57 billion, or 37 percent, to the parent group’s net profit last year, thanks to its thriving wealth management business, a group report showed. Wealth management sales picked up 33.2 percent to NT$29.66 billion last year, from NT$22.27 billion a year earlier, it said.
Taipei Fubon president Jerry Harn (韓蔚廷) expects overall lending to grow 10 percent this year, driven by consumer and corporate banking.
In particular, Harn expects credit card loans to expand 50 percent this year given a low base last year and bolstered by a recovery in consumer confidence.
Taipei Fubon did not provide guidance on its net interest margin — a basic measurement of a lender’s profitability — this year. Its net interest margin was flat in the final two quarters of last year despite three interest rate hikes of 12.5 basis points by the central bank.
Fubon Financial plans to expand further in China, setting up branches of Xiamen Bank (廈門商銀) in Chongqing, Tianjin and Nanchang this year and next, Kong said. Fubon Financial has about a 20 percent stake in Xiamen Bank.
The company expects overall premiums at its life insurance subsidiary to slow this year given a ban on selling interest-sensitive annuity products, said Chao Tsai-ling, an executive vice president at Fubon Life Insurance Co (富邦人壽).
The insurer contributed a net income of NT$8.64 billion, or 43 percent of the group’s earnings, last year even though a stronger NT dollar pushed up foreign exchange and hedging costs, the report said.
As of the end of December, Fubon Life had 83 percent of its currency exposure fully hedged, the highest among peers, Kong said, adding that this enabled the company to lower hedging costs.
Additional reporting by Amy Su
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