The nation’s 15 publicly listed financial holding companies got off to a strong start this year with combined profit expanding by nearly 20 percent in the first quarter from a year ago, supported by stable income growth in banks and brokerages.
The firms reported NT$70.38 billion (US$2.4 billion) in total net profit for the first three months of the year, up 19.4 percent from the previous year.
Profit from eight bank-focused firms stayed resilient in the first quarter, with four corporate banking-based financial holdings posting a 21.2 percent annual profit growth to NT$17.17 billion last quarter and another four retail banking-centered financial holdings reporting a 16.5 percent earnings increase to NT$18.42 billion.
SinoPac Securities Investment Service (永豐投顧) researcher David Lee (李曜宇) attributed the positive outcome to growth in banks’ wealth management fees, foreign exchange gains and the sale of bad debt associated with bulk shipping operator Taiwan Maritime Transportation Co (TMT, 台灣海陸運輸).
Two securities brokerage-based groups — Jih Sun Financial Holding Co (日盛金控) and Yuanta Financial Holding Co (元大金控) — reported NT$4.34 billion in net profit,up 85.6 percent year-on-year, thanks to rising share prices and expanding daily market turnover.
During the quarter, the TAIEX rose 237.77 points, or 2.76 percent, as foreign investors continued injecting funds, while average daily turnover rose to NT$123 billion, from the averaged 93.4 billion throughout last year, Taiwan Stock Exchange data showed.
For the first quarter, net profit posted by local securities brokerages totaled NT$8.2 billion, up 74.4 percent from a year earlier and an indication of investors’ positive reactions to the Financial Supervision Commission’s recent market-boosting measures, the stock exchange said.
However, three groups that focus on insurance — Fubon Financial Holding Co (富邦金控), Cathay Financial Holding Co (國泰金控) and Shin Kong Financial Holding Co (新光金控) — showed just 9.5 percent annual increase in combined profit, to NT$27.21 billion in the first quarter, amid the mixed effects of Asian currency fluctuations, securities investment gains and the reversed income tax, Lee said in a note on Friday.
Financial shares have underperformed the broader market by 1.26 percent over the past month due to market worries about policy headwinds after the occupation of the Legislative Yuan’s main chamber from March 18 to April 10 over the government’s handling of the cross-strait service trade pact.
“The legislative ratification of the service trade pact will serve an important beginning of more cross-strait financial cooperation,” Lee said.
As lawmakers are set to scrutinize the pact and decide whether to pass it now that student protests have ended, Lee said the market would refocus on firms’ fundamentals.
That will include if there are breakthroughs on cross-strait shareholdings in banks, interest rate normalization and steady progress in their China operations as well as the pace of profit growth in banks’ overseas and non-New Taiwan dollar businesses and more meaningful overseas partnerships.
SinoPac has maintained its “buy” recommendation on Cathay Financial, Mega Financial Holding Co (兆豐金控) and CTBC Financial Holding Co (中信金控), with target share prices of NT$54 for Cathay Financial, NT$29 for Mega Financial and NT$23 for CTBC Financial.
In Friday trading, Cathay shares closed at NT$45, Mega ended at NT$23.85 and CTBC finished at NT$19.20.
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