The combined earnings of the nation’s financial companies are likely to contract this year amid the nation’s slowing economic growth and a decline in private investment, ending a three-year streak of annual gains, according to data released by the Financial Supervisory Commission (FSC) on Thursday.
The aggregate earnings of domestic banks, credit cooperatives and Chunghwa Post Co (中華郵政) in the first 10 months of the year dropped NT$18.4 billion (US$576.04 million) from the same period last year to NT$297.6 billion, commission statistics showed.
Post offices operated by Chunghwa Post provide not only mail delivery, but also banking services.
The commission attributed the decline to a narrowing net interest margin (NIM) following the central bank’s interest rate cuts, and rising provision requirements by financial authorities against default risks, as well as a massive US$180 million fine imposed on Mega International Commercial Bank (兆豐銀行) for violating US money laundering regulations.
The profits of Taiwanese banks this year were also dragged by a lower contribution from their foreign branches amid a lackluster global economy, as well as the strengthening New Taiwan dollar, which led to earnings dropping at banks’ offshore banking units, analysts said.
As Taiwanese banks have been scaling down their China exposure this year amid an economic slowdown in that nation, yuan devaluation and increased market volatility, earnings contributions from their Chinese branches have also declined, analysts said.
CIMB Securities Ltd analyst Nora Hou (侯乃鳳) said in a note to clients that she is conservative about Taiwanese banks’ earnings outlook for this year and next year.
“We see little chance of topline recovery in the near term given lackluster loan growth, flat NIM and somewhat limited fee momentum,” Hou wrote in the Nov. 8 note.
Compared with banks, life insurers registered a bigger decline in their combined earnings from January through last month, according to the commission’s statistics.
The aggregate earnings of life insurers fell by NT$46.2 billion to NT$95.9 billion in the first 10 months, as increases in investment returns could not offset the impacts of lower policy product sales during the period, the commission said.
The statistics also showed that the aggregate earnings of securities brokerages fell by NT$389 million from the same period last year to NT$21.29 billion during the January-to-October period, while futures brokerages’ profits retreated by NT$13 million to NT$2.48 billion during the period, hurt by a persistent dip in transactions on local exchanges.
Excluding the NT$2 billion in real-estate disposal gains booked by Yuanta Securities Co (元大證券), declines in aggregate earnings by securities brokerages would have been more pronounced, a commission official said on Thursday.
However, general insurers posted a NT$200 million annual gain in aggregate profits to NT$2.48 billion in the first 10 months, statistics showed.
With the end of the year fast approaching, it is unlikely that the financial industry will report higher earnings than last year’s record-high NT$561.4 billion, the commission said.
Gudeng Precision Industrial Co (家登精密), the sole extreme ultraviolet pod supplier to Taiwan Semiconductor Manufacturing Co (台積電), yesterday said it has trimmed its revenue growth target for this year as US tariffs are likely to depress customer demand and weigh on the whole supply chain. Gudeng’s remarks came after the US on Monday notified 14 countries, including Japan and South Korea, of new tariff rates that are set to take effect on Aug. 1. Taiwan is still negotiating for a rate lower than the 32 percent “reciprocal” tariffs announced by the US in April, which it later postponed to today. The
ELECTRONICS: Strong growth in cloud services and smart consumer electronics offset computing declines, helping the company to maintain sales momentum, Hon Hai said Hon Hai Precision Industry Co (鴻海精密) on Saturday announced that its sales for last month rose 10 percent year-on-year, driven by strong growth in cloud and networking products amid the ongoing artificial intelligence (AI) boom. The company, also known internationally as Foxconn Technology Group (富士康科技集團), reported consolidated sales of NT$540.24 billion (US$18.67 billion) for the month, the highest ever for the period, and a 10.09 percent increase from a year earlier, although it was down 12.26 percent from the previous month. Hon Hai, which is Apple Inc’s primary iPhone assembler and makes servers powered by Nvidia Corp’s AI accelerators, said its cloud
Video streaming giant Netflix is launching a talent cultivation program in Taiwan aimed at producing high-quality Mandarin content, the company announced in a press release on Thursday. Netflix Chinese language content head Maya Huang (黃怡玫) said that Netflix has long invested in the Taiwanese market, citing the Netflix Fund for Creative Equity launched last year as an example. The fund would continue to dedicate resources to discovering content with the potential to be developed into Chinese-language projects, she added. The financing for the new talent projects seeks to create an ecosystem for content creators and professional development programs, she said. The talent projects
APPRECIATION: The central bank stepped in to stabilize the NT dollar after a surge in foreign institutional investment, triggered by optimism about tariffs and US Fed policy Taiwan’s foreign exchange reserves hit a record high at the end of last month, as the central bank intervened in the currency market to curb the New Taiwan dollar’s appreciation against the US dollar. Foreign exchange reserves increased by US$5.48 billion from May, reaching an all-time high of US$598.43 billion, the central bank said on Friday. While the central bank did not disclose the scale of its intervention, Department of Foreign Exchange Director-General Eugene Tsai (蔡炯民) said that the currency market remained relatively stable until the middle of last month. However, a shift occurred following the US Federal Reserve’s signal of a