While this year’s rally on the local bourse has boosted profits in the financial sector, banks are likely to see slower earnings growth compared with insurers and securities brokerages due to looming bad debts, the Financial Supervisory Commission (FSC) said on Thursday.
Following a 17 percent gain in the TAIEX this year, securities brokerages have reported an annual increase of NT$14.53 billion (US$484.17 million), or 69.33 percent in combined pretax profit to NT$35.486 billion during the first 10 months, on a decent recovery in average daily turnover, data from the commission showed.
If the growth momentum on the local bourse continues, total pretax profit for securities brokerages could reach NT$44.9 billion this year, up 52.2 percent from last year’s NT$29.5 billion, Futures Bureau Deputy Director-General Chou Hui-mei (周惠美) forecast at a news conference in Taipei.
The bull market has also increased cash dividends and capitals gains income for insurers, who saw their combined pretax profit in the first 10 months rise NT$17.9 billion, or 16.65 percent, annually to NT$125.4 billion, despite dealing with rising foreign exchange losses and higher hedging costs, Insurance Bureau Deputy Director-General Tsai Li-ling (蔡麗玲) said.
Although banks saw combined pretax profits during the same period grow NT$10.96 billion, or 4.19 percent, to NT$272.22 billion on gains in interest income and lower provision for bad debts, a number of lenders involved in a botched syndicated loan have said they would write off their exposure to Ching Fu Shipbuilding Co (慶富造船) this year, representing a drag on earnings growth, Banking Bureau Deputy Director Sherri Chuang (莊琇媛) said.
Overall, the nation’s financial institutions — including firms in the banking, insurance, securities, futures and investment trust segments — posted a combined pretax profit of NT$442.6 billion in the first 10 months, compared with NT$398.2 billion in the same period last year, according to statistics compiled by the commission.
The figure represented an annual increase of 11.15 percent and was just 2.06 percent less than the NT$451.9 billion for the whole of last year, the commission said, adding that at this pace, financial sector earnings could exceed NT$500 billion for the whole of this year.
Meanwhile, Taishin Financial Holding Co (台新金控) has outlined plans to continue expanding its securities brokerage arm, eyeing more acquisitions to grow Taishin Securities Co (台新證券) into a large-scale brokerage firm.
The securities unit in August merged with Ta Chong Securities Co Ltd (大眾證券), boosting its share of the local brokerage market from 0.5 percent last year to 1.4 percent this year.
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