State-run Hua Nan Financial Holding Co’s (華南金控) net income in the first six months of this year rose 13.7 percent from a year earlier to a record NT$8.45 billion (US$269.43 million), although its net interest margin shed 7 basis points, the company told an investors’ conference yesterday.
The results translated into earnings per share of NT$0.73, ninth among 15 domestic peers over the period, company data showed.
The conglomerate’s net interest fell 0.92 percent in June from three months earlier, missing its goal of holding steady at about 1.4 percent for this year.
A narrowing gap between local and foreign interest rates accounted for the decline, while excessive competition also played a role, main subsidiary Hua Nan Commercial Bank (華南銀行) said.
The lender contributed more than 95 percent of the conglomerate’s profit in the first six months.
Hua Nan Financial intends to boost its margins by strengthening loans to small and medium-sized enterprises and adjusting asset allocations, it said.
Lending to large corporations increased 4 percent in the first half, compared with the same period last year, but such operations generated thin interest income, due to the lower credit risk, it said.
“With the US-China trade dispute casting uncertainty over the global economy, we are finding business opportunities to serve firms seeking to move production capacity from China to Taiwan or Southeast Asia,” a Hua Nan Financial official said.
Relocations suggest the need for funding to acquire land and build factories, the official said, adding that the bank would reach out to potential clients.
In addition, the lender would continue to grow business with clients in the “five plus two” sectors the government is grooming, the official said.
As for portfolio adjustments, Hua Nan Financial plans to cash in on unrealized gains in US-dollar bonds before their yields drop further, another official said.
Domestic financial firms have parked sizable funds in US-dollar assets in the past several years to take advantage of interest rate hikes prior to last month.
The conglomerate’s wealth management business rose 17 percent in June from a month earlier on the back of rush demand for savings-like insurance policies that are due out next year, if regulators give the green light.
The rapid growth enabled Hua Nan Commercial Bank to outperform state-run peers in terms-first commissions, the conglomerate said, adding that the benefit would remain for the rest of the year.
Hua Nan Financial said it would design other investment products and train employees to focus on protection insurance.
The company posted NT$1.81 billion in net income last month, boosting cumulative earnings to NT$10.03 billion for the first seven months, or NT$1.25 per common share.
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