Fubon Financial Holding Co (富邦金控) and Cathay Financial Holding Co (國泰金控) last month saw their net profit decline from the previous month due to less contribution from their insurance units, which reported rising hedging costs as the New Taiwan dollar appreciated 1.5 percent versus the greenback.
Fubon Financial’s net profit decreased 36 percent to NT$5.2 billion (US$174 million) and Fubon Life Insurance Co’s (富邦人壽) net profit plunged 79 percent to NT$1.55 billion.
The life insurer in a statement on Monday attributed the decline in earnings to higher hedging costs and a high comparison base in March.
Cathay Financial’s net profit declined 8 percent month-on-month to NT$4.1 billion, as Cathay Life Insurance Co’s (國泰人壽) net profit dove 27 percent to NT$1.51 billion.
The NT dollar’s strength would reduce the value of the insurer’s US dollar-denominated investments and affect its investment performance, Cathay Life executive vice president Lin Chao-ting (林昭廷) told the Taipei Times by telephone.
“After the TAIEX’s recent recovery to above the 10,000-point mark, we made a profit by selling some equities, which helped offset some foreign-exchange losses,” Lin said.
Cathay Life last month set aside NT$1 billion for foreign-exchange reserves, which could be used by insurance companies to write off half of their foreign-exchange losses, he said.
Despite falling profits, Fubon Financial and Cathay Financial remained the top two most profitable companies respectively among the nation’s 15 financial holdings, their data showed.
The rally in the local stock market last month helped four financial conglomerates to turn profitable. They are Hua Nan Financial Holding Co (華南金控), Mega Financial Holding Co (兆豐金控), China Development Financial Holding Corp (中華開發金控) and Taishin Financial Holding Co (台新金控).
Separately yesterday, King’s Town Bank (京城銀行) announced that it would give each of its 900 employees NT$3,000 to boost private consumption and help local businesses, with the total payout expected to reach NT$2.7 million.
The announcement came after the company held its annual general meeting in Tainan, where shareholders approved a proposal to distribute a cash dividend of NT$1.5 per share, representing a dividend yield of 4.6 percent based on the stock’s closing price of NT$32.6 in Taipei trading on Monday.
The bank said it aims to achieve an annual growth of 3 percent in deposit to NT$198.2 billion this year.
However, lending could slightly weaken to NT$157.9 billion, from last year’s NT$158 billion, as many companies have postponed their investment plans amid the COVID-19 pandemic, it said.
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