Fubon Life Insurance (富邦人壽) increased its appetite for domestic and foreign stocks last quarter as it pursued higher profits and cash dividends in a global environment of low interest rates, the insurer said yesterday.
The insurer increased its combined investment in local and overseas equities to NT$637 billion (US$21.58 billion) as of the end of June, up 21 percent from NT$526 billion a quarter earlier, which could be attributed to an increase of NT$111 billion in local equities, the insurer told an investors’ conference.
The weight of stocks in its investment portfolio rose to 15.3 percent as of the end of June, up from 13.1 percent three months earlier, the insurer’s data showed.
Although domestic and foreign fixed-income assets continued to dominate the insurer’s portfolio with a weight of 68.6 percent, Fubon Life Insurance’s investment in fixed-income assets increased less than 1 percent to NT$2.85 trillion, from NT$2.83 trillion a quarter earlier, the data showed.
“We are holding the stocks as a long-term investment, and prefer shares of companies that show solid performance and consistently pay decent cash dividends,” Fubon Financial president Jerry Harn (韓蔚廷) said.
The weight of stocks in its portfolio hovered between 13 percent and 20 percent, so a weight of 15.3 percent in the second quarter was not particularly high, Harn added.
The insurer’s investment return after hedges last quarter stood at 4.2 percent, down from 4.87 percent a quarter earlier, as cash dividend income from equity investments was offset by lower realized capital gains, the insurer said.
However, its recurring return before hedges rose to 3.19 percent, from 3.06 percent a quarter earlier, the data showed.
Fubon Life posted a decline of 47.5 percent year-on-year in its first-year premiums to NT$61.4 billion for the first six months of this year, as it cut marketing activity amid the COVID-19 pandemic and adjusted products due to new regulations, it said.
Fubon Financial’s banking unit, Taipei Fubon Commercial Bank (台北富邦銀行), reported an annual dip of 13 percent in net profit to NT$9.4 billion for the first six months, with net income of treasury operations halved to NT$2.6 billion due to foreign-exchange and market-transaction losses, bank president Roman Cheng (程耀輝) said.
The bank saw its loans rise 7.2 percent year-on-year to NT$1.41 trillion in the first half and expects high single-digit percentage growth for the whole of this year, Cheng said.
The bank’s non-performing loan (NPL) ratio booked at 0.19 percent, flat from a year earlier, he said, adding that it would continue to see this month some soured loans to Singapore-based Agritrade International Pte Ltd.
Combined profit of the bank’s overseas branches fell 19 percent annually to NT$2.34 billion, weighed down by the ongoing COVID-19 pandemic and political tensions in Hong Kong, Cheng said.
Fubon Financial’s subsidiary in Hong Kong, Fubon Bank Hong Kong (富邦銀行香港), saw net profit dive 93.4 percent annually to HK$26 million (US$3.35 million) for the first six months, with its NPL ratio surging to 0.74 percent from 0.45 percent a year earlier, the data showed.
That could be attributed to the lender — hit by the pandemic and political tensions — setting aside loan-loss provisions of HK$150 million, Harn said.
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