Taishin Financial Holding Co (台新金控) yesterday reported that net profit in the first quarter plunged 52 percent to NT$2.1 billion (US$71.13 million) from a year earlier, as the company failed to realize an investment gain from its shares in Chang Hwa Commercial Bank (CHB, 彰化銀行) and it set aside a greater reserve for an additional payment to Prudential Financial Inc.
The company last year agreed to buy Prudential Life Insurance Co of Taiwan (保德信人壽) for NT$5.5 billion in a deal that required it to pay more to the US-based insurer if interest rates rose before the end of next month, Taishin Financial president Welch Lin (林維俊) told a news conference in Taipei.
The additional payment would not be more than NT$3 billion, Lin said.
Photo: CNA
“At the end of June, we will calculate what our total payment to Prudential Financial should be,” he said, adding that rate hikes lower the insurer’s debts more than its assets.
Prudential Life Insurance Co of Taiwan has been renamed Taishin Life Insurance Co Ltd (台新人壽).
Taishin Financial said it would no longer post investment gains from its CHB shares based on the equity method, because the company plans to sell part of its stake in the lender by issuing exchangeable bonds or class F preferred stocks.
Excluding its deal with Prudential Financial, Taishin Financial posted a lower net profit than last year because of lower investment gains amid global financial turmoil, the company said.
Banking unit Taishin International Bank (台新銀行) saw net profit drop 11 percent annually to NT$3.2 billion last quarter due to the lower valuation of its bond holdings, the company said.
The bank’s fee income from wealth management declined 9.4 percent to NT$2.3 billion, as clients became more conservative regarding investing, the company said.
However, fee income from credit card spending increased 29.3 percent to NT$436 million, as more online stores partnered with the bank, Taishin Bank president Oliver Shang (尚瑞強) said.
Fee income from corporate banking also rose at a double-digit percentage thanks to more syndicated loans and other services such as trust and trade financing, wholesale banking head Sharon Lin (林淑真) said.
Overall, the bank expects a high single-digit-percentage gain in fee income for the whole of this year, Shang said.
As the central bank is expected to continue to raise interest rates, the bank’s net interest margin is forecast to expand by seven basis points this year, it said, adding that its net interest margin in the first quarter remained flat at 1.14 percent.
Taishin Financial plans to inject capital into its banking and life insurance units in the second half, Lin said, without disclosing the amount of the proposed increase.
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