State-run financial holding companies saw their first-quarter profits slow from a year earlier, as their securities and insurance arms took a hit from market turbulence at home and abroad.
HUA NAN FINANCIAL
Hua Nan Financial Holding Co (華南金控) reported a net profit of NT$5.34 billion (US$178.42 million) for the first quarter, marking a 5.2 percent decline year-on-year due to weaker results from its securities and insurance subsidiaries. That translated into earnings per share of NT$0.39, company data showed.
Photo courtesy of Taiwan Cooperative Financial Holding Co
Despite this, core operations at main subsidiary Hua Nan Commercial Bank (華南銀行) remained healthy, with net income rising 3.3 percent to NT$5.21 billion, contributing 92 percent to total earnings, officials told an investors’ conference on Tuesday.
Mortgage lending retreated 80 percent, affected by the central bank’s credit controls.
The bank is to focus on policy-supported lending, such as first-home loans, and expects full-year growth in this segment to be modest, officials said.
Net interest margin improved to 0.71 percent in the first quarter and is expected to expand by about 10 basis points for this year, officials said, citing limited foreign currency exposure and anticipated rate cuts by the US Federal Reserve, which could bring down overall funding costs.
Non-banking subsidiaries underperformed. Hua Nan Securities Co’s (華南永昌證券) net profit plunged 50 percent to NT$215 million, while Hua Nan South China Insurance Co’s (華南產險) declined 16.8 percent to NT$332 million, officials said, citing poor investment income amid wild market swings.
Hua Nan Financial is cautiously optimistic about its earnings ahead, saying it has adjusted its investment strategy and the rise in the local currency could benefit the equity market for the rest of the year.
TAIWAN COOPERATIVE
Taiwan Cooperative Financial Holding Co (合庫金控) on Wednesday reported a net profit of NT$4.99 billion for last quarter, down 7.28 percent from a year earlier.
Taiwan Cooperative president Su Tso-cheng (蘇佐政) attributed the decline to softer results at its insurance and securities units.
The group’s life insurance arm, BNP Paribas Cardif TCB Life Insurance Co (合庫人壽), reported a net profit of NT$108 million, a slump of 63.76 percent, which was attributable to a stronger New Taiwan dollar, a product mix heavily weighted toward single-premium policies, and heightened market volatility, officials said.
For every NT$0.1 appreciation in the local currency, the company would incur NT$15 million in asset value losses, officials said.
The insurer is seeking regulatory approval to create a foreign exchange reserve, which would help mitigate the impact of currency fluctuations, officials said.
Subsidiary Taiwan Cooperative Securities Co (合庫證券) booked losses due to falling revenues from proprietary trading and brokerage operations, as market tumults drove investors to the sidelines, officials said.
However, losses began to narrow following a realignment of its investment portfolio, officials said, adding that the subsidiary aims to swing back to profit this year by focusing on dividend-oriented investment tools and adjusting bond holdings, officials said.
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