Fubon Financial

Fubon Financial reported unaudited consolidated pre-tax profit of NT$6.130bn and net profit of NT$6.516bn in March. Cumulative consolidated pre-tax profit and net profit was NT$13.807bn, and NT$13.908bn, respectively, translating into EPS of NT$1.12 for the first three months of the year. Excluding the impact from Covid-related policies, such as premium income, retention loss and reserve, the pro forma March consolidated pre-tax profit and net profit would be NT$9.053bn and NT$8.854bn respectively, and pro forma cumulative consolidated pre-tax profit and net profit would be NT$20.332bn and NT$19.128bn respectively. Both net profit and cumulative net profit of Taipei Fubon Bank in March hit a record high for the same period, and cumulative net profit of Fubon Securities in March was the second highest in record for the same period.

The performance of the main subsidiaries is as follows:

Fubon Life’s March net profit was NT$4,822mn and cumulative net profit was NT$7,239mn. TAIEX traded at a high in March and thus Fubon Life kept realizing capital gains. Capital gains of equities and funds and interest income were the main sources of profit. As incidents in the banking sector heightened volatility in March, long rates were in correction after a decline. Facing rising volatility, Fubon Life maintained liquidity to flexibly respond to subsequent market uncertainties. The market expects the rate hike to be nearing an end, leading to FX market range-bound. New FX reserve rules came into effect in March. The ending balance of Fubon Life’s FX reserves was about NT$32.9bn, exceeding the upper limit of NT$26.8bn, which helped offset FX risks and provide management flexibility. As FX reserve remains above the upper limit, Fubon Life can save around NT$500mn of regular monthly provision. In addition, the new rules also include a traditional hedging cost offset mechanism, which led to saving of around NT$600mn in March. As the recent hedging costs remain at a high, it smoothed out profits and losses when releasing FX reserves, and additional reserves will be required to accumulate FX reserves when the hedging costs fall in the future.

Fubon Life’s standalone cumulative FYP and TP reached NT$23,970mn and NT$78,070mn respectively, both estimated to rank the top 2 in the industry. FYP was NT$9,870mn in March, up 30.4% mom as interest-sensitivity products grew 33.6% and investment-linked products grew 18.9%. TP reached NT$30,022mn, up 54.8% mom. Fubon Life’s capital position remained decent, with RBC ratio and equity to asset ratio exceeding the legal minimum requirement of 200% and 3%, respectively.

Taipei Fubon Bank’s March net profit was NT$2,028mn and cumulative net profit was NT$6,908mn, up 6% yoy. The growth of cumulative net profit would be around 60% yoy if the bargain purchase gain in 2022 was excluded. The increase of net profit was mainly due to the double-digit growth in revenue. Net interest income grew, benefiting from rate hike, the improvement of loan and deposit structure and the growth of overseas loans. Net fee income grew by over 15% yoy, mainly due to growth from the wealth management and credit card businesses. In addition, the financial market volatility has eased since the beginning of this year. The interest spread of USD and NTD has remained at a high. The growth of equity, bonds, FX trading and valuation income increased significantly yoy. In the credit card business, the number of newly issued credit cards exceeded 800,000, on the back of the Costco co-branded card. Card spending continued to grow. The number of card in circulation and active cards on J card and MOMO card increased steadily, driving the number of active cards and the amount of card spending by 20% yoy. Asset quality remained benign. NPL ratio and coverage ratio were at 0.14% and 932%, respectively.

Fubon Insurance’s March net loss was NT$1,807mn and cumulative net loss was NT$4,254mn. Given the development trend of the company’s covid-related policies in evaluating actual loss and the authority’s adjustment on the COVID-19 tracking mechanism for moderate and severe cases starting from March 20, total loss was estimated and reflected in March. The related reserves balance of NT$2,387mn would be preserved for subsequent claims. Meanwhile, to strengthen the capital level, the company plan to complete the second capital injection of NT$16,000mn before the end of May. The RBC of the company will be improved and the statutory standard will be met.

In terms of business performance, the company maintained stable operation and risk control. The premium in March was NT$6,011mn, and both personal and commercial line insurance grew in the double digits, pushing up total premium by 24.0% yoy. Among which, the growth rate of 109.8% and 39.5% on commercial fire insurance and marine insurance was the highest. Accumulated premium in the first three months was NT$15.8bn, up 10.2% yoy. With a market share of 25.7%, Fubon Insurance continued to be the market leader.

Fubon Securities’ March net profit was NT$539mn, flat mom. Cumulative net profit was NT$1,534mn, up NT$769mn and 101% yoy, mainly due to the contribution from proprietary trading as the international and Taiwan stock markets rebounded.